Lifting of trade barriers by Japan succor for garment exports

30 Dec '08

2 min read

Vietnam, was riding on a high wave of growth in its textile and garment industry in the last few years and clocking up to nearly 20 percent growth rates annually. Looking at the exponential pace of growth, the government too set stiff targets, which till a few months back seemed achievable.

But the clock has tuned back for the once set to emerge as the second biggest exporters of garments and textiles to the US. The economic meltdown and the resultant global recessionary trends have put brakes on the Vietnamese textile and garment exports juggernaut.

According to one of the major industry association body of the country, the Garment, Textile, Embroidery and Knitting Association (AGTEK) in HCM city, export growth is projected to slowdown in 2009 and added by saying that shipments would be affected the most to countries like US, Japan, France and Spain.

But at the same time they optimistically expected the markets of Northern Europe and Switzerland to remain stable. Though December is considered a peak buying season across the globe, buyers had cut back on orders and even were not lifting the manufactured products according to the association.

Orders, normally to be completed in the first half of 2009, have still not been received from the buyers by the domestic manufacturers and whatever orders are trickling in, are just a small percentage of what they would have received in normal times. The second biggest headache is the delayed payments from the importers.

This is proving to be a bottleneck for the sector as they are not able to cough more resources due to the ongoing credit squeeze in the markets. The matter has come to such a head that it has now become a question of surviving through the crisis for which no one is willing to predict the end.

To survive through the crisis, the association bodies have suggested several measures to the government like lowering income tax slabs and extending tax payment deadlines along with lowering the labour union fees from two percent to one percent. The bodies have requested to immediately announce a stimulus package.

The only saving grace or succor is the lifting of tariff barriers on exports to Japan from Vietnam from December 1, 2008. Exports from Vietnam will attract zero percent duty subject to the raw material origins being from either Vietnam or the countries of the ASEAN.

Fibre2fashion News Desk - India

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