Major changes in the way clothing export licences are granted to garment producers have been announced by the Vietnamese government in a bid to boost competition and productivity rates.

From 2002, Vietnam's clothing exporters will automatically qualify for licences to the European Union, Canada and Turkey instead of having to wait for government approval.

Under the old system, quotas were allocated based on the performance of a company in the previous year with no reference to their future performance or ability to meet targets.

But under the new system, firms that can prove they can fill large quotas and have competitive products and a proven ability to find sales markets, will be awarded the licences.

"The new mechanism will reduce the accumulation and sale of quotas among companies and promote competition," said Le Van Thang, deputy head of the Trade Ministry's Import Export Department.

He added that the changes could be worth up to an extra $100 million in EU trade which could help Vietnam's export revenue may grow by more than $400m to over $2.5 billion next year.

Thang said many clothing producers found it hard to switch their production and accommodate abrupt changes in export policy during the year and that the new mechanism should help encourage stability and allow firms to plan more accurately.

He added that the changes will leave firms completely free from licensing or quota restrictions to sign export contracts in the first quarter of next year.

Under the new system, if exports from a certain category reach 50 per cent of the yearly quota in the first quarter, no more licenses will be granted automatically.

The same safeguard will come into effect if a category's exports reach 70 per cent of the total before July 26 or reach 90 per cent during the year, and once all automatic licences have been allocated, the remaining quotas will be distributed by the authorities.