HA NOI (Biz Hub) — A successful 2014 and the promise of bigger export opportunities has given the domestic leather and footwear industry the confidence to set a US$14 billion export target for this year.
Phan Thi Thanh Xuan, general secretary of the Viet Nam Leather and Footwear Association (Lefaso), told Viet Nam News that the new target marked a year-on-year increase of 15 per cent.
She said last year was a successful year for the industry, with its presence in 47 global markets seeing the total leather, footwear and handbags exports rise 22.5 per cent over 2013 to $12.74 billion, accounting for 8.5 per cent of the nation's total export turnover.
Impending Free Trade Agreements (FTAs) and the Trans-Pacific Partnership (TPP) will attract new investments into Viet Nam's leather and footwear industry, she said.
"We think the agreements will create remarkable growth in export turnover in the coming years," Xuan said, explaining that the ensuing reduction in tariff barriers would make it easier for Viet Nam to export to large markets.
When the TPP comes into effect, the current taxes of 3.5 to 57.4 per cent would be slashed to zero per cent, which would support exporters looking to expand production and make better products, experts said.
However, in upcoming years, the sector might have to face stiff competition from India, the second biggest footwear producer in the world, Xuan said.
India has the advantage of having lower wages and production costs than Viet Nam, and the Indian government has issued new preferential policies for foreign investors.
Other experts have also pointed out that when the market opens, foreign footwear makers will utilise Viet Nam's preferential tax policies. If domestic firms do not respond quickly, opportunities will be lost and market shares reduced, they have warned.
The US market, which was Viet Nam's largest footwear importer last year, will set up more non-tariff barriers, mainly on product safety standards, aiming to protect its own sector when the TPP is signed, the Thoi bao Kinh te Viet Nam (Vietnam Economic News) quoted Nguyen Hong Duong, deputy director of the American Market Department under the Ministry of Industry and Trade (MoIT), as saying.
Duong advised firms to continuously update themselves on policies and market information so that they can protect themselves better. They should express their concerns through Lefaso to the Government and seek solutions, he said.
Leather and footwear exports last year saw a year-on-year growth in most of its markets. The US ranked first with imports of $3.3 billion, up 26.71 per cent over 2013. It was followed by Belgium with $659 million, up 27.68 per cent, and Germany with $600 million, up 31.19 per cent.
Xuan attributed the growth to many leading footwear brands shifting orders from China and Bangladesh to Viet Nam in recent years, enhancement of the country's production capacity and its competitiveness capacity, and increasing foreign investment in the sector. — VNS