AKFTA accelerates Vietnam textile industry

The ASEAN – Korea Free Trade Agreement (AKFTA) led to a significant growth in Vietnam’s textile and garment industry. According to its open-access commitment, Vietnamese textile and garment products that satisfy certificate of origin norms will enjoy zero tariffs once the agreement takes effect from January 1, 2016. Currently, Vietnamese firms pay a tax of 8 to 13 percent.

The FTA would be a considerable opportunity for both countries’ enterprises. South Korea is Vietnam’s fourth largest importer of textiles and garments, accounting for more than 10 percent of the market’s export turnover, according to the Ministry of Industry and Trade.

It is forecast that textile and garment turnover in the South Korean market could reach $16.3 billion for 2015, increasing 11.6 percent year-on-year.

In 2011, the sector’s export turnover to South Korea was $900 million. A year later it increased to $1.1 billion and in 2013 it reached $1.6 billion. Last year’s total of $2.4 billion was a staggering 27 per cent increase over that of 2013.

South Korea currently provides nearly 20 percent of Vietnam’s textiles and with the large volume of ancillary materials it also exports.

According to the Vietnam Textile and Apparel Association (Vitas), South Korea imported US$627.4 million (S$840 million) in textiles and garments from Vietnam in the first four months of this year

The turnover marks an increase of 8.25 percent over the same period last year, making Vietnam the second largest textile and garment exporter to South Korea, after China. It composes one-fourth of South Korea’s garment market.