Two textile and garment companies to benefit the most from EVFTA

TNG Investment and Trading JSC (TNG) and Thanh Cong Textile Garment Investment JSC (TCM) are expected to benefit the most from the EU-Vietnam FTA (EVFTA), according to Bao Viet Securities.

The European Parliament on February 12 officially ratified the EVFTA.

EVFTA is expected to make significant contributions to export volume of both sides with Vietnam and EU export turnover expected to increase by 15 billion euros and 8.3 billion euros, respectively, by 2035.

Two textile and garment companies to benefit the most from EVFTA



Under EVFTA, most yarn and fabric products will enjoy tax exemption as soon as the agreement takes effect, while the tariffs will be cut step by step to zero percent within 6-8 years.

As such, the gap between Vietnam’s textiles and garments and Bangladesh which now enjoys zero percent tariff, will gradually be narrowed, while Vietnam has greater advantages than China which bears the tariff of 12 percent.

Meanwhile, the preferential tariff (zero percent) applied to Cambodia has been suspended because of labor right violations discovered recently.

Under EVFTA, most yarn and fabric products will enjoy tax exemption as soon as the agreement takes effect, while the tariffs will be cut step by step to zero percent within 6-8 years.
 

However, in order to be eligible for the preferential tariffs in EVFTA, Vietnam’s products need to satisfy the requirements of the origin rule. This means that Vietnamese enterprises have to use Vietnam-made or EU sourced materials to make products.


This is a difficult problem to be solved. At present, Vietnam has to import up to 80 percent of fabrics to make garments. Of this, 55 percent is from China, 16 percent from South Korea, 12 percent from Taiwan and 6 percent from Japan.

Vietnam’s products will have to compete fiercely with other big exporters such as China, India, Bangladesh, Cambodia and Pakistan. The countries consider Vietnam a big rival and apply important policies to help develop their textile and garment industry.

Bao Viet Securities (BVSC) also emphasized the ‘fabric onwards’ principle stipulated in EVFTA. Therefore, EVFTA will only bring real opportunities to enterprises with material self-supply capability and a high number of customers from the EU.

BVSC has named two companies that can benefitfrom EVFTA – TNG, a listed company on the Hanoi bourse, and TCM on the HCM City bourse.

For TNG, the EU is the biggest market, which brings 54 percent of revenue. In the last three years, TNG reported post-tax profit of hundreds of billion of dong each year and profit growth rate of 42 percent per annum in 2016-2019.

In 2019 alone, TNG made a post-tax profit of VND230.8 billion, an increase of 28 percent over 2018.

Turnover from the EU market only accounts for 5 percent of total turnover of TCM.

Linh Ha 

Mounting difficulties may lead half of Vietnam textile-garment firms to bankruptcy

Mounting difficulties may lead half of Vietnam textile-garment firms to bankruptcy

Some importers from US and EU, major markets for Vietnam’s textile and garment industry, have stopped orders within three to four weeks on Covid-19 pandemic.

Textile and footwear firms go local to survive pandemic

Textile and footwear firms go local to survive pandemic

While most textile and footwear enterprises in Vietnam struggled to find alternative sources of raw materials to maintain production, some with local sources have survived during the COVID-19 pandemic.

 
 

Other News

.
Black Friday 2021 launched in HCM City
Black Friday 2021 launched in HCM City
BUSINESSicon  20/11/2021 

The shopping festival Black Friday was kicked off on November 19 in Ho Chi Minh City.

Decrease in in seafood exports expected as a result of new Chinese policy
Decrease in in seafood exports expected as a result of new Chinese policy
BUSINESSicon  20/11/2021 

Vietnam’s seafood exports to China are likely to decrease sharply as Chinese customs are tightening control over imports.

Consumers more prudent with post-pandemic personal finances
Consumers more prudent with post-pandemic personal finances
BUSINESSicon  20/11/2021 

After giving birth to their second daughter, Thanh Van, a 39-year-old office worker in Hanoi, had to quit her job because she could not afford the cost of hiring a babysitter after a 30 per cent pay-cut due to the COVID-19 pandemic. 

Digital transformation to create new growth engine for Vietnam's agriculture
Digital transformation to create new growth engine for Vietnam's agriculture
BUSINESSicon  19/11/2021 

As digital transformation will help overcome most of the weaknesses faced by the local agriculture sector, it should be considered a breakthrough solution for sustainable growth and development in Vietnam.

