Opportunities for textile, garment exports to ASEAN

Tariff elimination and non-tariff barrier reduction commitments in the ASEAN Economic Community (AEC) will create more export growth opportunities for Vietnamese goods, especially textiles and garments. 

  There are opportunities to increase Vietnamese textiles and garments’ market share in ASEAN

Statistics from the General Department of Vietnam Customs show that trade between Vietnam and ASEAN increased by 13 times from US$3.3 billion in 1995 to US$42.1 billion in 2015. Notably, Vietnamese exports to ASEAN grew by 18 times from nearly US$1 billion to US$18.3 billion.

At a recent workshop held by the Ministry of Industry and Trade to discuss measures to enhance the competitiveness of Vietnamese exports to ASEAN, Do Quoc Hung, Deputy Director of the Asia-Pacific Market Department, said the elimination/reduction of 98 percent of tariff barriers in the AEC would facilitate Vietnamese goods’ access to the ASEAN market with a more-than-60-million population and annual gross domestic product of over US$3 trillion.

Compared with many other kinds of goods, textiles and garments see more export opportunities to ASEAN. The low market share of Vietnamese textiles and garments in ASEAN gives room for Vietnam to increase the export of these products to ASEAN.

Only five among 10 AEC member countries (Indonesia, Malaysia, Cambodia, Thailand, and Myanmar) export textiles and garments, but their products are exported mostly under foreign brands. Meanwhile, Vietnam is emerging as one of the world’s leading textile and garment manufacturers. Therefore, competition in the AEC is not a big problem for the Vietnamese textile and garment sector. AEC commitments will gradually reduce taxes applied to textile and garment exports among ASEAN countries to zero percent, creating big opportunities for Vietnam to boost exports to other ASEAN countries.

In the opinion of experts, however, low local content is a major weakness of Vietnamese textiles and garments. Currently, domestically sourced materials meet a mere 25 percent of practical demand. Moreover, Vietnamese textiles and garments still lack established brands. In recent years, Vietnam has paid just little attention to the ASEAN market while concentrating on promoting exports to the US, the EU, and Japan. This is an explanation for the absence of an appropriate strategy for boosting exports to ASEAN despite its geographical proximity to Vietnam.

In the opinion of Do Quoc Hung, to become firmly positioned in the ASEAN market, Vietnamese businesses need to pay greater attention to improving technology for the purpose of enhancing the quality and the local content of products. This improvement should go along with brand building and trade promotion efforts in order to create new advantages for Vietnamese garments, rather than the current price competitiveness. On their side, state management authorities should protect the rights and interests of domestic businesses in transactions with ASEAN partners.

Phuong Lan / ven