TPP – a push for garment sector’s sustainable development

The Trans-Pacific Partnership (TPP) Agreement, expected to be signed soon, will serve as a push for the Vietnamese garment sector’s growth and sustainable development, said a senior official in the industry.

In a recent interview granted to Vietnam News Agency on this issue, Le Tien Truong, Vice Chairman of the Vietnam Textile and Apparel Association (VITAS), said experts at many seminars affirmed that the garment sector, with its international competitiveness, will benefit much from free trade agreements (FTAs) in general and the TPP in particular.


This is also the main reason for garments to be considered a top priority in TPP talks, he said.


According to statistics, in 2012, the textile sector earned 17.2 billion USD from exports and made up over 15 percent of the country’s total export turnover. The 2013 respective figures were estimated at over 20 billion USD and 17 percent.


TPP countries now account for nearly 60 percent of Vietnam ‘s total garment export value. Of them, the US makes up 43 percent, Japan 11 percent, and the others 4 percent. In 2012 alone, Vietnam exported nearly 11 billion USD worth of garment products to these nations.


Therefore, it can be said that the TPP countries are the most important markets of Vietnamese garments, both at present and in the future, Truong stressed.


According to him, at present, there are about 6,000 garment businesses in Vietnam . Most of those are interested in the TPP negotiations relating to their industry, especially regulations on origin and tariff barriers.


Although Vietnam ‘s garment export turnover may surpass 20 billion USD before the signing of TPP, the country spends less than 10 billion USD on materials, which is not attractive to businesses that hope to invest in material production, he said.


To boost the material production and raise the rate of locally made products, one of the prerequisite factors is to increase export scale, he noted.


Regarding opportunities for local textile producers, the VITAS official said that if the TPP helps promote material investment, the sector’s norms on trade surplus, added value and rate of locally made products will be improved.


The industry expects to fulfil its target of reaching the locally made rate of 60 percent by 2015 and 70 percent by 2020, he said.


Truong said that when Vietnam joins the TPP, textile businesses will face three major challenges, including pressure on tax reduction, regulations on origin, and foreign investors’ rapid and strong investment trend.


Therefore, VITAS recommends that enterprises should make preparations to link more closely with the supply chain and avoid being overly defensive and so failing to take advantage of the preferential tariffs offered by the TPP, he said.


They must form a close and responsible supply chain to build its competitiveness with the aim of adding momentum to the garment industry’s sustainable growth, he added.


Furthermore, businesses should not consider the TPP as the end for long-term development but take this chance to boost their sustainable development and accumulate resources for improving competitiveness, Truong advised.-VNA




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