Vietnam's textile and garment exporters don't appear to be as badly off as some in Hong Kong and on the Chinese mainland, with overall exports for 2009 projected at US$9.5 billion, up 5% on last year. But appearances can be deceiving.
The figure presented by the Vietnam Textile and Apparel Association (VITAS) in February - when the Vietnam Leather and Footwear Association (LEFASO) also estimated 12% export growth for the same period - was, in fact, less flattering when the whole trade picture is revealed.
The numbers are said to represent the robust approach of manufacturers based in Hanoi, Ho Chi Minh City and Da Nang to survive through the economic downturn.
But the purchasing power of importing countries continues to drop and the export quotas that had previously limited exports of Indian, Bangladeshi and Chinese mainland products were recently abrogated, putting Vietnamese textile, garment and leather footwear products under higher competitive pressure.
Furthermore, from February 2009, the US Consumer Product Safety Commission is to enforce regulations that require a closer examination of products in the interests of safety. The EU anti-dumping regime on footwear also affects Vietnam's staple exports.
Despite these difficulties, Deputy Prime Minister Hoàng Trung H?i said textile, garment and leather footwear companies should maintain production levels and strengthen their position in their traditional markets while at the same time they should attempt to enter new markets.
More significantly, the Deputy Prime Minister has asked State management authorities to work with companies to help them overcome their difficulties.
Vietnamese garment products are competing fiercely with inexpensive Chinese mainland products and the economic recession has affected spending patterns of potential consumers at home and abroad. As a result, both production output and sales of textiles and garments fell considerably from January 2009 until now.
Vietnamese companies will try to enter new export markets in the Middle East, Eastern Europe and Africa, but so also will companies from Hong Kong, the Chinese mainland and elsewhere.
One strategy suggested to expand sales was be to establish a network of Vietnamese retail clothing stores abroad, something that does not currently exist.
The two associations, VITAS and LEFASO, have asked the Government to provide from its stimulus package some US$286 million to carry out export promotion activities in Africa, Japan, Eastern Europe and South America in the first six months of 2009.
VITAS and LEFASO also asked the Government to issue funds from the State budget to pay half the interest that textile-garment and leather footwear exporters pay banks on all outstanding loans.
Additionally, the two associations asked the Government to suspend value added tax (VAT) on imported equipment or goods required to process textiles, garments and leather footwear for export. And they want the Government to lower the general tax levied on imported equipment.
