'If needles and threads have to be imported, how can we localize textiles?'

That is the opinion of Mr. Mai Tien Dung - Minister, Head of the Government Office -Head of the Prime Minister's Working Groupduring the working session with Vietnam Textile and Garment Group. Working delegationrequest the Textile and Garment Group to speed up equitization to increase the domestic ratio in the industry.

Workers work at Prex Vinh Textile Factory in Lac Son Industrial Park (Do Luong). Photo courtesy of Nghe An Newspaper

Assessing the recent efforts of the textile and garment industry, according to Minister Mai Tien Dung, the Prime Minister asked the group to clarify 6 contents to ensure stable growth, promote production and business development, promote exports, focus on which production areas, and what markets?

The Government leaders also asked Vinatex to speed up the investment progress of projects, aiming for efficiency. Currently, the group is investing in 41 projects, 19 fiber projects, 17 garment projects, 6 upgrading and repairing projects. However, the group is only doing well in the first and last stages of fiber and garment. Particularly, the important and core stages of supporting the textile and garment industry, dyeing... are currently facing many difficulties.

"Even needles, threads, buttons... must be imported, so how can we localize them?", the Minister asked Vinatex leaders, and at the same time suggestedThe group speeds up investment in unfinished projects to avoid capital loss.

Chairman of the Board of Directors of Vinatex - Tran Quang Nghi admitted that domestic fabric production has not met domestic and export demand, and businesses still have to rely heavily on imported fabrics from other countries."Vietnam's textile and garment industry is currently showing an imbalance between production stages: strong in the export garment processing stage, but weak and lacking focus in the dyeing and weaving stage, so it has to import fabric from other countries," Mr. Nghi stated the reality.

However, even though the strength is tailoring, the export processing method is still the main one, the methods that bring high added value such as OBM (selling design ideas, products...) currently account for an insignificant proportion. With the outsourcing production method, production orders depend on foreign customers from design and materials. There are very few enterprises that are level 1 units working directly with large customers.

Minister, Head of the Government Office, Head of the Government Working Group worked with the Textile and Garment Group (Vinatex) on June 20. Photo: Nhat Bac

Minister Mai Tien Dung also said that the Prime Minister directed Vinatex to accelerate equitization and privatization of garment enterprises in the entire industry, and this must be considered a key issue.

The head of the Government's working group said that during his recent trip to the US, the Prime Minister was very happy to visit the booth of the US President's daughter - Ivanka Trump selling "made in Vietnam" products. "The goods are very beautiful from design to quality... If you don't look at the labels, no one would think that they are made in Vietnam," said Minister Dung.

According to him, the textile industry has conquered important, demanding markets such as the US, EU, Japan... but is "leaving behind" traditional markets such as Russia, India, the ASEAN region...

"If the textile industry does not innovate and accelerate equitization, it will not be able to meet the market's needs, which are changing flexibly every day," the head of the Government's working group emphasized.

The fourth requirement set by the Prime Minister for Vinatex is that the textile industry must have a good solution to access production capital, instead of outsourcing, it must move towards forming a closed chain, with higher product value. "There needs to be a method to replace the outsourcing industry to increase higher value," Mr. Dung said firmly.

Faced with the "irresistible" trend of the 4.0 industrial revolution, the Prime Minister also requested Vinatex to take the lead in quickly approaching and applying modern software technology in business management and administration.

Finally, Vinatex must reform administration, including factors related to customs, taxes... reducing cumbersome apparatus, high management salaries but low worker salaries.

“On the Government side, the Prime Minister still remembers that when he first met with businesses in 2016, Vinatex General Director Le Tien Truong said how many stages 1 meter of imported fabric for raw materials must go through,” Minister Dung cited.

Textile and garment products have been among the top export items of Nghe An province for many years. Photo courtesy

According to him, this is related to tax and customs policies... the group and the Ministry of Industry and Trade need to continue to review and recommend administrative reforms.

“The Prime Minister’s spirit is to be the most determined in achieving the set goals. Vinatex’s growth in the first 6 months has shown very good signs, so can we promise the Prime Minister that the whole year will achieve revenue and export exceeding the plan by how much to seriously implement the Prime Minister’s Directive 24 on maintaining the GDP growth target of 6.7%?”, Minister Mai Tien Dung asked.

In response, Vinatex Chairman Tran Quang Nghi confirmed that the textile and garment industry's export turnover in the first 6 months of 2017 was estimated at 14.2 billion USD, an increase of 10.6% over the same period. However, although the textile and garment growth in the first half of the year was positive, he said that it was not sustainable due to the negative impact of the trade protectionism policy of the Trump administration, the interest rate increase of the US Federal Reserve (FED)...

In the context of the US not participating in TPP, the textile industry said it is trying to solve the problem of "no TPP". Business leaders predict that textile and garment exports in the last 6 months of the year will not have many breakthroughs, with an estimated export turnover of 31.3 billion USD for the whole year, up 10.9% compared to 2016. The group's export value alone reached about 2.78 billion USD, up 11.4% over the same period.

According to Anh Minh/VNE