A heavy dependence on imported materials has made Vietnameseenterprises lose their competitive advantages and the development ofsupporting industries is expected to be the key to the obstacle and toenhance the competitiveness of businesses and the national economy, theNhan Dan (People) online newspaper has said.
The paper quotedChairman of the Ho Chi Minh City Association of Garment TextileEmbroidery and Knitting (Agtex) Pham Xuan Hong as saying that hiscompany – the Saigon 3 Garment Joint Stock Company - has to import 70percent of materials from foreign countries including 60 percent fromthe Chinese market with fabrics accounting for the most.
Nearlyall domestic garment companies have to import a significant proportionof raw materials from abroad, which is due to the low productioncapacity of domestic firms in the field that results from undiversifiedcategories of fabrics, limited supply of high-end goods and inflexibledelivery times, he noted.
General Director Nguyen Chi Trung ofGia Dinh Shoes Co., Ltd. Shared Hong’s view, saying that almost all offootwear, garment and textile companies in Binh Duong province depend onmaterials supplies from abroad. Gia Dinh Shoes Co for example, has toimport over 10 million USD of materials each year, with 80-90 percentfrom China.
"In fact, domestic suppliers can only offer simplematerials and accessories with less diversified designs and lowerquality than imported goods. Meanwhile, Chinese materials havereasonable prices, diversified categories, flexible payment schedulesand quick delivery. If Vietnamese firms do not import materials, theirleather and footwear products will have to compete fiercely with othersbecause of high prices and an unstable source of supply", Trung said.
Similarly,Protrade Garment Co., Ltd. in Binh Duong province has to import around40–50 million USD worth of fabrics each year, with 85 percent from Chinaand the remainder from Japan.
But domestic industry is notalone. Foreign direct investment (FDI) firms encounter the same problem.For instance, Mei Sheng Textiles Vietnam Co., Ltd. in Ba Ria—Vung Tauprovince specialising in producing yarns, dyed yarns, dyed fabrics andknitted fabrics with an annual capacity of 50,000 tonnes has to importover 90 percent of materials from abroad.
It can be said thattaking the initiative in materials and reducing the dependence onimported sources is an urgent need among Vietnamese enterprises. Despitethe national trade surplus recorded in the last two years and a tradesurplus of 1.6 billion USD in the first five months of this year, theresult comes completely from the FDI sector. The domestic economicsector continues to move into trade deficit.
Experts said thatenterprises are absolutely able to raise the localisation rate of theirproducts, particularly products using popular materials and notrequiring high technology. The question is whether domestic supplierscould meet the requirements of manufacturing enterprises or not.
Accordingto Personnel Director Nguyen Hong Anh of Protrade Garment Co, there areseveral joint venture companies producing garment and textile materialsat industrial zones in Binh Duong but they only produce simplycategories such as zippers, labels and buttons with modest quantity andundiversified models.
Anh said that in the long term, theGovernment should encourage businesses to invest in this supportingindustry by establishing industrial zones specialising in producingmaterials for garment and textile sector in a bid to reduce dependenceon imported materials.
General Director Nguyen Chi Trung saidthat localities have focused on attracting investment at all costs for along time, but have not always taken into account what they wouldprovide for investors in such a value chain. Thus, for many years, thesupporting industries of Vietnam have yet to develop but has mainlyinvolved itself in processing and assembly and faced trade deficit.
Tohelp enterprises ease the dependence on foreign markets, he recommendedthat the Government develop policies to support enterprises in thefield, such as providing low interest rate loans in long time, tax andland lease incentives, free training for workers and so on.
AgtexChairman Pham Xuan Hong also suggested the Government provideinvestment incentives for yarns, dyed fabrics and knitted fabricsindustry to create a stable domestic supply.
The Governmentshould actively invest in developing infrastructure for supportingindustries instead of waiting for investment from enterprises. Inaddition, enterprises in this field need to connect with others to seeksupplies and restrict the dependence on foreign markets, he said.
