The Vietnamese garment and textile industry's push into world markets will flounder unless the sector ramps up growth dramatically, industry insiders are warning.

As the country's integration into the global trading system gathers pace, the domestic garment and textile sector is facing increasing competitive pressure from exporters in China, Indonesia and Thailand.

Moreover, import barriers will be scrapped in the ASEAN region in 2006, the European Union will drop garment and textile quotas for WTO members in 2004, and the US market will begin setting quotas shortly.

Vietnam's $2bn garment and textile export industry is dwarfed by those of China ($50bn), India ($12.5bn) and Indonesia ($8bn).

Deputy industry minister and general director of Vinatex (the Vietnam National Textile and Garment Corp) Bui Xuan Khu said that there were four main hurdles to accelerating the industry's development - poor competitiveness, heavy dependence on imports of raw materials and equipment, the low awareness of Vietnamese goods in the international market, and the rudimentary designs used by Vietnamese firms.

In response to this, the industry plans to expand its labour force to about 3 million by 2005 and 4.5 million by 2010.

The ratio of Vietnamese-made materials and equipment should rise from the current rate of 25 per cent to around 50 per cent in 2005, and 70 per cent in 2010.

To hit these targets, the industry must marshall VND35 trillion ($2.4bn) in the 2001-05 period, of which Vinatex will deploy around $860m.

In the 2006-10 phase, around VND30,000 billion (about $2bn) will be required, with Vinatex spending VND9,500 billion ($655m).

A significant chunk of the capital will be devoted to increasing the domestic supply of polyester. Two polyester fibre factories, each with a capacity of 30,000 tonnes per year, will be built at a cost of $50m.

Investment in industrial zones producing garment accessories is estimated at $40m, and $50m will be spent on garment and textile manufacturing machinery.

Khu urged the industry to seek out local and domestic sources of investment capital, including joint ventures and wholly-foreign invested enterprises, in order to raise the maximum possible amount of funds.