Export of garments up by 17.1 percent

04 Jun '10

2 min read

According to Pham Xuan Hong, Deputy Chairman, Viet Nam Textile and Apparel Association (Vitas), the country's garment exports have increased by 17.1 percent during the first five months of the year, as compared to the corresponding period last year, registering US $3.8 billion.

In order to meet the industry's yearly export target of $10.5 billion, the industry will have to generate a monthly export turnover of atleast $1 billion for the remaining year. Currently, the industry's biggest challenge was the dearth of workforce that has lead to a 10 percent downfall in its manufacturing capabilities.

As of now, the apparel workforce is earning about VND 4 million ($200) per month. Although there was a 10-20 percent increase in the prices of overseas sales of goods in 2009, firms are yet pressed to surge worker's salary by 10 percent, so as to hold on to them. Firms are currently facing difficult times to continue to maintain workforce at such low salaries.

With the sudden steep increase in the prices of raw materials, the export prices, which rose by around 5-7 percent during the late 2009, are also unable to cover costs. Almost 90 percent of the raw material utilised by Vietnam's garment industry are bought from foreign countries.

After India decided to stop cotton exports, the cotton prices have increased from $1.3-1.4 per kilogram, as recorded early this year, to $1.9 per kilogram. The price has grown by 34.3 percent as against the same period in 2009.

The surge in prices of raw materials has also lead to a steep increase in material import revenues. As per the General Statistics Office, during the first five months of the current fiscal, the industry used up $269 million on cotton imports, an increase by 154.2 percent over the corresponding period, last year.

In addition, the figures for fabric and fibre were $427 million and $2.02 billion, respectively, a hike of 54.6 percent and 23.9 percent, respectively, over the corresponding period, last year.

Import cost for materials and accessories, utilised in the garment and footwear firms have also touched $1.01 billion, an increase by 31.7 percent, year-on-year. Despite hike of input materials costs, Vietnamese exporters have failed to re-negotiate export prices as they have inked deals with buyers.

Fibre2Fashion News Desk - India

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