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Vietnamese garment sector likely to face slowdown

05 Oct '11
2 min read

Vietnam Textile and Apparel Association (VITAS) has stated that in spite of witnessing a 28 percent rise in exports during the initial nine months of the current year, growth of the garment industry of the country may decelerate in the coming months.

The Association forewarned that factors like economic slump in the European and the US markets may lead to a significant fall in the country's textile and garment exports, the major revenue generating sectors for the country.

According to VITAS, export orders from the two markets for the month of November are already down by 10 percent.

The Association Chairman, Vu Duc Giang, stated that the US market is the largest importer of garment and textile items from Vietnam, and it is likely to confront several problems due to the tightening of its monetary policy by the Obama administration.

Mr. Giang said the apparel exports from Vietnam have also been impacted due to the financial crunch faced by some of the EU nations during the past few years.

The items which were most badly hit included jackets, with several firms witnessing around 30 percent fall in their order inflow. This has compelled the apparel exporters to shift their focus to other markets including South Korea, Japan, Canada and other Asian countries.

VITAS expects exports to the EU countries to fall by 10-15 percent in the coming months.

The high cost of raw materials is also adding to the difficulties of apparel producers as they need to import around 80-90 percent of their feedstock requirements, Mr. Giang said.

He added that the rise in the minimum wage, which has become effective since October, is also expected to further pressurise the producers-cum-exporters of apparels, as wages constitute 65 percent of their total costs.

In spite of all this difficulties, Mr. Giang avowed that the garment industry would undoubtedly achieve its current year's export target of US$ 13.5 billion, which has been set 10 percent above last year's target.

Fibre2fashion News Desk - India

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