Vietnam's textile industry is too dependent on imported materials, while to benefit from TPP tax rates, it must have domestic TPP raw materials.

According to the Ministry of Industry and Trade, Vietnam's textile and garment industry is considered a core benefit when joining the TPP Agreement, however, the textile and garment industry is facing major challenges in the supply chain to meet integration needs.

Domestic enterprises "powerless"

According to the provisions of the TPP Agreement, goods that want to enjoy preferential tax rates must meet the rules of origin of this Agreement. For textiles, the main rule of origin is “yarn forward”, meaning that the entire process of spinning, weaving, dyeing and sewing clothes must be carried out within the scope of the TPP member countries.

This regulation, according to Dr. Tran Thi Minh Huong (National Economics University), is "to encourage the Vietnamese textile and garment industry to develop further, invest in developing the fiber and fabric industry, and create opportunities for Vietnamese enterprises to participate more deeply in the supply chain in the TPP countries".

Vietnam's textile industry is assessed to have many opportunities to benefit from TPP.

However, currently, domestic textile industry has to import 60% of raw materials from China. Domestically, only 40% of raw materials are produced, but mainly knitted products, simple technology. For weaving, 70 to 80% is imported.

Faced with this situation, the Ministry of Industry and Trade acknowledged: Although clearly aware of the opportunities when joining the TPP if the conditions of origin of raw materials are ensured, domestic enterprises are almost “powerless” because investing in raw material production requires a large amount of capital. To invest in a weaving and dyeing factory requires tens of millions of USD, which is beyond the capacity of small and medium enterprises in the textile and garment industry.

Processing, cannot decide on production materials

Regarding the reason for the prolonged import of raw materials by the textile and garment industry, the Ministry of Industry and Trade explained that Vietnamese enterprises mainly process or produce under the direction of foreign enterprises, so they cannot decide on the raw materials for production. In addition, most domestic enterprises still use outdated technology, poor designs, and product quality that does not meet customer needs, so they cannot compete.

Faced with the above situation, experts believe that to solve the problem of raw material origin in TPP, textile and garment enterprises must coordinate with each other. Exporting enterprises must proactively seek out raw material production enterprises to minimize imports. This is the form of ensuring both the rules of origin of raw materials and price competitiveness.

However, in reality, according to Dr. Tran Thi Minh Huong, the internal linkages within the industry from yarn - weaving - dyeing - sewing are still weak. The value chain of the textile and garment industry includes 5 basic stages: supplying raw products (yarn, thread, fabric), finishing sewing, exporting, marketing and distribution. In this value chain, Vietnam's textile and garment industry mainly operates in the sewing stage, which is considered to have the lowest added value.

Carefully filter FDI capital into textiles and garments

To benefit from TPP, Dr. Tran Thi Minh Huong recommends that our country needs to build a strategy to develop the textile and garment industry, in which we should not stop at processing but should make efforts to shift to other forms of production and export, participating more in marketing and distribution to create more added value.

There should be policies to support and facilitate the textile and garment industry, such as: developing domestic raw material areas; incentives to attract investment in developing supporting industries, fibers, weaving, and dyeing (incentives for land funds, land rental prices, low-interest credit); carefully attracting FDI in the textile and garment sector; encouraging enterprises to produce and export packages from design to finished products.

Enterprises themselves need to be proactive and promptly grasp market information and TPP regulations, thereby building appropriate business strategies. Enterprises need to participate more deeply in sales and distribution in the industry value chain. In particular, they need to master fashion design to build a brand for Vietnamese textile and garment products.

At the same time, it is necessary to focus on human resource training, improving technology, increasing labor productivity and product quality, and enhancing competitiveness in the market.

In particular, businesses in the industry need to enhance their connections and use each other's products to create a more complete supply chain.../.

According to VOV