Vietnam’s garment and textile exports have achieved an annual growth rate of 25-30 percent in recent years, earning US$15.6 billion in 2011.
Vietnam’s share is still modest in comparison with the world’s annual apparel consumption of about US$350-400 billion, but there are more opportunities for the country’s garment industry in the near future.
According to trade experts, free trade agreements (FTAs) between Vietnam, ASEAN and other countries and regions, which are in force or under negotiations, are a useful tool for raising the industry’s turnover in the future.
It is clear that the Vietnam-Japan Economic Partnership Agreement, which took effect in late 2009, has opened major opportunities for the country’s growing industry as it regulates to cut all tariffs on apparel products to Japan to zero percent.
In the first six months of this year, Vietnam shipped garment and textiles to Japan worth US$882 million, a rise of 23.8 percent compared to the same period last year, accounting for 13 percent of the industry’s total export turnover.
Similarly, the industry’s exports to the Republic of Korea (RoK) saw strong growth of 50 percent in the first four months of this year, reaching US$380 million thanks to an FTA between ASEAN and the RoK, which came into force in 2010.
The Vietnam-EU FTA, which is under negotiations, is expected to cut tariffs on more than 90 export items, including garment and textiles.
In 2011, Vietnam shipped apparel products worth US$2.4 billion to the EU, accounting for 16 percent of the export share. But the figure was only US$1.12 billion in the first half of this year, down by 3.3 percent year-on-year.
Besides, the Trans-Pacific Partnership Agreement (TPP), which involves Australia, Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam, is also bringing high hopes for Vietnam’s apparel industry to access and expand exports to TPP members, particularly the US – a market consuming one quarter of the global garment and textile products.
The US is Vietnam’s top importer, reaching US$5.1 billion last year and US$3.5 billion in this year’s January-June period.
Le Quoc An, senior advisor to the Vietnam Garment and Textile Association, predicted that Vietnam’s exports to the US in the next five years will double the current figure, if the TPP is signed.
Once the TPP takes effect, Vietnam’s apparel products to the US will enjoy zero percent tariffs compared to the current level of 5-25 percent, increasing advantages of Vietnam’s garment and textiles against other countries.