VietNamNet Bridge - If Vietnamese textile and garment companies cannot organize fabric production, the industry will have to import 15 out of 18 billion square meters of fabric it needs by 2025. If so, Vietnam will forever do outsourcing for foreign companies. 

In the supply chain, textiles play an important role as fabric determines the cost and quality of finished garment products.

Vu Huy Dong, general director of Damsan JSC, admitted that there are still many problems in textile production, and textiles still cannot meet garment requirements.

In 2016, Vietnam’s fabric imports increased by 3.2 percent compared with 2015, though garment export value decreased by $23.84 billion, of which fabric export turnover accounted for 43.9 percent, down by 0.1 percent.

While Vietnam has to import 65-70 percent of fabric every year, it exports two-thirds of yarn output. This means that Vietnam has yarn in excess but not enough fabric.

According to Nguyen Son, deputy chair of the Vietnam Cotton and Spinning Association (VCOSA), one of the reasons behind this is the market management scheme.

The State has policies to help the development of supporting industries, but there is no specific policy designed for the spinning and cotton industry.

He said that state-owned enterprises and foreign-invested enterprises only undertake favorable links in the textile & garment supply chain, while private businesses take difficult work.

However, private businesses are facing difficulties when developing their projects. Most provinces/cities have rejected their projects to open dyeing factories.

As a result, a vicious circle exists in the textile & garment industry: Vietnam makes yarn, exports cotton, then imports fabric and exports garment products.

Vitas, affirming that textile and garment companies are facing difficulties, have made many proposals to the government.

It has asked to amend Decree 60 on the conditions for granting licenses to import printing machines. Under the current regulation, businesses owners must have junior college or higher-level degrees. If not, they have to attend MIC’s training courses majoring in printing to be able to import printers.

The association has also asked to remove the decision on raising the import tariff on polyester from zero to 2 percent, saying that most Vietnamese enterprises have to import the product.

In addition, it had asked Hai Phong City to reconsider port fees to help enterprises cut production costs.

And it has proposed to delay the plan to raise workers’ minimum wage in 2018, saying that it will raise production costs in a labor-intensive industry like textile and garments.

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