|Brexit could directly impact Việt Nam's garment and textile industry in the last quarter of this year. — VNA/VNS Photo|
Brexit could directly impact Việt Nam’s garment and textile industry in the last quarter of this year, according to experts.
In 2015, Việt Nam’s export value for textile and garment products to the European Union accounted for some 19-20 per cent of the national revenue from textile and garment exports, with the United Kingdom contributing nearly 4 per cent.
Representatives of the Việt Nam Textile and Apparel Association and some local garment firms speak to Vietnam News Agency reporters about the issue.
Vũ Đức Giang, Chairman of the Việt Nam Textile and Apparel Association
Brexit will definitely have an impact on garment and textile exporters due to the devaluation of the pound and the euro, which influences prices.
The political change will affect the purchasing power of customers in the European Union and the United Kingdom.
These issues will have a direct impact on textile and garment enterprises in Việt Nam. For instance, material prices will have to be re-negotiated due to changes in the exchange rate, which will have a direct influence on the input prices of products from the fourth quarter of this year. That situation will affect the long-term export orders for enterprises from 2017.
The change will relate to the structure of export markets in the European Union and the structure of export products to the European Union and the United Kingdom. Before Brexit occurred, local garment exports had entered the European Union, which included the United Kingdom, but now that the latter is leaving the bloc, the Vietnam-European Union Free Trade Agreement is likely to be reconsidered. Therefore, the influence of Brexit on Việt Nam is still unclear.
For the short term, Brexit will have an immediate impact on the sector’s production and business as well as the jobs of Vietnamese workers, eventually influencing the export growth rate to the European Union this year.
To limit the impact of Brexit, enterprises exporting to the United Kingdom and European Union markets need to focus on traditional markets such as the United States, the Republic of Korea and Japan as well as expand their share in new markets such as Russia and Eastern Europe with new product lines.
The enterprises also need to build supply chains to take full advantage of the signed free trade agreements and must diversify their products in both traditional and new markets.
In addition, they should be careful when negotiating with importers in other countries in the European Union to minimise the impact from Brexit.
Meanwhile, the government needs to accelerate the process of signing trade agreements with the remaining member countries of the European Union. The government also needs to hold talks with the United Kingdom on differences between the Vietnam-UK FTA and the Vietnam-EU FTA and must promptly inform the enterprises of the results.
Phan Thế Vịnh, Director of Agriculture Garment JSC
Brexit will affect countries exporting goods to the United Kingdom, including Việt Nam, because each change will create both positive and negative impacts. The Agriculture Garment Joint Stock Company (JSC) has mainly exported its products to Germany, Italy and Poland but has not shipped anything to the United Kingdom.
However, Brexit presents an opportunity for small- and medium-sized enterprises because these companies can consider the United Kingdom a niche market for their products, including the Agriculture Garment JSC.
Exporters in Việt Nam should view the change as a good opportunity to promote exports from Việt Nam in the United Kingdom, including textile and garment products.
Đỗ Huy Trung, Director of the Trí Đức Limited Company
The United Kingdom’s decision to leave the European Union will initially have little impact on Việt Nam’s garment exports because domestic textile and garment enterprises have mainly exported their products to Germany, Poland and Spain and have made few exports to the United Kingdom.
For now, there is no feedback from customers related to Brexit.
Trí Đức has so far not received any export orders from the United Kingdom.
However, Brexit will affect exporters to the country, including domestic garment enterprises, due to the impact of the changes to the pound versus the US dollar on their business.
When the United Kingdom leaves the European Union, Việt Nam and the United Kingdom will have to renegotiate provisions for financial and banking services. - VNS