Import and Export

In short, the textile and garment sector has made a remarkable contribution to the economic development of Vietnam. With nearly 2 million people involved in 2006, the industry contributed 8,2% to Vietnam’s industrial value, and 5 billion USD or 16,5% of the country’s export turnover, and this figure has been growing since. In table 1 an overview of the growth of the textile and garment export of Vietnam is given. The textile and garment industry still depends heavily on imported materials and accessories. Investment policies to boost production of materials and accessories have faced with many obstacles because the localities do not set aside land for the textile and garment industry or require an expensive wastewater treatment system.

Textiles and garment products is one of the most important sectors for Vietnamese export and outsourcing of production. Vietnam’s apparel exports are estimated to have risen 22.3% from a year earlier to $9.1 billion in the ten months of 2010, according to the General Statistics Office. In October, the country exported $1.1 billion worth of apparel products (+39.1% - and up more than 7.2% just against Sept.) In the ten-month period from January to October this year, the country has imported $4.35 billion worth of cloth (+26.5%), $2.13 billion of apparel and footwear materials and accessories (+37.1%), $905 million of fiber (+41.6%), and $554 million of cotton (+77.4%). Earlier, the Vietnam Textile and Apparel Association (VITAS) forecast the sector would finish its full-year export target of $10.5 billion by November. VITAS also predicted the apparel export turnover will hit roughly $1.5 billion monthly in this year’s remaining quarter (GSO Oct 26).

September was the third consecutive month the industry fetched more than $1 billion from exports, bringing the sector’s total export value in the first nine months of this year to more than

$8 billion, a year-on-year increase of 20.6 per cent, according to the General Statistics Office. Vice chairman of the Vietnam Textile and Apparel Association (VITAS) Le Van Dao said many garment exporters had orders for the end of this year and even for the beginning of next year. Le Van Dao Dao estimated that the industry would earn more than $1 billion each month in the fourth quarter. This sector holds promising opportunities and posts an export turnover of 9 billion USD in the first nine months of this year, the sector continued taking the lead amongst export staples since the beginning of 2009.

Export growth since 2001 has been steep. It was particularly strong in 2003 at 33% and in 2002 at 40%, but growth slowed in 2005 to just 10%. This was due mainly to the fact that quotas restricting imports from other Asian countries were eliminated at the beginning of the year, but imports from Vietnam into the USA ‐ Vietnam's largest export market ‐ were still subject to quotas. US retail buyers therefore turned to countries such as China and India for their clothing. In 2006, however, the USA implemented safeguard quotas on several categories of Chinese textiles

and clothing, with the result that buyers returned to Vietnam. As a result, Vietnamese exports soared by 20,6% to USD 5.834 million. As mentioned before Vietnam joined the WTO in 2007, and the USA was obliged to remove all quotas on textile and clothing imports from the country. The removal of quotas boosted US demand for Vietnamese clothing, especially for lower‐end products.

In Table 2 an overview is given of the expert divided to several markets: EU, US, Japan, or other countries.

Vietnam plans to double the value of its textile and garment exports from USD 4.8 billion in 2005 to USD 10 billion, according to a new report by Textiles Intelligence. At the same time it hopes to double the number of people working in the industry from 2 million to 4 million workers. Vietnam’s textile and garment industry plans to achieve these targets by streamlining production and thereby reducing unit costs to boost international competitiveness. These 2010 goals will certainly be reached at the end of this year. With a current workforce of 4,1 million and an export of already 9,1 billion this year, these goals have proved that the Vietnamese textile and garment industry has been able to grow rapidly despite enhanced global competition and a the devastating financial crisis.

Key markets are still markets with high purchasing power such as United State, EU, Canada, Japan, Korea, Australia and retail markets which play a role as shopping centres in the region such as Hong Kong, Singapore, Sweden, and England. The key markets include EU, where the annual import demand in recent years has been about USD180 billion, the export of Vietnam in 2008 to EU only is accounted for 1% of its import value, Vietnam is striving to raise this rate to 1.4% by 2010 (equal to USD 2.2 billion of the value). In 2008 EU abolished textile quota for China, this had substantial impacts on the Vietnamese textile and garment export to this market. Vietnam and other countries have to be in a fierce competition with the Chinese textile sector which has strong competitiveness, available materials and accessories and ability to meet various types of goods ranks.

Table 1: Vietnam's Textile and Apparel Export to EU in 1st Quarter 2010

Market 1st Quarter 2010 (USD) 1st Quarter 2009 (USD) 2010/2009 (%)

EU 324253733 336226258 -3.56

Germany 84772254 91191473 -7.04

England 54627306 51520129 6.03

Spain 50234429 54754419 -8.26

Netherlands 30747441 29901591 2.83

France 22138113 23478366 -5.71

Italia 18943091 22234843 -14.80

Belgium 18001411 14153122 27.19

Sweden 8816870 7520449 17.24

Czech Rep. 7392200 10599413 -30.26

Denmark 6557544 7008146 -6.43

Poland 4391504 4565824 -3.82

Luxembourg 3967044 548460 623.31

Ireland 3512448 2041737 72.03

Austria 2520380 3570721 -29.42

(Source: www.vietnamtextile.org):

