The SSI have stated that this year, the Vietnam National Textile and Garment Group and its branches have set a target of raking in VND 50.9 trillion, with pre-tax profits reaching VND1.55 trillion, up 11 per cent from 2019.
At present, several companies are attempting to negotiate orders for the second quarter of 2020. SSI believe that export activities will see robust growth this year as a result of orders moving from China to Vietnam, especially orders from emerging markets that benefit from the recently-implemented CPTPP such as Canada and Australia.
Despite these positives, the SSI predicts that the sector’s export activities are likely to face a number of challenges.
The biggest difficulty will likely come from an increasing number of FDI-invested factories moving to the nation, resulting in the competitiveness of wages becoming fierce between domestic firms and FDI-invested enterprises.
In addition, electricity and transportation costs will also have an affect on the sector’s competitiveness as the textile industry mainly depends on the import of machinery, raw materials, and accessories with a proportion of up to 60 per cent.
With the strict rules of origin being put in place as a result of the The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), along with an underdeveloped value chain, garment companies are poised to face several hurdles as they remain heavily dependent on importing materials from China.