Illustrative image (Source: sggp.org.vn) HCM City (VNA) - Vietnamese textile and garment companies should focus more on developing theirsupply chain to enable them to capitalise on opportunities arising from freetrade agreements, a panel discussion heard in HCM City this week.
Many foreign investorshave been attracted to Vietnam, especially after the recent signing of freetrade agreements, including the EU-Vietnam FTA, Pham Xuan Hong, Chairman of theHCM City Association of Garment Textile Embroidery and Knitting, said.
The delegates agreedthat FTAs bring opportunities but also challenges and risks for Vietnamesecompanies.
Oliver Massmann, GeneralDirector of Duane Morris LLC and Chairman of legal sector committee of theEuropean Chamber of Commerce in Vietnam, said the so-called fabric-forward ruleof origin under the EU-Vietnam FTA is a challenge for Vietnamese garment andtextile companies.
Vietnam depends onimported raw materials from China and the Republic Korea, and the sector doesnot create much value addition in the supply chain since it merely does lowvalue-added work such as cut-make-trim services to transform fabric intogarments to export, he said.
“A domestic supply chainmust be established.”
Yarn production must nowgo together with weaving and dyeing, but environmental protection must beensured, he said.
The FTAs would result inmore foreign investment in Vietnam in untapped parts of the value chain, andlocal companies would benefit from the expertise of foreign experts, he said.
Hong said: “Thus far ourgarment and textile sector has just been doing outsourcing. We were competingthrough low labour costs, but this is no longer an advantage. We must createnew momentum to compete.”
Having reliable rawmaterial sources at home and investment in technology would help create valuefor the sector, he said.
“Whether we have the TPPor not, the sector will develop as it has for many years.”
The EU, the secondlargest export market for Vietnamese garments and textiles, offers greatopportunities for Vietnamese firms to boost exports, he said.
Enterprises in thesector have mapped out measures hoping to enjoy better growth next year and inthe years to come, he said.
Richard Hong, CEO of TUVSUV ASEAN, said the Vietnamese food and garment industries have depended longenough on cheap labour and low costs, and “we need to invest in innovation,quality and food safety.”
Sathish Kumar Somuraj, GeneralDirector of TUVSUD Vietnam, said: “Vietnam has increased its businessopportunities through FTAs with certain main global markets, especially the EU,the US, Japan, the RoK, and ASEAN. These agreements will not only bring globalmarket access to Vietnamese businesses, it also means Vietnamese manufacturersare expected to comply with more stringent quality and safety regulations.”
TUVSUD and AGTEK have joined hands to help local manufacturers access globalmarkets by offering training and other activities to provide them with anupdated and more in-depth understanding of the stringent internationalquality and safety standards.
The panel discussion,titled “How Will Free Trade Agreements Affect Commodity Business Landscape in Vietnam?”,was among events held to celebrate TUDSUD’s 150th anniversary.
The company is one ofthe world’s leading service providers in testing, inspection, audit andcertification.
In future it wouldpartner with local companies, especially in the garment textile andfood-related industries, to help them gain confidence in their product qualityso that they can maximise the potential benefits offered by FTAs, Somuraj said.
Hong said Vietnam’sgarment and textile exports are expected to increase by only 5.5 percent thisyear to 28.5 billion USD.-VNA
Many foreign investorshave been attracted to Vietnam, especially after the recent signing of freetrade agreements, including the EU-Vietnam FTA, Pham Xuan Hong, Chairman of theHCM City Association of Garment Textile Embroidery and Knitting, said.
The delegates agreedthat FTAs bring opportunities but also challenges and risks for Vietnamesecompanies.
Oliver Massmann, GeneralDirector of Duane Morris LLC and Chairman of legal sector committee of theEuropean Chamber of Commerce in Vietnam, said the so-called fabric-forward ruleof origin under the EU-Vietnam FTA is a challenge for Vietnamese garment andtextile companies.
Vietnam depends onimported raw materials from China and the Republic Korea, and the sector doesnot create much value addition in the supply chain since it merely does lowvalue-added work such as cut-make-trim services to transform fabric intogarments to export, he said.
“A domestic supply chainmust be established.”
Yarn production must nowgo together with weaving and dyeing, but environmental protection must beensured, he said.
The FTAs would result inmore foreign investment in Vietnam in untapped parts of the value chain, andlocal companies would benefit from the expertise of foreign experts, he said.
Hong said: “Thus far ourgarment and textile sector has just been doing outsourcing. We were competingthrough low labour costs, but this is no longer an advantage. We must createnew momentum to compete.”
Having reliable rawmaterial sources at home and investment in technology would help create valuefor the sector, he said.
“Whether we have the TPPor not, the sector will develop as it has for many years.”
The EU, the secondlargest export market for Vietnamese garments and textiles, offers greatopportunities for Vietnamese firms to boost exports, he said.
Enterprises in thesector have mapped out measures hoping to enjoy better growth next year and inthe years to come, he said.
Richard Hong, CEO of TUVSUV ASEAN, said the Vietnamese food and garment industries have depended longenough on cheap labour and low costs, and “we need to invest in innovation,quality and food safety.”
Sathish Kumar Somuraj, GeneralDirector of TUVSUD Vietnam, said: “Vietnam has increased its businessopportunities through FTAs with certain main global markets, especially the EU,the US, Japan, the RoK, and ASEAN. These agreements will not only bring globalmarket access to Vietnamese businesses, it also means Vietnamese manufacturersare expected to comply with more stringent quality and safety regulations.”
TUVSUD and AGTEK have joined hands to help local manufacturers access globalmarkets by offering training and other activities to provide them with anupdated and more in-depth understanding of the stringent internationalquality and safety standards.
The panel discussion,titled “How Will Free Trade Agreements Affect Commodity Business Landscape in Vietnam?”,was among events held to celebrate TUDSUD’s 150th anniversary.
The company is one ofthe world’s leading service providers in testing, inspection, audit andcertification.
In future it wouldpartner with local companies, especially in the garment textile andfood-related industries, to help them gain confidence in their product qualityso that they can maximise the potential benefits offered by FTAs, Somuraj said.
Hong said Vietnam’sgarment and textile exports are expected to increase by only 5.5 percent thisyear to 28.5 billion USD.-VNA
VNA
