Textile, garment sector prioritizes material development

Dependence on imports

According to statistics from the Ministry of Industry and Trade (MoIT), domestic enterprises have to import about 70 percent of materials, mostly from China. Due to weaknesses in weaving and dyeing, the domestic textile and garment sector exports yarn and imports a large amount of fabric materials for production.

Pham Van Viet, Vice Chairman of the Ho Chi Minh City Textile, Garment, Embroidery and Knitting Association, said that domestic textile and garment companies have to import not only materials, but also specialized machinery, buttons, and other accessories. Products of the textile and garment supporting industry still lack a stable output market, discouraging investment in this field.

The textile and garment industry depends heavily on imports, with low added value, and lacks self-sufficiency in production. Therefore, the textile and garment supporting industry needs to be prioritized so that it can soon attract investment from multinational corporations to drive the formation of a system of supporting industry enterprises serving this sector.

Domestic textile and garment enterprises have to import about 70 percent of materials

Business support

In the strategy to develop the textile, garment, and footwear industries until 2030 with a vision to 2035, the MoIT has proposed technological innovation solutions, especially in weaving and dyeing, to promote the supporting industry for the textile and garment sector and gradually fill the supply shortage.

The textile and garment sector is coordinating with the MoIT to establish large industrial parks with wastewater treatment systems meeting environmental standards.

The MoIT has recently submitted a proposal to Deputy Prime Minister Tran Hong Ha regarding the revision of Decree 111/2015/ND-CP on the development of supporting industries. This draft revision includes many new policy incentives that have been proposed.

In addition to corporate income tax incentives, the draft revision of Decree 111/2015/ND-CP has developed various mechanisms and policies to help supporting industry enterprises enhance their competitiveness, meet the requirements of multinational corporations and companies producing finished products, and attract investment in the supporting industry sector.

According to the draft, the level of interest rate differential subsidy is set at three percent per year. Under this policy, each project will be eligible for this credit support only once during the same period if the project has not received any other state budget-funded credit support.

The duration of the Government’s credit support is equal to the loan term, but capped at a maximum of 10 years from the date of signing the loan contract. This credit support policy applies to loan agreements signed and disbursed up until the end of 2030. Priority will be given to supporting industry products in the fields of textiles and garments, leather and footwear, electronics, automotive manufacturing and assembly, mechanical engineering and manufacturing.

To support the textile, garment and footwear sectors in securing a stable supply of raw materials, the MoIT has worked with the Vietnam Leather, Footwear and Handbag Association to propose the establishment of a center for raw material trading and development. This center is envisioned as a hub for showcasing samples, distributing raw materials, facilitating investment, transferring technology, and enabling transactions between domestic and international enterprises. Many textile and footwear companies are optimistic about the center’s potential, hoping for its prompt establishment to address the bottleneck in raw material supply.

A representative from the Vietnam Institute of Industrial and Trade Policy and Strategy suggested that a comprehensive mechanism is needed to facilitate stronger business linkages between foreign direct investment (FDI) enterprises and domestic firms. Such a framework should encourage experience-sharing, business collaboration, and production partnerships, ultimately driving the development of supporting industries in the textile and garment sector.

While encouraging FDI, it is essential to establish and enhance incentive principles, raise technical standards and regulations for products, and ensure environmental protection, resource conservation, and energy efficiency in line with regional and global standards.

Experts emphasize that policies to develop supporting industries in the textile and garment sectors should address the following issues: Industrial zones dedicated to producing raw materials and accessories must have convenient transportation links and be connected to seaport systems; A supply chain linkage should be established between textile-dyeing facilities and garment factories in the region to minimize transportation costs and reduce product prices; There should be financial mechanisms and tax incentives for enterprises investing in wastewater treatment systems.

Development policies, particularly industry strategies, should clearly identify key regions and localities in planning industrial zones and wastewater treatment plants. This targeted approach will attract secondary investors to address supply shortages effectively.

To partially meet the demand for raw materials, the textile and garment sector is collaborating with the MoIT to develop large-scale textile industrial zones equipped with wastewater treatment systems. These zones aim to meet environmental protection standards and align with the sector’s “greening” initiatives.