Flower farmers do not dare grow large quantities for Tet amid Covid uncertainty
Flower farmers do not dare grow large quantities for Tet amid Covid uncertainty
BUSINESSicon  19/11/2021 

Many flower and bonsai farmers in HCM City and the Cuu Long (Mekong) Delta have reduced production for Tet (Lunar New Year) which falls early next year since they are worried the COVID-19 pandemic will affect demand.

Vietnam may have new USD billionaires
Vietnam may have new USD billionaires
BUSINESSicon  19/11/2021 

If assets are calculated according to the value of the stock market, Vietnam will have more USD billionaires.

Vietnam among top 10 countries with largest installed solar power capacity
Vietnam among top 10 countries with largest installed solar power capacity
BUSINESSicon  19/11/2021 

Visual Capitalist has listed Vietnam among the world’s top 10 for largest installed solar power capacity.

Global energy crisis: another concern for Vietnam's economy
Global energy crisis: another concern for Vietnam's economy
FEATUREicon  19/11/2021 

Disrupted coal mining in Ordis in Inner Mongolia, the most important coal mining hub in the world, is posing huge risks that could stifle global growth.

Too many traceability apps confuse farm-produce buyers
Too many traceability apps confuse farm-produce buyers
FEATUREicon  19/11/2021 

The farm produce traceability system in Vietnam still doesn’t match GS1 standards (the most widely used system of standards in the world), and, as such, the existing traceability apps are just for internal use.

More businesses seek black credit as cash flow plummets
More businesses seek black credit as cash flow plummets
FEATUREicon  19/11/2021 

Seventy-one percent of businesses anticipate revenue decreases in 2021, higher than the 65 percent figure in 2020, according to a survey.

VIETNAM BUSINESS NEWS NOVEMBER 19
VIETNAM BUSINESS NEWS NOVEMBER 19
BUSINESSicon  19/11/2021 

Seafood stocks surge on business recovery

Overspend in the works for reboot of national economy
Overspend in the works for reboot of national economy
BUSINESSicon  19/11/2021 

Vietnam may not be able to increase its budget deficit next year in order to ensure state budget spending, with the economy still sabotaged and business revenues still dented.

Captivating incentives target FDI from Europe
Captivating incentives target FDI from Europe
BUSINESSicon  18/11/2021 

Vietnam will continue considering foreign investment one of its important drivers for socioeconomic development over the next four years, with its ambitious plan to attract more high-quality funding. 

VN to strengthen financial foundation in the next ten years
VN to strengthen financial foundation in the next ten years
BUSINESSicon  19/11/2021 

Vietnam's top priority for 2021-30 is to build a financial foundation for the country's sustainable development, said policymakers and experts during a conference to discuss finance strategy for the 2021-30 period.

Pandemic makes 85 percent of Vietnamese consumers more likely to use digital banking in future
Pandemic makes 85 percent of Vietnamese consumers more likely to use digital banking in future
BUSINESSicon  18/11/2021 

Around 85 percent of Vietnamese banking consumers are more likely to use online and digital banking services compared to 18 months ago, according to a new report from SaaS cloud banking platform Mambu.

Food shopping trends change due to social distancing
Food shopping trends change due to social distancing
BUSINESSicon  18/11/2021 

The way people buy food in HCM City has changed after a period of social distancing amid the COVID-19 pandemic, with more food products bought online, according to online sellers.

The cost of reopening the economy
The cost of reopening the economy
FEATUREicon  18/11/2021 

Nearly two months have passed since Ho Chi Minh City and 18 southern provinces have lifted lockdown measures and set up the "new normal", with the operations of people and enterprises gradually resuming.

More gyms close as membership dwindles
More gyms close as membership dwindles
FEATUREicon  18/11/2021 

More and more gyms have shut down or have been transferred to others, sometimes for free.

Coffee, vegetable industries agree on codes of conduct to encourage sustainability
Coffee, vegetable industries agree on codes of conduct to encourage sustainability
BUSINESSicon  17/11/2021 

As many as 42 enterprises from the coffee and fruit-vegetable industries have signed a pledge to show their commitment to support and implement the codes of conduct (CoCs) 

Pandemic will have long-lasting impact on business operations in Vietnam
Pandemic will have long-lasting impact on business operations in Vietnam
BUSINESSicon  17/11/2021 

Many factories, including about 200 contracted factories that make sportwear for Nike Corporation, resumed production in Vietnam earlier this month. 

 
 
 
Leave your comment on an article

OR QUICK LOGIN