Footwear production line in Binh Duong Province. VNS Photo

Thanks to the preferential tariffs under the EU-Vietnam Free Trade Agreement, footwear exports to the bloc’s 27 member countries increased by 19.2 per cent year-on-year in the first quarter of 2021.

Overall exports, mainly of aquatic products, textile-garment, footwear, and farm produce, were worth nearly US$4.8 billion.

The importing markets were mostly countries with ports and distribution and transhipment centres such as Belgium, Germany, Netherlands, and France.

The EVFTA, which took effect in August last year, has opened up great export opportunities to a market with a GDP of $15 trillion for Vietnamese companies.

The EU was Viet Nam's fourth largest market with purchases of $43.7 billion last year.

To enjoy the tariff preferences, leather goods and footwear need to comply with the rules of origin and get a EUR.1 Certificate of Origin.

Some 32 – 34 per cent of exports benefited by getting the certificate, indicating that Vietnamese businesses and goods are increasingly capitalising on concessionary tariffs in FTA partner markets, the Ministry of Industry and Trade said.

It said that between August 1 last year, when the EVFTA took effect, and April 4, authorised agencies in Viet Nam issued 127,300 certificates of origin to enable exports worth nearly $4.8 billion.

The country has become the “footwear factory” of the world, while its own market has a population of more than 96 million.

But the interruption of the global supply chain by the Covid-19 pandemic has caused alarm in the Vietnamese leather and footwear industry since it it is heavily dependent on raw material imports.

To develop sustainably and make the most of tariff incentives and opportunities brought by the EVFTA and Comprehensive and Progressive Agreement for Trans-Pacific Partnership, leather and footwear businesses need to develop domestic sources or diversify foreign sources.

Sixty per cent is imported from China, according to Phan Thi Thanh Xuan, general secretary of the Viet Nam Leather, Footwear and Handbag Association (Lefaso).

Many businesses have started to look for raw materials in other markets such as India, Europe, Singapore, and Japan.

The pandemic remains a major hurdle, experts said, but if enterprises work hard to find partners and improve their competitiveness, the opportunities remain huge. – VNS