Table 2: EU Clothing Imports in First Quarter 2010

ra 22,394,666 20,883,410 20,444,168 -2.1 44,743,813,617 41,243,743,404 39,737,574,860 -3.65 1997.97 1974.95 1943.71 -1.58 China 9,952,322 10,016,666 10,190,546 1.74 17,127,732,618 18,094,721,717 17,391,473,035 -3.89 1720.98 1806.46 1706.63 -5.53 Turkey 2,175,400 1,856,240 1,918,339 3.35 6,528,369,119 4,955,167,175 5,291,257,046 6.78 3001 2669.46 2758.25 3.33 Banglade

sh 2,817,384 2,925,426 2,778,762 -5.01 3,400,135,164 3,704,326,915 3,368,954,446 -9.05 1206.84 1266.25 1212.39 -4.25 India 1,409,092 1,472,660 1,383,622 -6.05 3,514,604,166 3,350,431,107 3,219,335,540 -3.91 2494.23 2275.09 2326.74 2.27 Tuynisia 529,022 448,506 418,954 -6.59 2,113,028,645 1,612,916,771 1,672,585,979 3.7 3994.22 3596.2 3992.29 11.01 Morocco 577,564 505,552 466,785 -7.67 1,894,778,112 1,458,728,045 1,388,126,702 -4.84 3280.64 2885.42 2973.8 3.06 Vietnam 749,660 466,678 412,172 -11.68 922,771,008 849,539,641 821,503,616 -3.3 1230.92 1820.4 1993.11 9.49 Sri Lanka 355,880 343,334 353,461 2.95 820,659,605 828,400,669 798,976,534 -3.55 2306 2412.81 2260.44 -6.32 Indonesi

a 395,794 342,312 288,266 -15.79 862,065,376 810,433,771 654,374,317 -19.26 2178.07 2367.53 2270.04 -4.12 Pakistan 567,080 586,066 565,145 -3.57 665,860,091 645,488,165 616,811,579 -4.44 1174.19 1101.39 1091.42 -0.91 Thailand 279,206 202,752 189,455 -6.56 601,820,345 531,600,635 493,076,903 -7.25 2155.47 2621.93 2602.61 -0.74 Switzerla

nd 27,964 26,582 21,869 -17.73 506,527,791 428,009,716 374,593,750 -12.48 18113.57 16101.49 17128.98 6.38 Macedon

ia 122,478 104,674 93,604 -10.58 392,712,203 304,644,875 300,369,545 -1.4 3206.39 2910.42 3208.94 10.26 Egypt 181,562 169,882 127,535 -24.93 367,383,962 335,738,592 285,320,483 -15.02 2023.46 1976.3 2237.19 13.2 Hongkon

g 386,776 102,966 105,410 2.37 1,066,570,801 363,809,037 283,558,290 -22.06 2757.59 3533.29 2690.05 -23.87 Cambodi

a 190,330 180,482 158,980 -11.91 354,716,911 327,054,671 278,523,093 -14.84 1863.69 1812.12 1751.94 -3.32 Unite

States 47,534 63,084 55,062 -12.72 269,659,417 265,800,789 254,347,452 -4.31 5672.98 4213.44 4619.29 9.63

Mauritius 110,294 95,690 82,260 -14.03 314,168,742 257,727,535 235,625,783 -8.58 2848.47 2693.36 2864.4 6.35 Croatia 54,092 45,792 43,498 -5.01 269,090,287 207,868,621 213,915,584 2.91 4974.68 4539.41 4917.83 8.34 Ukraine 99,884 66,738 63,193 -5.31 278,227,590 178,628,759 175,574,836 -1.71 2785.51 2676.57 2778.39 3.8

Q1 08 Q1 09 Q1 10 Suppliers

Volume (100 Kg) Value (USD) Unit Price (USD/ 100kg)

Q1 08 Q1 09 Q1 10 Q1 08 Q1 09 Q1 10

(Source: www.vietnamtextile.org)

Over the past nine months, exports to the big markets have recorded high growth. Exports to the US increased 22.1 per cent to $3.94 billion, while the export to the EU and Japan rose 6.7 per cent and 14.3 per cent to $1.18 billion and $691 million. Exports to North Korea surged 64 per cent thanks to the impact of its Free Trade Agreement with ASEAN.

However, Pham Xuan Hong, VITAS deputy chairman, said the garment industry was facing a shortage of labour and an increase in the price of transport and power. A surge in the price of cotton on the world market also had a negative impact on the industry. A tonne of cotton has risen 45 per cent since the same period last year to $1,900-2,000 while the industry has to import up to 95 per cent of its cotton. The industry imported 260,000 tonnes of cotton in the first nine months of the year and estimates that figure will reach roughly 370,000 tonnes by the end of the year.

Hong said garment exporters were seeking new sources from Japan and ASEAN countries in order to enjoy preferential taxes.

To fulfil the target of $19 billion from exports by 2015 and $25 billion by 2020, the garment sector is actively implementing programmes related to cotton cultivation to increase domestic supplies and develop human resources to meet the increasing demands of the sector. The sector is also promoting its trademark and setting up distribution networks nationwide to take a firm foothold in the domestic market.

3.3. Main players in business and manufacture of the textile and garment industry in