Onlythe strong development of supporting industries can help domesticenterprises take the initiative in input materials, limiting thedependence on imported sources and improving their competitiveness.-VNA
The paper quotedChairman of the Ho Chi Minh City Association of Garment TextileEmbroidery and Knitting (Agtex) Pham Xuan Hong as saying that hiscompany – the Saigon 3 Garment Joint Stock Company - has to import 70percent of materials from foreign countries including 60 percent fromthe Chinese market with fabrics accounting for the most.
Nearlyall domestic garment companies have to import a significant proportionof raw materials from abroad, which is due to the low productioncapacity of domestic firms in the field that results from undiversifiedcategories of fabrics, limited supply of high-end goods and inflexibledelivery times, he noted.
General Director Nguyen Chi Trung ofGia Dinh Shoes Co., Ltd. Shared Hong’s view, saying that almost all offootwear, garment and textile companies in Binh Duong province depend onmaterials supplies from abroad. Gia Dinh Shoes Co for example, has toimport over 10 million USD of materials each year, with 80-90 percentfrom China.
"In fact, domestic suppliers can only offer simplematerials and accessories with less diversified designs and lowerquality than imported goods. Meanwhile, Chinese materials havereasonable prices, diversified categories, flexible payment schedulesand quick delivery. If Vietnamese firms do not import materials, theirleather and footwear products will have to compete fiercely with othersbecause of high prices and an unstable source of supply", Trung said.
Similarly,Protrade Garment Co., Ltd. in Binh Duong province has to import around40–50 million USD worth of fabrics each year, with 85 percent from Chinaand the remainder from Japan.
But domestic industry is notalone. Foreign direct investment (FDI) firms encounter the same problem.For instance, Mei Sheng Textiles Vietnam Co., Ltd. in Ba Ria—Vung Tauprovince specialising in producing yarns, dyed yarns, dyed fabrics andknitted fabrics with an annual capacity of 50,000 tonnes has to importover 90 percent of materials from abroad.
It can be said thattaking the initiative in materials and reducing the dependence onimported sources is an urgent need among Vietnamese enterprises. Despitethe national trade surplus recorded in the last two years and a tradesurplus of 1.6 billion USD in the first five months of this year, theresult comes completely from the FDI sector. The domestic economicsector continues to move into trade deficit.
Experts said thatenterprises are absolutely able to raise the localisation rate of theirproducts, particularly products using popular materials and notrequiring high technology. The question is whether domestic supplierscould meet the requirements of manufacturing enterprises or not.
Accordingto Personnel Director Nguyen Hong Anh of Protrade Garment Co, there areseveral joint venture companies producing garment and textile materialsat industrial zones in Binh Duong but they only produce simplycategories such as zippers, labels and buttons with modest quantity andundiversified models.
Anh said that in the long term, theGovernment should encourage businesses to invest in this supportingindustry by establishing industrial zones specialising in producingmaterials for garment and textile sector in a bid to reduce dependenceon imported materials.
General Director Nguyen Chi Trung saidthat localities have focused on attracting investment at all costs for along time, but have not always taken into account what they wouldprovide for investors in such a value chain. Thus, for many years, thesupporting industries of Vietnam have yet to develop but has mainlyinvolved itself in processing and assembly and faced trade deficit.
Tohelp enterprises ease the dependence on foreign markets, he recommendedthat the Government develop policies to support enterprises in thefield, such as providing low interest rate loans in long time, tax andland lease incentives, free training for workers and so on.
AgtexChairman Pham Xuan Hong also suggested the Government provideinvestment incentives for yarns, dyed fabrics and knitted fabricsindustry to create a stable domestic supply.
The Governmentshould actively invest in developing infrastructure for supportingindustries instead of waiting for investment from enterprises. Inaddition, enterprises in this field need to connect with others to seeksupplies and restrict the dependence on foreign markets, he said.
Onlythe strong development of supporting industries can help domesticenterprises take the initiative in input materials, limiting thedependence on imported sources and improving their competitiveness.-VNA
