Companies in Vietnam’s garment and textile sector are actively seeking new suppliers of materials to reduce their dependence on imports from China, Cao Anh Dung, Director of Department of Light Industry, Ministry of Industry and Trade, told media persons, reports Viet Nam News.
Reviewing the performance of Vietnam’s economy in the first five months of 2014, Dung said the exports of garments have shown a positive trend, while imports of materials for the garment and textile sector have remained normal.
Vietnam’s fabric production from natural fibre during January-May 2014 was 129 million sq m, registering an increase of 17 percent year-on-year, as per the statistics from the Ministry. However, production in May dropped by 5.4 percent over April figures and was estimated at 27.2 million sq m.
In May 2014, Vietnam exported garments and textiles worth US$ 1.45 billion, showing a decrease of 8 percent compared to April exports. The total exports in the first five months stood at $7.44 billion, up 17 percent year-on-year.
The effect of revised electricity tariff, which has become effective from June 1, would be felt in production and export figures in the coming months.
Meanwhile, the Vietnam Textile and Apparel Association (VITAS) has asked enterprises to explore importing materials from other countries like India, Indonesia, Malaysia, South Korea and Thailand.
Finding material suppliers from countries other than China, which is currently the main supplier to Vietnam, is seen necessary for two reasons. First, is to reduce dependency on China, and second is to prepare for the Trans-Pacific Partnership (TPP) agreement, expected to be signed later this year.
The TPP agreement is likely to apply the yarn-forward principle, wherein fabric and garments made from yarn imported from China, which is not a part of TPP, would not enjoy duty-free benefit for exporting to other TPP-member countries.