According to experts, TPP partnership will help Vietnamese textiles to improve the added value of products, and also require enterprises to improve competitiveness, facilitate auxiliary industries.
Heightening and improving product value
Vietnamese market is vast and consists of potential customers to textiles. Vietnam has joined formal international organizations, thus textile export quotas were completely abolished so that enterprises are no longer worried about restricted export.
Economic experts assessed, when textile industry flourishes, enterprises have opportunities to expand their manufacture scale and diversify the supply chain. Accordingly, the positive aspects of the origin rules will encourage businesses to invest in the auxiliary industry and focus on raw materials in order to enjoy the preferential tax rate of TPP, and less depend on raw material imports, especially imports from China. This will help to enhance the added value of exported garment products; facilitate a sustainable growth of this industry.
Besides, TPP would be a prerequisite to accelerate the investment process for the raw material production, which is a capital-intensive phase requiring advanced technologies. In addition, TPP will attract investment flows into Vietnam's textiles. In fact, FDI in domestic textiles has continuously increased in recent years, especially in 2015. Many major projects recently launched in Vietnam focus on producing textile materials and accessories, including dyeing and premium garment. New trends in FDI in Vietnamese textiles are establishing industrial parks exclusively for this industry, rather than merely a single project.
In Binh Duong, textile industry is one out of six key industry of the province. In 2015, provincial textile exports reached 2.09 billion USD, up 11.6% year-on-year, accounting for 9.6% total exports of the province and being ranked second in export turnovers of the province. The main export markets of Binh Duong textiles, like: the US, European Union (EU), South Korea, China, obtained growth from 8-11%. In addition, the successful TPP, FTAs with EU, South Korea, Russia negotiations, will help the industry to enjoy preferential tariffs, expand their export markets among member countries. At present, many large enterprises in the province have signed contracts until the end of 2016.
Nguyen Van Luong, Deputy Director of Vietnam Esquel Garment Manufacturing Company (Thuan An town), said the successful TPP negotiations would help Vietnamese textiles to gain more competitive advantages compared with countries in the region, especially China. The company also has now signed contracts until the end of 2016.
Besides, Binh Duong is planning for auxiliary industry development and forming industries producing raw materials for the textile industry. Binh Duong has attracted one major project in the textiles’ supporting industry. That was a yarn - dyeing conjugated chain project of Vietnam Far Eastern Polytex Company with an investment of 274.2 million USD in Bau Bang industrial park.
Joining TPP will help Vietnam's textiles to improve the added value of products. Photo: Textile production line of tuong Long Textile Company (Song Than II industrial park, Di An town)
Improving competitiveness
According to MSc Ha Lam Oanh, Thu Dau Mot University, Vietnam's textiles is experiencing material limitations as guaranteeing the origin rules and the intense competition with FDI enterprises. Textile industry is expecting benefits from exports as joining TPP. Currently, FDI enterprises are contributing to the fierce competition with domestic enterprises in terms of orders, input materials, labors…Economic experts said as Vietnam joins the TPP, import duty on garments will reduced from 20% to 0%, foreign products will appears more and more on domestic market, and compete fiercely with domestic products.
To enhance competitiveness, make the most advantages from TPP, domestic enterprises should actively improve cooperation with customers through increased production capacity, timely delivery, quality management and performing social responsibilities… Besides, domestic companies must invest more in market research and designing.
According to economic experts, in the current conditions, designing, raw materials supply and trade are able to gain the highest profit for the textiles. To develop efficiently this industry, textile enterprises also need supports from the State; increase exports in the form of FOB; research, design new products with particular characteristics. Companies needs products with high differentiation, must be unique, modern, updates on fashion trends…
Hopefully, when TPP takes effect, benefits that Vietnam enterprises gain will outweigh obstacles.
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TPP is expected to bring many advantages to Vietnamese textiles. However, according to experts, to take full advantage of this opportunity, textile industry must overcome numerous challenges. When Vietnamese enterprises participate in the international integration, competitive ability becomes the most concern of businesses.
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Reported by P.Le , H.H – Translated by Ngoc Huynh