Workers pack shoes at the Thuong Dinh Footwear Company in Ha Noi. — VNS/VNS Photo Ngoc Ha

HA NOI Biz Hub) — Domestic and foreign-invested enterprises (FIEs) in the leather and footwear sector continue to show impressive growth, making Viet Nam the second largest global exporter of footwear.

The Viet Nam Leather and Footwear Association (Lefaso), said that in the first six months of the year, the nation's footwear exports jumped 17.8 per cent year-on-year to US$4.8 billion and the value is expected to surpass $11 billion by this year-end, radio The Voice of Viet Nam (VOV) reported.

The global demand has risen mainly due to the economic recovery in the US and the EU, said the association, and the free trade pacts expected to be signed will give a further impetus to Viet Nam's leather and footwear exports.

The Trans-Pacific Partnership (TPP) Agreement and Viet Nam-EU Free Trade Agreement (VEFTA) are likely to be signed later this year or early next year, and the optimism it is generating has resulted in huge investments in the leather and footwear sector.

Numerous projects awash with foreign funding are being set up throughout the country in these sectors, with state-of-the-art technologies, and modernised and streamlined facilities that are adding value to their production processes.

Suppliers of imported raw materials are also making significant investments in the sector, carving out a niche in the Vietnamese market, while aggressively looking for opportunities to tie-up with Vietnamese partners.

They are unanimous in the view that once the TPP and VEFTA come into effect, 2014 would be a crucial year to lay the foundations and reap the benefits of increased trading activities.

The opportunities are there and it is up to the domestic businesses to grab them, Tran Vi Co, Director of Hien Dat Exhibition and Trading Services Company said.

Lefaso President Nguyen Duc Thuan emphasised that the increase in use of domestic material has generated a lot of interest.

The leather sector has, till now, used only around 30 per cent of its domestic materials, but this will increase significantly in the future, Thuan said, adding the country is developing two leather industrial zones in two main regions.

Furthermore, smaller industrial zones in key regions are in various stages of development to produce other materials, such as synthetic leather, shoe soles, and decorating materials.

HCM City is going through a revolutionary transformation as a centre for the supply and exchange of raw materials for the whole sector.

The sector has set a target of using 100 per cent domestic tanned leather by 2020, and 50 per cent of synthetic leather and 70 per cent of shoe soles by 2050, Thuan said.

Currently, Lefaso has devised measures to help the sector develop sustainably in the future. Training is one of its priorities.

Accordingly, a human resource-training centre will be set up in the southern region in 2015. — VNS