Garment sector eyes localisation of inputs

Monday, Apr 14, 2014 08:30

In 2013, export turnover of the industry reached US$20.4 billion, an increase of 18 per cent year-on-year.— Photo baohaiquan

HCM CITY (Biz Hub) — The domestic garment and textile industry aims to reach a localisation rate of 60 per cent by 2015 to increase profits and competitiveness, and reduce the need for the imports of raw materials, according to the vice president of the Viet Nam National Textile and Garment Group (Vinatex).

Le Trung Hai, who spoke with the media during the recent Saigon Tex exhibition for international garment and textile manufacturers and accessories makers, said the localisation figure would increase to 70 per cent after 2015.

Hai said this effort was being made to increase the export value of the industry, which depends heavily on imported raw materials and outsourcing for its major foreign clients.

The move to increase the localisation rate is especially important because Viet Nam is currently negotiating the Trans Pacific Partnership (TPP) Agreement and other regional trade and tax agreements.

To enjoy low tax from these trade agreements, Viet Nam will be required to use domestic raw materials.

In addition to increasing the localisation rate, domestic garment and textile companies are also aiming to increase the Free on Board (FOB) rate from the current 38 per cent to more than 50 per cent by 2015.

Moreover, the Original Designed Manufacturer (ODM) rate would rise to nearly 10 per cent by 2015 from the current rate, which is now under 5 per cent.

To achieve the targets, many projects to develop raw materials are being carried out nationwide.

According to Vinatex, many cotton farms with a size of up to 1,500 ha now exist in provinces like Dac Lac and Ninh Thuan.

Vinatex worked with the Viet Nam Oil and Gas Group to produce materials to weave fabric, and the industry as a whole has hired and worked with foreign experts to set up projects to develop regions to plant raw materials.

In addition, construction of many weaving plants nationwide has taken place.

In 2013, export turnover of the industry reached US$20.4 billion, an increase of 18 per cent year-on-year. — VNS

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