Once it gets ratified by the participating countries, the TPP will eliminate 18,000 tariffs, and Vietnam will be a huge beneficiary as the relaxation of import duties will provide it with preferential access to US and Japanese markets, among others.
“In particular, the TPP will boost the country's textile industry, with a potential increase in the volume of exports of apparel and footwear by 50 percent in 10 years,” states the report.
In fact, domestic and foreign companies have already been making upstream investments, and moving their factories into Vietnam. These include Vietnam's Vinatex, South Korea's Dong-IL Corp, Japan's Tom's Limited, Taiwan's Forever Glorious, and Chinese companies such as Texhong Textile Group Ltd., Pacific Textiles Holdings Ltd., Esqual Group, Jiangsu Yulun Textile Group and Shenzhou International Group Holdings Ltd.
These investments mean that the Vietnamese apparel industry will not merely be 'cut and sew', but can secure higher added value in the supply chain, according to the report.
Recently, credit rating agency Moody's Analytics has cited Vietnam's low labour costs, improving infrastructure and scale, and wide-ranging reforms – the relaxation of ownership restrictions for public companies, real estate and banks – as vital factors in its favour over China, which currently controls around 35 percent of the US apparel market.
The Vietnamese government has targeted a growth rate of 6.5 to 7 percent in the next five years. However, to make good on its economic objectives, Vietnam has to strengthen its technological capability, institutional capacity and efficiency, and develop local private industrial and service sectors, the report stated. (RKS)
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