Vietnam’s underdeveloped fabric production is making it tough for textile and garment companies to reap adequate benefits from free trade agreements, including the European Union-Vietnam Free Trade Agreement (EVFTA).
The domestic fabric industry manufactures around 2.3 billion metres of fabric a year, meeting only a quarter of the country’s demand.
Fabric Import Dependency Challenges Vietnam’s Garment Exports
Vietnam imports more than 7 billion metres of fabric material from China, Taiwan and South Korea for production and export. The textile and garment industry exports nearly $40 billion worth of products and requires around 10 billion metres of fabric each year.
Domestic materials used by textile and garment businesses in Vietnam comprises only about 40-45 per cent of the total materials, according to the ministry of industry and trade.
In 2019, Vietnam imported around $13 billion worth of fabric for the textile and garment industry. The amount of fabric produced in the country is often used to make low or medium quality apparel, and typically does not meet the requirements of exporters, according to a report in a Vietnamese newspaper.
According to minister of industry and trade Tran Tuan Anh, the country’s production of cotton, fibres and dyes does not satisfy the textile and garment industry’s demand.
Not enough attention is being given to dyeing technology and environmental protection to develop the textile dyeing industry, so businesses are reluctant to invest in textile production or form start-ups in fashion design.
Vietnam’s textile and garment industry focuses mostly on manufacturing, with low added value. Truong Van Cam, deputy chairman of the Vietnam Textile and Apparel Association, said that due to the lack of fabric materials, FTA rules of origin make it harder for businesses to use their values.
Investment in fabric production has faced challenges including a lack of funds and expensive technologies. As a result, while the textile and garment industry has seen exports rise over the years, imports of fabric materials have also risen.
An investment of around $30 billion is needed for the industry to be able to produce the remaining 8 billion metres of fabric, according to the association.
