Over the first two months of 2021, Da Nang textile and garment industry has recorded many impressive growth figures in its export activities, thereby creating a positive signal for a year of flourishing operations.

Picture taken at the 29 March Textile and Garment JSC

Leverage from free trade agreements

Data published by the municipal Department of Industry and Trade show that, since the beginning of 2021, Da Nang exports have started to flourish again.

Da Nang's total export value in the first two months of this year reached US$ 240.5 million, up 7.9% versus the year-ago period.

Many positive changes have been seen in the export of Da Nang's key items, with textile and apparel export value recording US$ 66 million, a rise of 7.3% over the same period last year.

The positive results have been mainly attributed to the initiative of the textile and garment industry in shifting from garments to face masks in order to keep production going and pay employees, somewhat mitigating the losses caused by canceled orders due to coronavirus crisis.

In addition, the signing of many free trade agreements, especially the EU-Viet Nam Free Trade Agreement (EVFTA), has created extra motivation for Da Nang-based textile and garment companies to overcome their difficulties.

Also, the official administration of Covid-19 vaccines in many countries, including Viet Nam, is seen as a positive move for the economy in Viet Nam, and in the world at large, flourishing stronger after a gloomy period due to COVID-19 pandemic.

Mr Nguyen Duc Tri, Vice Chairman of the Viet Nam Textile and Garment Association cum Chairman of the Board of Directors of the Da Nang-based Hoa Tho Textile and Garment JSC, remarked, in the midst of COVID-19 triggered difficult conditions, the company still surpassed last year's target by 2% to hit VND 3,256 billion in revenue. Of which, the company earned USD 186 million from exports and paid VND 86 billion in tax to the city budget.

Vice Chairman Tri proudly said that, despite pandemic-triggered challenges and difficulties last year, Viet Nam has still maintained its export activities, and become the largest textile and garment exporter to the USA. Mr Tri noted the EVFTA, effective from August 2020, was expected to help Viet Nam’s textile and garment industry to increase its exports to the EU by about 67% by 2025 compared to the scenario without this agreement.

Promoting investment in automation and increasing productivity

Mr Huynh Van Chinh, Director of the Board of Directors of the 29 March Textile and Garment Company said that all most of ‘Made-in-Viet Nam’ textile and garment products have been available in such international markets as the USA, EU, Japan, and South Korea.

Mr Chinh also remarked that according to the commitments of the EVFTA, besides meeting strict quality criteria, to enjoy preferential tariffs local businesses must implement strict origin requirements. Specifically, the EVFTA requires rules of origin to apply from fabric onwards, meaning that exports to the EU must use fabric produced in Viet Nam or the EU. The agreement also allows firms to use fabric from foreign countries which have FTAs with both Viet Nam and the EU.

Meanwhile, new-generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and EVFTA had very strict regulations on materials and manufacturing processes.

Mr Chinh underlined the need for Da Nang textile and garment businesses to take the initiative to seek new sources of international-standard imported raw material in a bid to meet EVFTA-set requirements.

“Importance should be attached to boosting investment in automatic production systems to increase productivity and reduce manufacturing costs” Mr Chinh remarked.

By KHANH HOA – Translated by M.D