Export of textiles and footwear: bustling from the beginning of 2018

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Production of leather footwear and handbags at Vien Thinh Footwear Company. Photo: Nguyen Hue.

According to statistics of the General Department of Vietnam Customs, in January 2018, the textiles, garment and footwear export turnover increased sharply over the same period. In particular, textiles and garment export turnover reached US$ 2.49 billion, accounting for 12.3% of the total export turnover of the country, an increase of 15.5% compared to January 2017. In general, the export of Vietnam's textiles and garment to most markets in the first months of the year increased compared to the same period last year, of which the Myanmar market increased by 144.5% to US$ 2.34 million; Egypt market increased by 133% to $ 0.28 million; Turkey market increased by 117.7% to US$ 3.92 million; Ukraine market increased by 104% to US$ 0.42 million; Hungary increased by 100% to US$ 0.15 million.

In big markets, export turnover of textiles and garment industry is quite positive. In particular, export turnover reached US$ 1.19 billion, an increase of nearly 11%; exports to Japan reached US$ 309.53 million, an increase of 22%; exports to Korea reached US$ 255.84 million, an increase of 18.8%; exports to China reached US$ 108.72 million, an increase of 63.8%; and exports to the EU reached US$ 332.74 million, an increase of more than 5.8%.

Ms. Nguyen Thi Tuyet Mai, General Secretary of the Vietnam Textile and Garment Association, said that the export situation of the textile and garment industry in the beginning of 2018 was better than in 2017. By this time, enterprises have orders until the end of June, and some enterprises even have orders to the end of September. Opportunities to increase turnover, expand the market of the textile will be even better if the free trade agreement between Vietnam and the EU is effective soon.

In the first month of 2018, footwear export turnover was quite positive with an export turnover of US$ 1.42 billion, an increase of 21% over the first month of 2017. Export of footwear to most markets increased compared to the same period of 2017. It was notable that exports to India increased by 138.8% to US$ 9.93 million; exports to China increased by 68.8% to US$ 129.55 million, exports to Singapore increased by 67% to US$ 6.55 million, exports to Portugal increased by 58.5% to US$ 0.38 million, exports to Argentina increased by 54.3% to US$ 9.21 million, exports to Taiwan 51.5% to US$ 12.96 million, exports to the US increased by 33.6% to US$ 506 million, and exports to Japan increased by US$ 98.4 million, an increase of 39.6%.

According to the Vietnam Leather, Footwear and Handbag Association, in 2018, leather and footwear industry is likely to be strong because of many favorable factors. Specifically, the Vietnam-EU Free Trade Agreement is expected to be signed in mid-2018. Compared to China -the biggest competitor, Vietnam's footwear products will enjoy tax incentives from 3.5% to 4.2% when exporting to the EU, creating a huge competitive advantage. When EVFTA comes into effect, the tax rate will be 0%, especially sneakers, accounting for two-thirds of total exports to the EU but will not be subject to the 7-year protection level. Similarly, unprotected handbags should be subject to a tax rate of 0%. Rules of origin as GSP (preferential tariff) should be quite favorable. In 2018, the footwear sector set an export target of US$ 20 billion, an increase of 10% compared to 2017. To achieve these goals, the the Vietnam Leather, Footwear and Handbag Association said that the association will intensify the participation in consultancy activities of State agencies in promulgating policies related to production and business activities of enterprises. At the same time, promote the dissemination of State policies and the attraction of domestic and foreign investment for the development of supporting industries for the production of leather and footwear materials, in order to increase the localization rate of the products and maintain the sustainable development.

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However, the general difficulty of the textile, garment and footwear industry is that the input costs are constantly increasing while the outsourcing prices do not increase, thus affecting the enterprises' profits. In order to solve this problem, in the past time, enterprises introduced many cost-saving solutions such as applying lean production and found solutions to strengthen the connection, raising the initiative in raw materials, reducing input costs as well as taking advantage of tax incentives from signed FTAs.