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Vietnam needs to invest in fabric production to meet origin requirements

adv-07

Vietnam expects a lot from the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). To take advantage of free trade agreements, Vietnam’s garment and textile sector has to comply to with rules of origin. But Vietnam needs to invest in fabric production to meet origin requirements when exporting to CPTPP and EVFTA countries. Shortage of fabric resources is a big obstacle for the garment and textile industry of Vietnam. It has to speed up reforms with innovations in designs, management, fabric production and building brands.

This would not be easy because Vietnam must compete in designs, quality, prices and delivery time with other major fabric producers like China and India. Investing in fabric production needs careful consideration in terms of production scale because Vietnam’s garment industry uses less than a billion meters of woven and knitted fabrics every year, or 18 per cent of global exports. If the fabric production targeted only Vietnam, production scale would be too small while investing in large-scale production. Instead Vietnamese garment firms have to work with global giants to establish value chains and invest in production to meet their demands and have to invest in raw material production to meet rules of origin in trade deals.

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