• Vietnam is widely expected to be one of the main beneficiaries of the revised multilateral trade pact CPTPP. 
  • A new report suggests Vietnam could increase garment and textile exports by over 10% in 2018 if it exploits the markets signed up to the new trade deal.
Vietnams textile and garment industry is focused on achieving a target of $35bn in exports in 2018

Vietnam's textile and garment industry is focused on achieving a target of $35bn in exports in 2018

Vietnam could boost garment and textile exports to the Comprehensive and Progressive Pacific Partnership (CPTPP) countries by over 10% in 2018 if it expands and exploits the markets signed up to the new trade deal.

The Southeast Asian country is widely expected to be one of the main beneficiaries of the revised multilateral trade pact, which was signed by the 11 remaining countries of the Trans-Pacific Partnership (TPP) deal early last month.

The landmark agreement will slash tariffs and foster trade in a marketplace worth close to US$13.5trn. A recent report by the World Bank offers a conservative assumption that CPTPP would increase Vietnam's GDP by 1.1% by 2030 to 3.5%. Under CPTPP, imports and exports are predicted to grow by 5.3% and 4.2% respectively.

Vietnam is also expected to benefit from trade liberalisation and improved market access, while the deal is expected to help stimulate and accelerate domestic reforms in many areas. 

Vietnam apparel sector set to reap CPTPP benefits

According to FPT Securities Company (FPTS), the export of textiles and garments to CPTPP countries accounts for around 15% of Vietnam's total export turnover. Once up and running, CPTPP will be the second largest market for Vietnam's garments and textiles, after the US, at 47%.

In the period 2013-2017, the average growth rate of Vietnam's textile and garment exports to CPTPP countries was 8% annually. Among the CPTPP countries, Canada, Japan, Mexico, Australia, New Zealand and Singapore are heavily dependent on imported textiles, mainly from China.

Vietnam has not signed bilateral trade agreements with Canada, Mexico and Peru, so the competitive advantage of Vietnam in these markets is currently weak. According to FPTS, CPTPP will create a "remarkable advantage" for the country to expand and exploit these markets with export turnover expected to reach US$4.8bn in 2018, representing growth of 10.5%.

Vietnam's textile and garment industry is focused on achieving a target of $35bn in exports in 2018, a 10% increase on $31bn in 2017. This is despite global political and economic instability, particularly in Korea and the US, which could have a negative impact on consumer demand.

The World Bank report advises Vietnam that if it is to fully reap the benefits of CPTPP, it needs to take further steps to enhance competitiveness and trade facilitation. These include behind-the-border issues such as continued improvement in connectivity to enable integration into global value chains and keeping trade costs low.