Viet Nam's garments exports in the first nine months of the year reached US$18 billion, a 19-per cent year-on-year increase, and its garments imports reached $11 billion. — Photo dongphuc

The move comes in the light of advantages offered by the Trans Pacific Partnership (TPP) and other free trade agreements that the country has entered into with regional trade blocs around the world.

Le Tien Truong, Viet Nam Textiles and Garment Group (Vinatex) general director, said that after years of manufacturing processed products, enterprises had gained much experience in manufacturing, management and labour.

This wealth of experience serves as a foundation for enterprises to shift to FOB (freight on board) and original design manufacturer (ODM) models, according to the general director.

Vinatex is determined to apply as soon as possible the ODM model, which will allow the company to define the chain linkage of dye-textile-garment and improve its business effectiveness index.

The group will review and improve operations to meet production targets for the domestic and international markets.

Nguyen Xuan Duong, management board chairman of Hung Yen Garment Corporation Joint Stock Company, said that to be able to produce with the ODM model, concerned sectors such as textiles, garments and dyes had to develop at the same time.

However, the garments and textiles sector was weak in three areas: product development, marketing and chain linkage. To develop the ODM model, businesses must overcome these weaknesses, especially marketing, as well as clarify targets for the sector and draft a material industry development plan.

Viet Nam's garments exports in the first nine months of the year reached US$18 billion, a 19-per cent year-on-year increase, and its garments imports reached $11 billion, said the Ministry of Industry and Trade (MoIT). As a result, the sector achieved a $6.2-billion trade surplus.

Dang Phuong Dung, general secretary of the Viet Nam Textile and Apparel Association (VITAS), said that in spite of the high export turnover, the added value remained modest.

This was attributed to sectoral dependence on imported materials, as the country could only provide 1 per cent of demand for cotton and 20.2 per cent of demand for textiles.

Although the sector could produce six million fibre bundles each year, only 30 per cent of the fibre bundles could be used because quality remains below standard.

Sectoral participation in the global supply chain is considered passive, according to Dung. The sector is mainly focused on manufacturing processed products and lacks product model designers. Businesses that produce processed products are also passive in seeking and expanding markets.

Ho Thi Kim Thoa, deputy industry and trade minister, said the current world trend in garments included the development of a package supply chain and e-commerce trading, both of which remained a challenge to Viet Nam.

In line with this, the MoIT last April approved a garments and textiles development plan from 2020 to 2030 that aims to make the sector a key export industry and enable it to meet increasing domestic demand, create more jobs, enhance competitiveness and firmly integrate with the regional and international economy.

In the past few years, the sector has been relentless in improving the investment environment, granting preferential policies, expanding co-operation and luring capital.

Separate free trade agreements that Viet Nam has entered into with the European Union and the Customs Union of Russia, Belarus and Kazakhstan, as well as the TPP, would serve as huge opportunities for the sector to further access world markets, added Thoa. — VNS