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Textile industry in dire need of raw material trading centers
21
Jul '08
Ever since 2004, Vietnam National Textile and Apparel Group (VINATEX) is planning to build two material trading centers in Hanoi and Ho Chi Minh City (HCM). However, due to certain clearance problems in land acquisition, especially in HCM, the scheme is being delayed for an indefinite period.

Presently the textile industry is vexed over soaring prices of the raw material and its inability to cope with the situation.

Southern Vietnam textile industry in particular, is in dire need of this material center which can help its companies become more independent and active.

A total of five hectares in Thu Duc District was allocated to VINATEX for setting up this raw textile material trading center. The Association, however, reported that land transfer procedures had been stalled despite approval of the Government authorities because the area was identified by the Department of Transportation and Public Works as a zone for waste management project.

Prices of the raw material have mounted by 20 percent on an average in the first half of this year requiring the textile and garment industry to desperately increase its supply of raw materials. As many as 2,500 companies import raw materials for half of their contracts and this is because there is not even one raw material processing center in the south from where about 1,500 textile companies operate.

Having a raw material trading center is quintessential because it provides a venue where local textile and garment manufacturers can buy domestic and international supplies of raw material at a reasonable rate. This arrangement would not only facilitate growth of the Vietnamese textile industry but will also help garment firms to move away from less profitable outsourcing contracts.

Experts believe that the textile and apparel enterprises must also lessen the dependence on imported raw material to ease out the pressure of rising costs. Industrial sources confirmed Fibre2fashion that recently, Saigon 2 Garment Joint Stock Company transformed one of its factories in Tan Binh District to a raw materials processing and trading center. After its launch, a large number of Chinese suppliers have offered their products for local manufacturing firms. In fact, now, raw material providers from Thailand and Indonesia have also been invited to trade their products in Vietnam.

However, this center is not big enough to serve the entire southern region which is why some other centers were being planned.

US purchases about 50 percent of Vietnam's exported textile and garment products while EU and Japan buys 17 and 8 percent respectively, of the remaining. The country aims to export goods worth US $9.5 billion to US but this would be next to impossible if domestic companies still imported 70 percent of the required raw material.

Fibre2fashion News Desk - Vietnam

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