Vietnam's textile exports, hit by the slump in the Asian economy in recent years look set for short-term growth, the Paris-based Centre for the Economic Observation of Textiles (CTCOE or Centre Textile de Conjoncture et d'Observation Economique) said.

Vietnam has 77 million inhabitants and in 1999 a growth of 4.1 per cent of their Gross Domestic Product associated with an inflation rate of 6.1 per cent.

Since 1997, apparel producers in Vietnam have faced stiff competition from their counterparts in neighbouring countries that have been able to benefit from the devaluation of their currencies. Furthermore, the Asian crisis meant that Vietnam's exports to Asian countries suffered because of the decrease in demand.

Vietnam's exports
In 1998, the country's global exports amounted to $1.4bn, with textiles and apparel making up the major proportion of this. Apparel exports represent 90 per cent ofthe total value of the textile/apparel sector.

Because of under-investment into the early stage processes such as spinning and weaving, this sector supplies just 20 per cent of the needs of the Vietnamese apparel industry. Which means that all of the manmade yarns have to be imported.

Export destinations
In search of new outlets, Vietnam has focused on the European Union as the main destination for its apparel exports. In fact, approximately half of Vietnam's textile/apparel exports head there. Germany accounts for 47 per cent, and France 15 per cent (in value) of Vietnam's exports to Europe.

Japan, where there are no import quotas, stands for 21 per cent of Vietnam's textile/apparel exports (in value). Vietnam is now Japan's fifth textile/apparel supplier after China, the European Union, South Korea and USA.

Export destinations of textile/apparel - 1998

European Union 48 per cent
Japan 21 per cent
Taiwan 11 per cent
South Korea 9 per cent
USA 6 per cent
Others 5 per cent

Export destinations of textile/apparel to the European Union - 1998

Germany 47 per cent
France 15 per cent
Netherlands 11 per cent
United Kingdom 7 per cent
Italy 5 per cent
Others 15 per cent

Apparel manufacturing costs
The main apparel items manufactured in Vietnam are shirts, trousers, ties, sweaters, sportswear and socks. Privately owned firms produce more apparel than state-owned mills. Workers are abundant, well qualified and cheap, and this has, of course, attracted foreign investments.

According to Werner International, the hourly cost of manpower in Vietnam is only US$0.22. This compares very favourably with the rates in certain other exporting countries in Asia:

Vietnam 0.22 $US /hour
China 0.43 $US /hour
South Korea 2.69 $US /hour
Taiwan 4.68 $US /hour

Approximately 40 per cent of apparel exports are entirely controlled and financed by foreign firms. According to the Planning and Investment Ministry of Vietnam, in December 1998 there were 147 firms in the country funded by foreign capital mainly from Taiwan, South Korea, Hong Kong, and Japan. These 147 firms represent 20 per cent of the global sector.

Because of its low costs and its qualified workers, it is reasonable to expect that Vietnam's apparel exports will continue to increase in the short term.

by Marc de Laroche

Source : CTCOE