Despite explosive export growth, the leather and footwear sector is still in weak productivity

	Leather and footwear sector imports 60% of materials
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	Export of leather and footwear businesses are expected to increase in 2018

In the first nine months, exports of all kinds of footwear were estimated to increase by 10.5% over the same period in 2017. Photo: Nguyen Hue

According to the latest report from the Ministry of Industry and Trade: In the first nine months of 2018, the leather and footwear sector has maintained a relatively stable development. Total manufacturing output was estimated at 202.2 million pairs, up 4.5% and total export turnover of footwear was estimated at US$ 11.7 billion, up 10.5% over the same period in 2017.

Vietnam has now become the third largest exporter of footwear and handbags. Revenue from production and exports of related products also increased rapidly. The signing of a number of trade agreements, such as the Vietnam-EU, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), will open a development opportunity for Vietnam’s footwear sector, especially attracting investment and promoting exports to the EU markets and CPTPP countries.

However, the Ministry of Industry and Trade said that the leather and footwear sector also faced some difficulties such as: labor costs are increasing; Labor productivity per hour in Vietnam is still lower than that in other regional countries. Similar to the garment and textile sector, the industrial revolution 4.0 will also affect the leather and footwear enterprises with the trend of investing in modern equipment and reducing labor.

According to the Ministry of Industry and Trade: The constraints on productivity related to equipment of Vietnamese enterprises are a disadvantage that needs to be overcome soon, especially in the context of the high potential of shifting the production of the leather and footwear sector from China to Vietnam after the US-China trade war.

In this regard, Nguyen Duc Thuan, Chairman of Vietnam Leather, Footwear and Handbag Association (Lefaso) stated: "In 2018 as well as in the future, footwear and handbag enterprises will face the fierce competition of enterprises in the same sector in the world. To this date, the countries in the world are calculating labor productivity by hour. According to this calculation, the productivity of Vietnamese enterprises is about 0.6-0.7 pairs / hour, while enterprises applying advanced technology and machinery have reached 1.2 pairs / hour " .

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han Thi Thanh Xuan, Vice President and General Secretary of Lefaso, added: "If we apply management methods and technology to solve the problem of labor productivity, the footwear is expected to grow by 1.5-2 times compared to the present. This process will help enterprise replace a part of labor and improve product quality as well as control the uniformity of the products. Although investment will be quite costly, but to ensure long-term, sustainable development, the enterprises also need consideration and give appropriate investment.