Hanoi (VNA) - Domestic firms in the leather and footwear industry lagfar behind their foreign directed investment (FDI) peers as Vietnam cements itsposition as a leading world exporter in the sector, experts said.

Vietnam’sleather and footwear industry posted exports of 8.5 billion USD by July 15, ayear-on-year increase of 10 percent, the General Department of Vietnam Customshas reported.

This figure makes Vietnam fourth largest footwear producer in the world interms of volume, after China, India and Brazil, and the third largest exporterin terms of value after China and Italy.

However, foreign invested firms account for 81 percent of the export value anddomestic firms account for the remaining, according to the Vietnam Leather, Footwear andHandbag Association (Lefaso).

Lefaso attributes the domination of FDI firms to their ability to expandcapacity and build new factories as they prepare to benefit from tax breaksaccorded by several Free Trade Agreements (FTA) that Vietnam has signed.

The association said domestic firms are constrained by capital shortage andmarket access, making it difficult for them to expand production and increasetheir competitiveness. On the other hand, FDI firms are able to build onalready existing advantages of capital, experience, technological superiorityand other factors.

[Vietnam leatherware makers make a mark]

A report in the online baohaiquan.vn (Customs Newspaper) cited experts assaying Vietnamese footwear enterprises have the opportunity to get new ordersbecause China continues cutting investment incentives for textiles and footwearsectors to focus on hi-tech sectors.

However, with the situation tilted strongly towards FDI enterprises, domesticfirms must bring in drastic changes to improve their position by strengtheninginformation linkages, joining associations as well as promotion initiatives ofministries and other agencies.

Lefaso Secretary General Phan Thi Thanh Xuan said the staff of domesticenterprise should be trained to be proactive in marketing and accessinginformation and to respond quickly to orders, instead of passively waiting forcustomers to find them.

Moreover, increasing investment by FDI enterprises should be seen as anopportunity for domestic firms to learn from the former’s experiences. Domesticfirms should also consider cooperating with FDI firms to get orders, Xuan said.

The report on baohaiquan.vn also said that domestic enterprises wantthe Government to support them through the creation of legal corridors,mechanisms and policies to facilitate their operations.

For instance, they need preferential policies on credit, taxes and labour sothat they can reduce operational costs and become more competitive, the reportsaid.-VNA