Vu Duc Giang, Chairman of Vietnam Textile and Apparel Association (Vitas), said the purchasing power of the market in 2021 will not change, since there is no breakthrough growth if the Covid-19 pandemic continues. However, the Regional Comprehensive Economic Partnership (RCEP) will make it easier for textile businesses to exploit the benefits of existing agreements and promote regional production chains.

Vu Duc Giang, Chairman of Vietnam Textile and Apparel Association (Vitas). 

The year 2020 is the first year the export turnover of the textile and garment industry will decrease after 25 years of continuous growth. Could you please tell us more about the current situation of the textile and garment industry?

- Vietnam's textile and apparel exports have maintained a steady growth momentum in the period from 2016 to 2019. In 2016 it reached US$28.12 billion, in 2019 it reached US$38.9 billion, with the compound annual average growth at 9.55%.

Particularly in 2020, due to the negative impact of the Covid-19 pandemic, the export turnover is expected to reach US$35.27 billion, a decrease of US$3.6 billion compared to 2019, equivalent to a decrease of 9.29%.

This reduction is still lower than many other countries, especially in the context of the world’s total demand for textiles and clothing falling 25%.

The reason for this drop is that the pandemic happened suddenly, affecting global purchasing power, as the jobs of people around the world are also impacted. Social distancing leads to a decrease in people's income. People prioritize buying necessities and food over clothes. Veston, a high-end men's and women's shirt brand, which is considered a strategic item with high value, saw consumption reduced by 80%.

The challenges of the textile and garment industry in 2020 will include changing the buying and paying methods of customers. Along with that, high-end shirts and suits have low consumption, some businesses have no orders or reduce orders by up to 80%.

Therefore, many businesses have to switch to production of work wear, home wear, sportswear, fabric masks. Accompanying the transformation is technology change and retraining of workers. Expensive, costly business while the business situation is difficult.

Although the export turnover to the markets has decreased, the share of Vietnam's textile and apparel has also changed. Vietnam is the second largest textile exporter to the United States (11.80% market share), ranking 6th in exports to Europe, 2nd is exported to Japan and South Korea. In particular, Vietnam also became the largest exporter to China, with a market share of 19.1%. This result is a remarkable effort of the textile and garment industry.

How do you comment on the picture of the textile and garment industry in 2021?

- Up to now, around the world, the pandemic situation is still complicated. The negative impacts of the pandemic can last for 1-2 years. This is our biggest concern because in that context, it is very difficult for textile enterprises to offer stable solutions. Therefore, it is forecast that, in 2021, textile and garment exports will continue to face difficulties because in the post-pandemic period, people's income is still low. Purchasing power in the domestic market in 2021 will remain stagnant, with no breakthrough growth. When there is a vaccine to control Covid-19, the market can be brighter. We forecast that textile export in 2021 could reach about US$37 - 38 billion.

Regarding the material and auxiliary scenario, in 2021 and 2022, Vietnam may still attract many investment projects in yarn, weaving, dyeing, transitioning from 2019 to 2020, which can ensure the supply shortage of Vietnamese textiles.

The reason is the change in buying methods in countries, after the global supply chain has problems, fashion brands accept to buy Vietnamese materials, meanwhile, the Vietnamese machines for yarn and weaving have brought into full play their service capacity in the domestic and export markets.

It is expected that by 2021, with the possibility that the disease scenario will be better controlled around the world in the first quarter, Vietnam could export about US$37-38 billion, with a slight growth compared to 2020.

Before the opportunities of textile enterprises when trade agreements and economic partnership agreements have just been signed, in your opinion, what should Vietnamese textile and garment enterprises do to take advantage of the opportunities from these agreements?

- In my opinion, RCEP between ASEAN and the six partners that already have an FTA with ASEAN will bring many opportunities for Vietnam's textile and garment industry.

For RCEP, the textile and garment industry will open up a large market with less stringent commitments and more favorable requirements than the EVFTA and the CPTPP.

Moreover, in the RCEP bloc, there are a number of CPTPP member countries that will solve the difficulties and challenges coming from input materials, because it will help to support the material shortage in the country today. Unlike other agreements, in the RCEP, rules of origin will be a relatively easy "plus point" for Vietnamese enterprises.

As a result, the textile and garment industry expects the RCEP to create an opportunity for Vietnam to have a more open market in China, when China starts to import Vietnamese textile products. Besides, Japan is also a potential market.

If before, garment products in these markets are forced to prove that the raw materials are originating from ASEAN, Japan, while Vietnam imports the majority of raw materials in this industry from China.

With RCEP, Vietnamese garments made from Chinese raw materials also enjoy preferential tariffs when exported to the Japanese market. In addition, RCEP makes it easy for businesses in this industry to exploit the benefits of existing agreements and promote regional production chains.

In order to take advantage of the FTA, textile enterprises need to carefully study the commitments and roadmap to reduce and eliminate tariffs on textiles and garments. Then, proactively plan to meet the rules of origin and improve the quality of goods, to meet the requirements of the import markets.

To achieve the target by 2025, export turnover will reach US$55 billion, increase 9.4% / year on average, use 3 million laborers, trade surplus is US$33 billion, the added value of textile and garment exports products reaches 65%.

At the same time, effectively supporting and removing obstacles and barriers for textile and garment enterprises in the future, Vitas proposes to the Government to soon approve the Industry Development Strategy to 2030 with a vision to 2035, to direct the formation of a large textile industry with concentrated wastewater treatment to attract investment projects in the textile and dyeing stage to meet the origin requirements of new generation trade agreements, especially the EVFTA and CPTPP.