Time is running out for Vietnamese garment, textile and footwear businesses to get prepared to face difficulties and take advantage of the opportunities arising out of the European Union-Vietnam Free Trade Agreement (EVFTA), which may officially come into force in July. The government too needs to continue promoting restructuring and facilitating the adaptation.
Textile stocks in Vietnam witnessed a temporary upswing last month following the ratification of the EVFTA, but textile enterprises continue to face difficulties due to heavy dependence on imported raw materials and machinery as well as reduced demand worldwide.
Vietnam’s textile and garment industry is heavily dependent on imported machinery and raw materials.
EVFTA is opening up a great opportunity for Vietnamese enterprises and many products that Vietnam already exports to this market, including garments and textiles, coffee and footwear, still have a huge room to expand, according to media reports in Vietnam.
The EU is spending nearly $280 billion annually on importing textiles and garments from suppliers across the world, while Vietnam’s market share occupies less than 2 per cent of EU’s total textile and garment imports.
Executive director of Vietnam Textile and Garment Group (Vinatex) Cao Huu Hieu said the country’s textile and garment export turnover to the EU market reached about $4.5 billion in 2019, up 2.23 per cent compared to 2018 figures.
When the EVFTA comes into effect, 42.5 per cent of tariff lines imposed on Vietnam’s textiles and garments will be abolished and the rest will be eliminated after three to seven years.
Chairman of the board of directors of TNG Investment and Trading JSC Nguyen Van Thoi said enterprises who can meet the rules of origin will have great advantages to enjoy tax incentives and boost exports. TNG exports more than $100 million worth of garments to the EU market every year.
The agreement sets very high requirements relating to origin, certification of origin, food safety, information transparency and production environment.
Vice chairman of the Vietnam Textile and Apparel Association (VITAS) Truong Van Cam said although the country can produce yarns, it is yet to meet the requirements set in the new generation FTAs.
The Ministry of Industry and Trade said that mechanisms and policies on the development of supporting industries will continue to be reviewed in accordance with the contents of EVFTA to facilitate sectors that will benefit the most from the agreement.
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