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Garment exporters face downturn

Update: July, 24/2012 - 10:29

 

Sai Gon 3 Garment Co workers make garments for export. Textile and garment producers are struggling from a lack of export contracts and other market difficulties due to the ongoing debt crisis in the Eurozone. — VNA/VNS Photo Thanh Vu
HA NOI — Textile and garment producers were struggling from a lack of export contracts and market difficulties due to the ongoing public debt crisis in the EU, said the Viet Nam Textile and Apparel Association (Vitas).

Deputy chairman of Vitas Pham Xuan Hong said that only large textile and garment exporters had received contracts for the third quarter. Many small-and medium-sized producers had been forced to narrow production due to a lack of demand.

Hong said that consumption demands in the EU had decreased sharply in past months, and export orders had fallen roughly 20-30 per cent over the same period last year.

According to the General Statistics Office, the industry growth rate was only 8.7 per cent in the first half of the year, much lower than the rising rate of 30 per cent last year.

If the situation continued, textile and garment producers would be forced to make workers redundant, and roughly 20 per cent of them would lose their jobs, Vitas said.

Hong said besides the reduction in export orders, local textile and garment producers, especially smaller enterprises, had also faced major challenges to meet with stricter regulations on quality and social responsibility required by European markets.

To meet the regulations, producers would have to pay higher input costs which would make it difficult to price their products competitively, Hong said.

Vietnamese textile and garment exporters are also having to compete with fierce competition from China, Cambodia, Bangladesh and Myanmar. Together with Cambodia and Bangladesh, Myanmar's textile and garment exports to the EU will soon enjoy tax exemption.

The devaluation of the euro against the US dollar has also reduced profits for Vietnamese exporters who have to pay for imported raw materials from mainland China, Thailand and Taiwan in US dollars while receiving payment from European customers in euros. — VNS

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