To compensate for a drop in export orders due to COVID-19, Vietnam’s local textile and garment businesses are striving to seize opportunities brought about by the EU-Vietnam Free Trade Agreement (EVFTA), says the Vietnam Textile and Apparel Association. Vietnam exported textiles and garments worth $19.2 billion during the first eight months of the year, registering a year-on-year decline of 11.6 %. The number of export orders in the HCM city dropped approximately 25 % in April, and over 30 % in May, with predictions of continued dip during the second half of the year, says the HCM City Association of Garment Textile Embroidery and Knitting.
The complicated nature of COVID-19 pandemic has exerted a range of negative impacts on the sector’s export markets, with global purchasing power in general plummeting, while a series of well-known fashion brands such as Brook Brother, New York & Co, and JCPenny have declared bankruptcy. Currently, local textile and apparel firms need to reach a total of USD 7 billion in export orders to achieve the export turnover target of last year, with the EVFTA offering the best opportunity for local firms to fulfill their goals.
To take full advantage of the trade pact, local businesses must take into consideration key factors such as prices, fast delivery, and tax incentives presented by the EVFTA in order to compete with strong rivals from Bangladesh and Turkey, says the association With regard to rapid delivery requirements, aside from improving logistic capacity, there should be improvements in simplifying administrative procedures and reducing the clearance time faced by export businesses.
Moreover, the domestic textile and garment sector must be proactive to use import materials from countries that have signed FTAs with the nation and the EU, therefore making use of preferential tariffs due to flexible rules of origin stated within the EVFTA.
The industry should also shift to supply high-tech garment and textile products, including protective clothing, sports, and medical equipment.