The Ministry of Industry and Trade said that the price of input materials has jumped sharply in 2010. It said that the cost of cotton is up 25 percent; fibres, 34 percent; wood, 30 percent; and plastic, 43.7 percent due to rising world demand. Meanwhile, producers said their prices have increased by only 5 to 10 percent. 

The textile and garment industry has been the hardest hit as it has to import 80 percent of its input materials. 

Nguyen Duc Khiem, the CEO of the Viet Thang Garment and Textile Company, said that the cost of viscose fibre increased from US$2.2 per kilo to the current price of US$2.7 last year.

While that cotton rose from US$1.3 to US$1.6 per kilo.

In addition, a delay in deliveries and India's ban on the export of cotton fibre to protect its own textile and garment industry since the middle of April has led to shortage in Vietnam. 

Exports of wood products have also been hit by the rising cost of imports. Since the beginning of the year, the price of timber has risen by 30 percent to 40 percent. 

Tran Phuc Hong, Director of the Kim Son Wood Processing Company, said his firm had signed a contract to export outdoor furniture to Germany three months ago but was just about breaking even, despite making cut-backs. 

"The contract will be completed in September. If the cost of raw materials continues to rise in the coming months, we will go under," he said. 

Meanwhile, plastics firms are also struggling. 

In the first quarter of the year, Vietnam imported nearly 100,000 tonnes of raw plastics worth US$153 million, an increase of 12.4 percent in volume and 73 percent in value over the same period last year. 

The Sam Phu Plastics Joint Stock Company plans to expand its production this year and it has already imported about 1,000 tonnes of raw plastic annually, said Do Nguyen Thanh, the company's deputy general director. 

To make ends meet, domestic producers have had to slash production costs and share materials, said Khiem. 

Local enterprises have called on the Government to raise its investment in supporting industries.