FTAs give impetus to fulfill footwear export target of US$27 billion

Statistics compiled by the General Department of Vietnam Customs indicate that footwear exports during the seven-month period soared by 10.4% to reach US$10.147 billion, while handbag exports also edged up by 7.4% to US$1.621 billion against the same period from last year. Of the figure, foreign-invested enterprises (FIEs)’ revenue accounted for 77.9% of total export turnover.

Exports to EVFTA and CPTPP member countries see double-digit growth

Figures indicate that footwear exports have recovered strongly since the remaining months of last year, with several businesses securing export contracts for the entire year.

Most notably, leather and footwear exports to 16 key countries including the United States, China, Japan, Belgium, the Netherlands, Germany, the UK, the Republic of Korea, Canada, France, Spain, Italy, Australia, Mexico, the United Arab Emirates (UAE), and Taiwan (China) accounted for over 88.4% of the sector’s total export turnover.

In addition, the leather and footwear industry has moved to maximise incentives under the terms of FTAs, namely the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to boost exports.

Specifically, exports to EVFTA and CPTPP member countries during the seven-month period increased by 23.8% and 13.9%, respectively, while exports to the ASEAN market rose by 2.4%.

Sustainable development solutions needed

Nguyen Cong Han, deputy director of the Hai Phong city’s Department of Industry and Trade, pointed out that footwear enterprises have not yet got involved in the FIEs’ production chain and the global value chain.

In addition, the footwear industry’s technology equipment is mainly imported from Taiwan (China) at 65.79%, China at 23.68%, and a small proportion from Japan, Germany, and Italy, with technology level being at an average level.

Labour productivity and the sector’s production efficiency have remained limited with production activities mainly being outsourced to foreign firms.

Phan Thi Thanh Xuan, vice president and general secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso), emphasised that with the green transformation for sustainable development being a global trend, Vietnamese enterprises are required to quickly improve the transparency of their supply chain, from the stage of raw material and sustainable production towards a circular economy model that is responsible to society and the environment.

Experts also pointed out that in order to seize upon opportunities brought about by FTAs, the development of supporting industries and raw materials for the domestic leather and footwear industry can be viewed as extremely important.

Simultaneously, there should be synchronisation in terms of mechanisms and policies in a bid to attract investment from multinational corporations whilst strengthening connectivity among local firms to further participate in the supply chain of raw materials for FIEs.