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Vietnamese textile and garment industry: difficulties still ahead

With demand decreasing sharply, the textile and garment industry is expected to continue facing difficulties in Q2.

Textile and garment shares prices are fluctuating. From the beginning of the year to April 15, the export value of garment and fiber products decreased by 6 percent and 6.6 percent, respectively, compared with the same period last year.





According to Vitas, since the second half of March, many big clients from the US and the EU have asked Vietnamese enterprises to delay deliveries or cancel contracts.

Therefore, VNDirect Securities believes that textile and garment exports will be more severely affected in Q2 after unsatisfactory business results in Q1.

Its special report on the textile and garment industry’s performance released in May showed that export turnover in Q1 was lower than the 3-year average level and decreased by 7.7 percent in comparison with the same period last year.

Because of the openness of the economy, the interdependence among trading partners, the closure of western economies, and temporary lockdown in Vietnam, exporters have been seriously affected. 

The orders for Vietnam’s textile and garment companies are mostly from developed countries such as the US (50 percent of total export turnover) and the EU (12 percent).

The orders for Vietnam’s textile and garment companies are mostly from developed countries such as the US (50 percent of total export turnover) and the EU (12 percent).

This explains why the US and EU decisions to temporarily close the borders have dealt a strong blow to Vietnam’s textile and garment industry.

In the first half of April, garment exports only brought turnover of $739 million, a decrease of 35.4 percent compared with the same period last year.

While the demand for garments is decreasing dramatically, demand for cloth and medical face masks is soaring. This has partially helped alleviate the adverse impact of the Covid-19 epidemic.

In March alone, Vinatex and its subsidiaries provided 15 million antibacterial face masks, while maintaining production of 35 tons of antibacterial knitted fabric.

According to QY Research, the mask market was valued at $2.9 billion in 2019, and the figure is expected to reach $7.2 billion this year, up by 153.1 percent.

Many textile and garment companies reported revenue and profit decrease for Q1. Thanh Cong Textile and Garment, Investment and Trade (TCM) had VND790 billion in revenue, down by 19.2 percent, and post-tax profit of VND34 billion, down by 20.9 percent. Soi The Ky reported turnover of VND617 billion, up by 1.9 percent, and post-tax profit VND52 billion, up by 0.3 percent.

According to VNDirect, as of April 29, the textile and garment share price had fallen by 10.3 percent compared with the beginning of the year.

In the long term, EVFTA and CPTPP trade agreements will be the supportive factors for textile and garment companies.

Mai Lan 


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