Although some footwear firms have started to produce their own materials recently, they are limited to outsoles, rings, buttons, buckles and boxes. — Photo vov

HCM CITY (Biz Hub) — Taking initiative to develop their own material sources is still beyond most domestic footwear enterprises in HCM City.

Materials for leather and footwear products are mainly imported from mainland China, Taiwan and South Korea.

Although some footwear firms have started to produce their own materials in recent years, they are limited to outsoles, rings, buttons, buckles and boxes.

Important materials like leather and imitation leather are still imported due to limitations within the domestic leather sector, which cannot meet domestic demand or quality standards.

The Ministry of Industry and Trade's Industrial Policy and Strategy Institute carried out a survey on the domesticalisation ratio of support industries in the city last year.

The rate of leather and footwear support products for adults was around 38 per cent.

According to Nguyen Van Khanh, general secretary of HCM City's Leather Shoes Association, Vietnamese enterprises were mainly small and medium- sized with limited resources, so it was difficult for them to invest in this field.

There are about 10 leather tanning enterprises in Viet Nam but these only could serve the demands of the domestic market, said Khanh.

A lack of clear standards on waste had also prevented the development of the sector because it caused concern for foreign investors, even though the sector was being encouraged by Viet Nam's government, said Khanh.

Experts say this could be a break-through year for the footwear sector after free trade agreements with EU, the US and ASEAN are completed.

However, many footwear producers say that despite these big opportunities, enterprises may struggle to meet the high standards set out in those deals.

The Trans-Pacific Partnership (TTP) has particularly stringent guidelines, and to receive the full benefits of the deal, Vietnamese firms will have to use locally produced materials or materials imported from other TPP members.

Nguyen Van Thinh, general director of Viet A Chau Service – Trade – Production Co, Ltd expressed hope that the State would issue preferential policies for domestic enterprises on tax, land and administrative formalities because compared to foreign enterprises, domestic firms were weak in terms of capital, technology and human resources.

Domestic enterprises would not able to compete if they were not given preferences, he added. — VNS