Vietnam's textile industry is pledging to increase the supply of raw material to garment makers the country's second biggest export earner.
In 2014, Vietnam only produced enough fabric to meet a fifth of the industry's requirements, meaning some $10 billion in fabric was purchased overseas, with nearly half of this coming from China, according to official customs data.
Vietnam’s textile and garment exporters have sourced more than 65 percent of raw materials, including fabrics and other accessories, from overseas, said Le Quoc An, a senior adviser to the Vietnam Textile and Garment Association, forecasting that thanks to the Trans-Pacific Partnership Agreement (TPP), the domestic makers of raw materials would grow quickly to meet the demand.
Vietnam's exports of textiles and garment products, the country’s second-biggest cash earner after telephones, smart phones and spare parts, could generate US $28.5 billion in 2016, up roughly 15 percent from $24.7 billion in 2015, said a senior industry official.
The TPP could slash U.S. duties on many of Vietnam’s exports of garments to zero from the current average of 17.5 percent, which will help the industry to earn an additional $15 billion in exports to the U.S and Japan and create at least 1 million new jobs, according to the Ministry of Trade.
As the TPP agreement takes effect, Vietnam is expected to be one of the biggest winners.
Eurasia Group estimates that Vietnam’s exports of garments will see 50 percent growth over the next 10 years due to the trade pact.
Foreign investors who are attracted by the country's prospect after the trade pact comes into effect and by the fact that Vietnam has expanded GDP at 6.7 percent in 2015, the fastest growth rate in the past five years, have announced several garments and textile projects with a combined investment of more than $1 billion.