MoIT seeks to address material bottleneck

A raw material trading center

Phan Thi Thanh Xuan, General Secretary of the Lefaso, said Vietnam is the 3rd largest footwear producer in the world, after China and India, and ranks 2nd in the world in terms of exports. However, the leather and footwear industry is facing many big challenges with the biggest being the bottleneck in the supply chain of raw materials and accessories. In addition, major footwear importing countries have introduced a series of new requirements related to social and environmental issues.

Minister of Industry and Trade Nguyen Hong Dien (second left) visits the TBS Group Handbag Office Research and Development Center

According to Nguyen Duc Thuan - Chairman of the Lefaso, one of the major difficulties of the leather and footwear industry is that the supporting industry providing raw materials is not yet developed. Currently, most of the raw materials for export production are imported from the Republic of Korea, China, and ASEAN countries. Therefore, meeting the intra-bloc origin ratio required by FTAs is a big obstacle. In order to promote the development of the industry in the coming period, breakthrough solutions are needed to improve the industry’s value chain to create sustainable benefits. On that basis, Thuan proposed to construct a raw materials trading and innovation center to develop raw materials and accessories for the Vietnamese fashion industry in Binh Duong Province.

Some MoIT’s experts shared that the establishment of a trading center is consistent with the industry’s development practices and the Law on Competition. By operating this trading center, Vietnamese businesses will promote their internal resources and enhance their competitiveness in the market.

Five key tasks

Speaking at the meeting, Minister Nguyen Hong Dien agreed with the proposal to construct the trading center. According to Decree 111/2015/ND-CP on the development of supporting industries, leather and footwear is one of the six industries eligible for support policies that prioritize investment in raw materials and accessories production.

Minister Dien requested the Lefaso to coordinate closely with functional units of the MoIT to implement a specific action plan to realize the strategic goals approved by the Prime Minister, focusing on key contents as follows:

First, keep disseminating information, raise awareness, and support businesses in developing strategies and converting production and business models to meet new regulations of markets, especially the trend of transforming green and sustainable production and export.

Second, update information related to the leather and footwear industry on the market, regulations and policies of foreign markets for member units.

Third, advise functional agencies, especially the MoIT, on drafting mechanisms and policies related to production and business in the leather and footwear sector, and outline FTA negotiation plans with partners.

Fourth, strengthen coordination with relevant units of the MoIT and other ministries and sectors to support businesses in the industry in application of new technologies towards green and sustainable production and export, and in trade promotion activities, especially for green and circular products in the EU and other potential markets.

Fifth, support training on approaching target markets, exploit preferential commitments in FTAs; and respond to technical barriers and trade defense measures