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Vietnamese textile firms propose wage freeze
27
Jul '16
The Vietnam Textile and Apparel Association (VITAS) has proposed that the Government freeze minimum wage in 2017 and only increase it once every two or three years to create favourable conditions so that textile and garment companies remain competitive.

The suggestion by VITAS was made a conference in Hanoi where speakers underlined that Vietnamese textile and garment enterprises are at risk of missing their export target for 2016 due to reduced competitive ability and lack of export orders.

The minimum wage, which has risen an average 26.4 per cent per year for local enterprises and 18.1 per cent each year for enterprises with foreign investment in the period of 2008-16, is a major factor that is eroding Vietnam's competitiveness, according to Vitas.

The increases in minimum wage also entail increased payments of insurance and union dues, further burdening enterprises, it said.

Truong Van C?m, Deputy Chairman of VITAS also pointed out that Vietnam's currency has remained stable against the dollar while competitors in textile and garment sector such as India, Bangladesh, ASEAN countries and China, have devalued their currencies, increasing their export competitiveness.

High interest rates on bank loans ranging between 8 to 10 per cent, also make capital more expensive for local enterprises, he said.

VITAS reported that Vietnam's garment and textile export value in the first half of this year reached $12.6 billion, an increase of 4.72 per cent over the same period last year, accounting for 41 per cent of the sector's annual target for 2016.

The growth in the industry's export value was largely attributed to foreign direct investment (FDI) firms, while local firms had difficulties getting new export contracts, especially orders for shirts, trousers and jackets, VITAS said.

It warned that the lack of export orders could worsen and many small- and medium-sized firms may have to shut down. VITAS predicted the industry might earn only $29 billion from exports this year, $2 billion less that the target, if the situation does not improve.

Other experts at the conference also urged local textile and garment firms to invest in modern technology for the production of yarn and fabric.

Local textile and garment enterprises also proposed reducing the frequency and time it takes to check garment materials for customs clearance as a means to increase production and competitiveness. (SH)

Fibre2Fashion News Desk – India

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