New-generation free trade agreements have enhanced the machinery and equipment used in the Vietnamese garment and textile sector, offering opportunities for domestic businesses to access new technologies and improve labor productivity.

Vietnam Textile & Apparel Association (Vitas) Secretary General Truong Van Cam cited that the Vietnamese garment and textile sector has made most of opportunities provided by the international economic integration process to accelerate its development. This is more than evident when reviewing the export turnover, which has risen from US$4.8 billion in 2005 to US$27 billion in 2015. To achieve remarkable results, the sector has promoted foreign investment attraction and strengthened the application of advanced technologies.

It is clear that machinery and equipment providers have come to Vietnam to seek cooperation opportunities. For example, Belgium’s Flanders Investment & Trade and Textile Machinery Association in coordination with Vitas organized the roadshow on Belgian technology solutions for Vietnamese textile industry in late June 2016.

Belgian Monitoring Systems’ representatives talked about its production system and how that can be applied to improve productivity and product quality, while Bonas Textile Machinery Area Sales Manager Hans Scherpereel introduced solutions for weaving and Jacquard weaving.

Vitas also cooperated with the German VDMA Textile Machinery Association to introduce modern technology trends for the textile sector in early July.

Vietnam remains strong in the final stages of cutting and sewing, however, it is very weak in spinning, weaving and dyeing as it requires a huge capital investment. In addition, garment and textile businesses are small-scale with limited financial capacity. It is also argued that lack of skilled labors is seen as an insolvable issue for spinning, weaving and dyeing. In particular, some production plants have not met the set requirements such as the Dinh Vu Polyester Fiber Plant and the Yen My Dyeing Plant despite having received a large investment of capital.

Minh Khai Textile Company Managing Director Nguyen Khanh Quyen said that the state needs to strengthen investment in sectors that require a huge capital and advanced technologies such as spinning, weaving and dyeing. In addition, free trade agreements will benefit the Vietnamese garment and textile sector, but they need to promote investment in technologies and improve labor productivity in order to catch up these opportunities.

Truong Van Cam went on to put emphasis on that garments and textiles are one of the sectors to benefit most from free trade agreements. However, domestic businesses need to meet rules of origin, such as fabric forward in the EU-Vietnam Free Trade Agreement (EVFTA) and yarn forward in the Trans-Pacific Partnership (TPP) while the sector imports 80 percent of materials from countries outside the EVFTA and the TPP. Therefore, improving production technologies and increasing local rate are needed.

Source: VEN