Vietnam textile and apparel industry likely to face big challenges over the TPP’s rule of origin

During a Vietnam-Republic of Korea (RoK) scientific seminar on garment technology held in Ho Chi Minh City on September 9, co-hosted by the Ministry of Science and Technology’s National Office in the Southern Region and representative office of the Korea Institute of Industrial Technology, concern was raised that once the looming Trans-Pacific Partnership (TPP) comes into force, regulations on the origin of goods will present big challenges to Vietnam’s textile and garment sector.

Moon Byung-chul, Commercial Counsellor at the RoK Consulate General in Ho Chi Minh City, said that Vietnam must follow TPP’s “yarn-forward” rule of origin which requires that only textile and apparel products using the US and other TPP countries’ yarns and fabrics qualify for the benefit of the agreement.

Although Vietnam is one of the world’s top apparel exporters, 70 percent of its textile makers are working as sub-contractors on medium and small scales, but are still weak in fibre manufacturing, weaving and dyeing, with almost all input materials imported from China and the RoK.

According to the Vietnam Textile & Apparel Association (VITAS), the rate of locally-made products in the sector stands at a mere 55 percent, attributable to the weak weaving and dyeing capability.

VITAS Vice Chairwoman Dang Phuong Dung revealed that weaving and dyeing projects fail to receive licences due to their high risk of environmental pollution.

She called on Vietnamese apparel makers to learn from the RoK – a fashion powerhouse in research and development in order to produce quality fabrics and also suggested zoning off regions and areas exclusively designed for weaving and dyeing and equipped with infrastructure and waste treatment facilities, making it easier to pitch to foreign investors.