Positive signs for VN’s textile, garment sector

Wokers have jobs when textile and garment companies have orders. (Photo: SGGP)

VietNamNet Bridge - Due to the world economic downturn, businesses in the textile and garment sector faced a decline in exports and a lack of orders in the first few months of the year. However, there are clear signs of recovery, with the number of orders improving.

Increasing orders

At the end of this year’s second quarter, the number of orders at textile and garment businesses in Ho Chi Minh City have increased by 15-20 percent compared to the first few months of the year.

Most businesses have orders from foreign partners, which will keep them busy until the third of quarter.

According to Phung Dinh Ngo, director of Binh Hoa Garment Company, the company has had recent orders, with exports to the EU showing satisfactory results in the second half of the year.

Pham Xuan Hong, chairman of Sai Gon 3 Garment Joint Stock Company, said his company has earned US$25 million from garment exports this year. Exports to Japan accounted for 65 percent, with orders from America and the EU stabilizing.

Vietnam has achieved remarkable growth in garment and textile exports to Japan at a time when exports to its major markets, like the US and the EU, plunged.

According to textile and garment companies, many importers stopped orders or hastily cut orders during the economic downturn. When the world market began to improve, traders did not have enough goods to sell, leading to the recent increase in orders.

The quick recovery of Vietnam’s textile and garment industry has shown its particular advantages compared to other countries.

Chairman of The Vietnam Textile and Apparel Association (Vitas) Le Quoc An said Japanese importers are switching their orders from other countries to Vietnam, as they appreciate the consistency in the quality of Vietnamese made clothes and the skill of its workers.

Vietnam’s textile and garment exports in the first six months of this year totaled more than $4 billion, a decrease of 1.3 percent compared to the same period last year.

The decrease is much lower than the forecast of 15 percent and was relatively lower than other countries.

Textile and Garment exports still achieved growth rates in Japan, Korea, Taiwan and Norway.

The highest growth was for Japan at 25 percent.

The recent signing of the Vietnam-Japan Economic Partnership Agreement is expected to help further increase Vietnamese clothing exports to Japan.

Under the treaty, from July 1 Japan will eliminate import tariffs on Vietnamese textiles and garments that use raw materials of Vietnamese, Japanese or ASEAN origin.

Taxes are currently five to ten percent.

Pham Xuan Hong, deputy chairman of Vietnam Textile and Garment Association, said exports increased to Japan due to Vietnam’s quality orders and reasonable prices.

Increasing orders, decreasing workforce

Orders and workers are two the most difficult aspects at the current time for the textile and garment sector.

With the positive signs from the market and stable long term contracts, businesses do not have enough workers.

Many companies have had to outsource to fulfill contracts.

The serious shortage of workers has forced many garment companies to recruit untrained workers and offer attractive salaries. This compares to the number of job losses in the clothing industry worldwide.

At some businesses, there has been a 50 percent drop in the work force since the end of 2008.

Pham Xuan Hong, a member of the association, said some companies laid-off workers when they had no orders, but when they have orders they face difficulties in recruiting workers.

In the first few months of the year, many companies cut down on workers when they had no orders. This resulted in many of the trained workforce returning to their hometowns. Companies do not know where to find them in order to resume normal production.

Ho Chi Minh City based textile and garment companies, on average, are 10 -15 percent short in employees.

Many companies have offered more than VND2 million per month and ensured rewards for Tet, but are still struggling to recruit enough workers.

With the problems in hiring enough staff, the industry expects to make $9.1 billion compared with the initial target of $9.5 billion this year.

VietNamNet/SGGP