Truong said that in 2022-2023, major textiles exporters such as China, Vietnam, India, Bangladesh, and Turkey had all seen growth.

In that period, all of the above countries, excluding Vietnam, depreciated their domestic currencies to support exports. Turkey depreciated its currency the most, cutting its currency in half, with Bangladesh devaluing by 21 per cent, and China by 11 per cent.

Le Tien Truong, chairman of Vinatex

As a result, Vietnam's textile products have been 15 per cent more expensive than other countries in the top five. "This is also the reason why in 2022 and 2023, Vietnam's garment exports fell by 10 per cent, representing the largest decrease among the five major textile exporting countries," Truong said.

The common interest rate level of these countries is at 3.5 per cent. In Vietnam and at Vinatex, the average loan level is about 7 per cent for businesses with good credit and about 9 per cent for businesses without. Vietnam has the most positive real interest rates among this group.

Truong provided data related to Vinatex's financial status from the past five years. Specifically, the interest rate paid to banks in 2023 (on the consolidated report) increased by 10 per cent on year, while the total outstanding debt declined by 11 per cent.

"This means the cost is more compared to 2022, and interest payable surged by 30 per cent compared to 2021. Based on current credit contracts in the first two months of 2024, the total interest payable in 2024 is not expected to be lower than in 2023," according to Trung.

Truong explained that it is not very difficult for them to access credit, but during the past 18 months, the raw material production industry has been struggling. "The garment and textile industry worldwide, including Vietnam, is lost. In 2022, it was easy to access capital, which became increasingly difficult in 2023, and especially challenging at the end of 2023 and early 2024," he urged.

Banks are currently cutting loans for companies, or requiring 100 per cent collateral for short-term loans. The interest rate and credit policy is about 7 per cent for state-owned joint stock commercial banks, and about 9 per cent for non-state-owned joint stock commercial banks.

Interest rates are currently falling, but disbursement is proving difficult. The market is also much more competitive than it has been in the previous two years as China reopens for business. By the end of last year, China's textile industry's capacity had reached 60 per cent.

China has also supported electricity prices at 4 cents/kWh for the industry, equivalent to half of Vietnam's prices, and 50 per cent for domestic transportation prices, since last March. Bangladesh does not require health insurance and offers a very low minimum wage of $15 per month.

Trung went on to say, "150,000 employees are working in this industry, with around $1 billion paid out in salaries, and about $500 million spent on electricity every year. It is therefore necessary to support producers this year by not reducing credit limits and not requiring fixed collateral."