Strong supply chain to boost Vietnam's garment sector

17 Apr '12

2 min read

Developing efficient supply chain is the key to raise competitiveness of Vietnamese manufacturing industry, including textiles and garments, officials said at a seminar in HCM City.

The urgent need to develop supply chain for Vietnam's manufacturing industry like textiles and apparels was underscored at a seminar organized by the Ministry of Industry and Trade (MoIT) and the Multilateral Trade Assistance Project III (EU-Vietnam MUTRAP III).

Speaking at the seminar, MoIT's Multilateral Trade Policy Department's Deputy Director General, Le Trieu Dung, said there is an urgent need to upgrade the raw material supply chain to raise the value propositions of key export sectors.

An improved supply chain would prove helpful during the Free Trade Agreement discussions to be held with the EU. Also, it would prove to be important for already existing FTAs with Korea, India, Japan, New Zealand and China.

Around 90-95 percent of the value addition in the manufacturing sector is done by the supply chain, which includes raw inputs, designs, manufacturing, research and the support industry. Assembling of the finished goods meagerly contributes 5-10 percent in the value chain.

Dang Phuong Dung, General Secretary of Vietnam Textile and Apparel Association (VITAS), said heavy dependence on imported raw inputs is one of the reasons behind fragility of the textile and apparel manufacturing industry supply chain.

Elucidating this, she said that hardly 10 percent of the raw inputs used by the Vietnamese textile and apparel manufacturing industry are sourced domestically.

For example, Vietnam presently consumes around 400,000 tons of cotton per year, however, only 3,000 tons of this is supplied by the domestic supply chain, while the rest is imported.

Majority of the machines, chemicals and dyes used by Vietnamese textile and apparel industry are also imported, which gives rise to an ineffective supply chain. Also, there are lack of adequate linkages to facilitate distribution and retail network.

Ms. Dung said high export turnover would fail to add much value, in the absence of an effective supply chain and hence she stressed on the need for taking urgent steps to strengthen the raw material value chain of Vietnamese textile and clothing industry.

Fibre2fashion News Desk - India

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