The free trade agreement being negotiated between the US and 11 other Pacific nations will bring "huge" opportunities to expand Vietnam's footwear industry, experts believe.

Business representatives at a conference in Ho Chi Minh City last week said Vietnam has become their main production base in the region. And they are expecting more firms to head to Vietnam is the Trans-Pacific Partnership Agreement (TPP) is passed, which will reduce tariffs on Vietnamese exports to the US to near zero.

The meeting, held by the Vietnam Leather, Footwear and Handbag Association (Lefaso) and its US counterpart, Footwear Distributors and Retailers of America (FDRA), heard that wages in Vietnam are equivalent of just 38% of those in China, even though productivity is the same and workers in some areas have higher skills.

Footwear is Vietnam's third most-lucrative export industry in terms of revenue, and generated US$8.5bn last year. Nearly 600 businesses employ more than 1.1m workers in direct and supporting sectors to produce 800m pairs of shoes a year.

Lefaso's vice chairman Diep Thanh Kiet said Vietnam's industry will have to develop a better material base as well as business skills to capitalise on the opportunities presented by the TPP. The local industry doesn't yet produce basic materials like leather, polyvinyl chloride (PVC), polyurethane (PU) and cloth, he said, adding that Vietnamese firms are also behind in marketing and product development skills.