Vietnam’s export of garment and shoes seems poised to record significantly lower growth this year.
The numbers for the whole year of 2016 are not available yet, but according to the General Department of Vietnam Customs, the total export of garment and textile products was $22.58 billion in the year to December 15, up 4.8 per cent on-year. This is the lowest growth in 10 years.
Vu Duc Giang, chairman of the Vietnam Textile and Garment Association, said at a recent conference reviewing the annual performance of the sector that the year saw the biggest ever shifting of orders from Vietnam to other countries.
He attributed the slow growth to fluctuating material prices. Also, foreign direct investment in the field saw remarkably slower growth this year than in recent years.
Shoe export showed a similarly grim picture. Vietnam exported $12.3 billion worth of shoes in the period. The growth rate was 8.1 per cent, lower than the 16.3 per cent of 2015 and the 22.9 per cent of 2014.
Talking to local media, Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear and Handbag Association attributed the less-than-desirable results to political instabilities, especially Britain’s exit from the European Union, which caused demand in Europe to decrease, resulting in falling orders from importers.
The US is among the biggest importers of Vietnamese garment and shoe products. Even before Vietnam, together with 11 countries, signed the Trans-Pacific Partnership Agreement (TPP) in February, many garment and shoe manufacturers as well as material producers have come to set up shop or expanded investment in Vietnam, citing the deal as one of the biggest reasons.
Now that President-elect Trump has said that the US would withdraw from the TPP, which he called “a potential disaster,” and Japan, another member country, has said the TPP would be meaningless without the involvement of the US, the prospects of the deal are grimmer than ever.
Xuan said that the country’s shoe sector still has a lot going for them with or without the TPP.
According to Xuan, as the EU-Vietnam Free Trade Agreement will become effective in 2018, 2017 will be the year where importers, customers, and investors prepare for better growth in the next period.
“Moreover, there are other free trade agreements, such as the one with the Eurasian Economic Union (EAEU). Vietnamese shoe exports to this market are still very modest,” she said.
Representatives of VITAS also said that the garment sector, which exported 40 per cent of its products to the US, is banking on EU and the EAEU market in the coming period. Besides the association highlighted Myanmar as a potential market in the ASEAN for Vietnamese garment and textile companies, as the US lifted the embargo on Myanmar in October and allowed the country to enjoy preferential tariffs.
By Ha Duy