Vietnam Daily News

Textiles and garments enjoy $6.5b surplus

Written by Dailynews.vn Saturday, 10 December 2011 19:16

With export turnover expected to top $13.8 billion this year, the textile and garment sector remains the country's top earner, Le Tien Truong, deputy chair of the Vietnam Textile and Apparel Association, told Tuoi Tre.

Truong said that, even though the country's trade gap has widened and raw material prices have fluctuated wildly, the sector managed to reap a trade surplus of $6.5 billion this year, $1.5 billion more than last year.

"The localisation ratio of the textile and garment sector has also risen by 2 percentage points year-on-year, to 48 percent," he said. This ratio indicates the percentage of materials used by textile and garment companies that are produced locally.

He said the lucrative operation of the sector is the result of well-conducted market forecasts and efficient investment and production, adding that local exporters have also managed to win the trust of international partners and customers.

However, Truong added that the sector is concerned that it may not be able to maintain such high growth next year, since its main export markets - the US, the EU, and Japan, which account for nearly 80 percent of total export volume - all face serious economic problems.

"Textile and garment exports will face many challenges next year thanks to the global economic slowdown, especially the ongoing European debt crisis," he said.

As for the domestic market, he said high inflation remains the main obstacle for the textile and garment businesses.

Though the government is aiming to keep inflation below 10 percent next year, the rate is still high enough to threaten businesses operations, he said.

"Certain costs such as power, water, fuel, and labour wages will continue to rise, negatively affecting the sector's operation and growth," he said, adding that capital will be the next challenge.

"Most businesses have endured capital shortages in order to maintain production.

"Moreover, although lending interest rates have dropped to around 16-19 percent a year, not many businesses will be able to access these sources of capital."

Truong said the sector has targeted a $15 billion export turnover in 2012, which would be a 12-percent rise year-on-year.

"To achieve this goal, the sector has to increase its localisation ratio."

Specifically, the sector has to increase the use of polyethylene (PE) fibers provided by Vietnamese businesses, rather than using imported fibers, which would help save $300 million a year, he said.

"Local businesses are also encouraged to use domestically-sourced raw material, equipment, and machinery to save costs."

Source: www.intellasia.net/news/articles/economy/111350312.shtml