Industry watchers can now breathe a sigh of relief to see this year’s target of earning US$9.3 billion from garment exports, up 3 percent against 2008, is within reach.
Strong signals from new markets
New markets have played an important role in the success of Vietnam’s textile and garment sector, said Pham Gia Hung, Director of the Vietnam Textile and Apparel Association (VITAS).
While American and European markets saw a decrease of 4-5 percent, Asian markets like Japan, Taiwan, the Republic of Korea and Singapore experienced a significant surge, with the most contracts ever.
A trade agreement signed recently between Vietnam, Southeast Asian countries and Japan, has helped Vietnamese businesses with legal procedures and capital and promoted a two-way trade balance.
Garment and textile exports to new markets earned US$123 million, up 50 percent compared to July and 35 percent compared to last year.
Le Dong Trieu, General Director of Gia Dinh Textile and Garment Corporation, said his company’s exports are recovering, as the contracts to Japan have risen by 10 percent.
Other businesses including Viet Tien, Sai Gon and Phong Phu have also successfully penetrated new markets.
Grounds for optimism
Although the global garment market has dropped 10-15 percent, Vietnam’s garment sector is one of the few that have risen.
The industry set a target to earn an average of US$800 million per month in the last three months of 2009 and this is a real possibility.
According to Pham Gia Hung, there are two reasons for the rise. First, there are now signs of recovery among Vietnam’s major export markets. Second, Vietnam’s biggest competitors like Bangladesh and Pakistan have reduced their exports to Vietnam’s traditional markets.
The tax exemption policy included in the bilateral trade agreement between Vietnam and Japan, which took effect in October, will encourage importers to offer more contracts to Vietnamese businesses.
Another factor behind the rebound of Vietnam’s garment export is that many new markets now import Vietnamese products for their domestic consumption instead of exporting as they used to do.