Since 2000, the garment and textile sector has boasted of achieving an annual growth rate of more than 20 percent, attracting nearly 2 million workers and contributing 15 percent of the country’s total export turnover. In recent years, the sector’s total retail revenue and export turnover have reached US$2.05 billion and US$6 billion respectively, up 24 percent while its industrial production value has increased by 16 percent.

In the wake of Vietnam’s joining the World Trade Organisation (WTO), the sector has faced a lot of opportunities but also great challenges as protection barriers for domestic production have been reduced to a record low to honour commitments to the WTO.

As from January 11, 2007, the import tax on garment and textile products has fallen from 50 percent to 20 percent and that on materials from 40 percent to 12 percent. Therefore, Vietnamese garment and textile producers will have to compete fiercely with large WTO member rivals such as China and India.

No longer imposing quotas on products imported to the US market, the US Department of Trade has erected a new barrier by building a mechanism for anti-dumping supervision of Vietnamese garment and textile products exported to the US. This action is hindering Vietnamese business activities in the US which currently accounts for more than 50 percent of Vietnam’s garment and textile export market shares in the world. Meanwhile, the sector is finding itself in a difficult position to pool human resources.

In the face of such challenges, the garment and textile sector has outlined a strategy for future development with a focus on developing domestic and regional trademarks. For the time being, garment and textile companies should try to approach untapped markets in the Near Middle East, Africa and Australia and to promote joint ventures and trade links with foreign partners in order to ensure the domestic supplies of material for production. They should pay more attention to training human resources in terms of technology, marketing and business management while adopting incentive policies to attract highly skilled workers.

They should also concentrate on producing high-quality items with a full understanding of foreign partners’ anti-dumping laws to clarify the origin and cost of their products for export.