HCM CITY ?The US has increased Viet Nam? textile and garment quotas by 7 per cent this year and bickering has begun over how those quotas should be allocated.
At a meeting held in HCM City on Tuesday the ministries of Trade and Industry said they had issued a circular creating a new quota system.
Circular 18 envisaged allocation on demand until June 30, Nguyen Duc Thanh, head of the trade ministry? Textile and Apparel Quota Administration Division, explained. In the second half of the year the ministries would allocate the quotas based on export records in the first half, with an eye on ensuring export obligations were met. However, allocations for the first half-year would cease when the threshold of 70 per cent was reached in each category of clothing.
If the 70 per cent limits were not reached by the end of June the ministries would continue with the automatic allocation until they were reached. But this came with a proviso that set off a debate among the officials, over 400 textile and garment manufacturers from southern provinces, and representatives of US importers attending the meeting: the allocations had to be secured by depositing earnest money in banks.
This means a company seeking to get a quota has to deposit in a bank an amount equivalent to the value of the export contract. It can get back the money on execution of the contract.
But most companies at the meeting protested against having to pay these deposits.
"If all businesses paid money to get export quotas, we wonder what will remain of the quotas for automatic allocation to others," Pham Xuan Hong, director general of Sai Gon 3 Garment Company, wanted to know.
Nguyen Duc Hoan, director of HCM City? Song Ngoc Company, pointed out: "All manufacturers will be ready to pay deposits while applying for the automatic quota allocation".
"This will put manufacturers with no export records, like Song Ngoc, at a disadvantage." Most delegates wanted 50 per cent to be reserved for automatic quota allocation; they said the remaining 50 per cent could be allocated against earnest money.
However, representatives of Columbia Sportswear and JC Penney Corporation from the US said manufacturers should be told to pay deposits to cover 100 per cent of their exports.
"This will guarantee they?l deliver their exports to us in time," Tran Trong Thuy of JC Penney said.
Deputy Minister of Industry Bui Xuan Khu said it was difficult to arrive at a measure to please all exporters.
"The trade and industry ministries will continue to consider measures to have the best quota allocation system," he promised.
Viet Nam? textile and garment exports to the US last year were worth US$4.85 billion, an increase of 10 per cent over the previous year. Its target this year is $5.6?5.8 billion.
