Nghe An Textile and TPP test

(Baonghean) - Among the 12 countries that signed the agreement, Vietnam is considered the country that benefits the most from this "agreement of the century", in which textiles and garments are, in our opinion, one of the first "gifts" that Nghe An can enjoy. However, please do not think of TPP as a magic wand.

It must be recognized early that TPP is not a ready-made meal full of delicacies. Integration is always like that, the winners can gain a lot, the losers can lose a lot, but certainly no one gains everything and no one loses everything.

Hoang Thi Loan Textile Factory

Before the TPP “arrived” in the province, the textile and garment industry had developed a Project on export development orientation in Nghe An for the period 2011 - 2015 and was approved by the Provincial People's Committee. This is considered a "stick" for businesses to confidently invest capital, it also shows the province's viewpoint on the textile and garment development strategy in this land of Lao wind. It affirms that textile and garment still holds an important position in Nghe An's industrial sector, contributing to promoting the advantage of labor resources, creating jobs for workers, and rapidly increasing export turnover.

According to our research, there are currently hundreds of enterprises producing and trading textile products in Nghe An. We can mention "brothers and sisters" such as Hoang Thi Loan Textile and Garment Joint Stock Company; Phu Vinh Company Limited; X20 Garment Factory of Lam Hong Garment Company (Military Region IV). HALOTEXCO Garment Joint Stock Company, Haivina Kim Lien Company Limited, Prex Vinh Company Limited, ... along with the increase in quantity, the effectiveness of the above names also contributes to the overall competitiveness of the province, bringing Nghe An textile and garment industry to a new higher level.

If in 2008, the export turnover reached 4.4 million USD, then the financial crisis and global economic recession in 2009 had a huge impact on the export market of Nghe An textile and garment enterprises, leaving the turnover at only 2 million USD. The positive shift returned slightly from 2010 with the export value reaching only 3.1 million USD, accounting for 1.84% of the total export turnover. However, with the country's accession to the WTO, a spectacular breakthrough was written in the following years.

Continuously in 2012 and 2013, the textile and garment export turnover reached 73 million USD, accounting for 19.4%. In the first 7 months of 2015 alone, it reached 41.7 million USD, an increase of 71% over the same period... There is no doubt that textile and garment is one of the most spectacular breakthroughs in the field of investment in export production, contributing to the most obvious advantage of the province.

Returning to the TPP story, after the agreement has just been signed, it is very likely that TPP will be ratified by the national parliaments in the first months of 2016. The “luck” for the textile industry has been enthusiastically talked about quite a lot. The tax rate from over 20% to 0% will certainly bring Vietnam’s textile industry an unprecedented price competitive advantage.

However, that is the “carrot” side, but what about the “stick” side? Like many other localities, our textile industry has long imported raw materials mainly from China (one of the exclusion conditions of TPP). So where will we get the yarn to weave fabric, where will we get the fabric to make clothes? That is clearly the most obvious but also the most difficult question to answer for Nghe An textile industry in the face of the attractive TPP opportunity!

Perhaps it is time for us to have a calculation with specific roadmaps for each stage. In the short term, we cannot abandon traditional markets because of TPP. In other words, we must accept "half-way" with TPP. Along with that is a long-term strategy on raw material sources. Previously, we had a famous fiber factory right in Vinh City; what is the reason to prevent us from thinking about it now? It is not a story of a day or two, what we consider is not something that other localities do not consider. In an increasingly specialized market economy, choosing to produce raw materials yourself is not necessarily the optimal choice.

However, in production, local raw materials are always an advantage that no one wants to refuse. Difficult does not mean impossible! Looking back, a few decades ago, how many people could have imagined that we would have a closed-loop clean milk production and processing corporation with thousands of hectares like the TH brand today? Everything can still start from zero! TPP is an opportunity, that is indisputable, but it is very possible that TPP is also a harsh test of the market. Be careful and calm, do not miss it but do not be too hasty.

Nguyen Khac An