Footwear sector takes steps into New Year

A successful 2014 and the promise of bigger export opportunities has given the domestic leather and footwear industry the confidence to set a US$14 billion export target for this year.

Phan Thi Thanh Xuan, General Secretary of the Vietnam Leather and Footwear Association (Lefaso), told Vietnam News that the new target marks a year-on-year increase of 15%.

She said last year was a successful year for the industry, with its presence in 47 global markets seeing the total leather, footwear and handbags exports rise 22.5% over 2013 to US$12.74 billion, accounting for 8.5% of the nation's total export turnover.

Impending Free Trade Agreements (FTAs) and the Trans-Pacific Partnership (TPP) will attract new investments into Vietnam's leather and footwear industry, she said.

"We think the agreements will create remarkable growth in export turnover in the coming years," Xuan said, explaining that the ensuing reduction in tariff barriers will make it easier for Vietnam to export to large markets.

When the TPP comes into effect, the current taxes of 3.5 to 57.4% will be slashed to zero percent, which will support exporters looking to expand production and make better products, experts said.

However, in upcoming years, the sector might have to face stiff competition from India, the second biggest footwear producer in the world, Xuan said.

India has the advantage of having lower wages and production costs than Vietnam, and the Indian government has issued new preferential policies for foreign investors.

Other experts have also pointed out that when the market opens, foreign footwear makers will utilise Vietnam's preferential tax policies. If domestic firms do not respond quickly, opportunities will be lost and market shares reduced, they have warned.

The US market, which was Vietnam's largest footwear importer last year, will set up more non-tariff barriers, mainly on product safety standards, aiming to protect its own sector when the TPP is signed, the Thoi bao Kinh te Vietnam (Vietnam Economic News) quoted Nguyen Hong Duong, Deputy Director of the American Market Department under the Ministry of Industry and Trade (MoIT), as saying.

Duong advised firms to continuously update themselves on policies and market information so that they can protect themselves better. They should express their concerns through Lefaso to the Government and seek solutions, he said.

Leather and footwear exports last year saw a year-on-year growth in most of its markets. The US ranked first with imports of US$3.3 billion, up 26.71% over 2013. It was followed by Belgium with US$659 million, up 27.68%, and Germany with US$600 million, up 31.19%.

Xuan attributed the growth to many leading footwear brands shifting orders from China and Bangladesh to Vietnam in recent years, enhancement of the country's production capacity and its competitiveness capacity, and increasing foreign investment in the sector.
VNA/VOV.VN