Vietnam Garment and Textile Group (Vinatex) director general Le Tien Truong said exports for the industry will most likely jump exponentially once the trade pact comes into full force.
As a result of the FTA, Vietnam exporters to the Eurasian Economic Union (EEU) have an opportunity to become a leading player in the market in just the next three years, Truong said.
Pursuant to the agreement, exporters to the EEU – encompassing Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan – will enjoy tariff free exports on substantially all industry export items.
Under the FTA the two sides have pledged to open the market for substantially all items traditionally traded between the two nations, or in other words, to roughly 90% of the total trade volume between the two sides.
Dang Phuong Dung, Vietnam Textile Association (VITA) vice president and secretary general, said last year Vietnam’s combined garment and textile exports to the individual nations comprising the EEU was roughly US$17 million.
Once the agreement is firmly in place Dung guesses that the combined imports and exports by Vietnam's garments and textiles could expand by as much as 50% in the first year alone.
Vietnam currently ranks 8th among garment and textile exporters to the EEU with combined export revenue of more than US$300 million, which is modest compared to the potential.
Dung added that thanks to the signing of the FTA, a wave of foreign investment has been flowing into the industry from the outset of this year, broadening the horizons for Vietnamese products.
However, businesses in the industry have their work cut out for them, as they will need to get their act together and strive to increase their competitiveness in terms of quality of product and timelines of delivery.
At a recent conference Prime Minister Nguyen Tan Dung warned that the FTA imposes a number of challenges for garment and textile exporters operating in Vietnam.
The Prime Minister specifically warned that businesses should not think the EEU is an easy market and added domestic businesses will have to compete fiercely with foreign rivals on the basis of quality of product.
To take full advantage of the FTA, Vinatex and the Vietnam Textile and Garment Association (VITAS) have put in place comprehensive measures introducing cooperative opportunities to EEU partners and conducting fact-finding tours.
A representative from the Vietnam Chamber of Commerce and Industry (VCCI) WTO centre in turn warned businesses should pay more attention to ensuring quality and origin of products.
Businesses must also make sure their staff has adequate language skills and choose reliable partners, the VCCI representative said.
A few businesses have suggested the government facilitate setting up payment methods by Russian currency as Russia is a huge and potential market but import-export activities are currently transacted by US dollars.
A representative from Vinatex unveiled the garment and textile industry has made significant progress over the past decade with export revenue having increased from US$5.9 billion in 2006 to US$24.5 billion in 2014.