Has VietNam textile really get benefit from TPP?

Textiles sector necessarily be most interested in TPP, where 12 member states agreed to separate chapter devoted to the industry which is considered a very important role in economic growth in some markets of TPP countries.

The volume of exports may increase 21%?

According to the announcement from the Ministry of Industry and Trade, textile will be eliminated tariffs immediately when the agreement was signed and took effect. However, tariffs on some sensitive products will be eliminated with a longer route, but these items have not been specifically disclosed.

TPP also sets out specific requirements for rules of origin, it means the business have to use yarns and fabrics from the TPP areas, to promote the establishment of the supply chain and invest in this sector.

To support for countries in the TPP meet the requirements of the rules of origin, the members also provide a mechanism for "supply shortage", which allows the use of some types of yarn and fabric not available in the zone.

Specifically, Textile chapter also indicates commitments on cooperation and customs enforcement to prevent tax evasion, smuggling and fraud. At the same time, the textile enterprises also have mechanisms to safeguard trade, avoid the risk of damage in case of a surge of imports.

A separate chapter on rules of origin are also provide, in which they agreed a common set of rules of origin to determine the goods 'origin' and enjoy preferential tariffs in TPP.

Also, the provisions on "accumulation", allows the use of materials of one member of the TPP. Accordingly, the exporters just show the origin of the goods shall be entitled to preferential tariff treatment.

The countries participating in the TPP are important export partner of Vietnam, particularly the US and Japan. Up to 40% of value goods of Vietnam exported to 11 countries in the TPP, including items of clothing, textiles and shoes accounted for 31% total value.

According to the forecast of World Bank, textile production can be increasing by 21% and export growth into US market can reach a record 90% in 2020. At the same time, export growth of branches can be at 41%, corresponding to the value of exports increased by $ 11.5 billion by 2020.

Personal communication with us, Ms. Dang Phuong Dung - Vice President and General Secretary of Vietnam Textile and Apparel Association, said that textile industry is positioned to meet the requirements of the rules of origin. Because today's Vietnam yarn industry has developed and ability to meet demand of the textile.

The calculated of materials investment problem.

"The time of the Vietnam Textile products manufacturing, exports up to 70% and for domestic use only 30%. So when there is higher demand in TPP, it will make the problem yarn shifting production to match market demand, now they have to fend Agricultural output will rapidly shift "- Ms Dung evaluation.

But according to the forecast of Vietnam Development and Investment Bank Securities Join Stock Company (BSC), to meet the rules of origin "from yarn onwards", companies have to use the domestic raw materials or imported from countries in the TPP in order to enjoy the preferential tax rate.

Present, have more than 70% of materials produced textiles imported from abroad. In particular, imports of raw materials from China accounting for 42% according to the Vitas, the remaining textile industry to import materials from South Korea, ASEAN, Taiwan ... This is seen as a challenge for the industry to be able to declare and take advantage of tax incentives from the TPP.

While the projects to produce materials input such as spinning, weaving, dyeing is need much capital and involves environmental problems, while Vietnam's garment enterprises are mainly small-scale, less capital, thus investment projects material supply is not interested.

Therefore, only a small number of large-scale enterprises, especially state-owned enterprises leader is Vietnam Textile and Garment Group (Vinatex) have projects to catch TPP agreement. In 2015 Vinatex announced plan to deploy 51 new projects, mainly in spinning, weaving, dyeing to supply raw materials.

According to Ms Dung evaluation, it is very difficult to have enough resources to invest materials for textile industry. For these are industries require big capital, while the issue of land, the environment, technology, management ... are the bottlenecks to industry enhance competitiveness.

"Vietnam harder than other countries about management, capital, but the problem is to have the experience to compete with countries like China, where they have gone before us in textile dyeing factories they had almost theatrical Depreciation and now they just renewed, then the investment in raw materials, our businesses must calculate, do not rushing” Ms Dung recommendations.

In the context of domestic enterprises are not enough resources to invest in raw materials, BSC said that the inflow of FDI in the textile industry increased rapidly by TPP effect. Since 2014 there were many FDI projects have poured into textiles, mainly investors from Chinese, Taiwan, HongKong.

As of mid-2015, the textile industry contributed $ 4.18 billion in FDI attracted, accounted for 76.2% of total capital. With the import structure of input materials are big changing, it will help move the supply to the countries in the TPP, reduce dependence on raw materials imported from China and Taiwan.

However, the advantages of the TPP are being identified bring beneficial for investors in weaving, dyeing, to promote investment in Vietnam with large projects to capture opportunity tax reduction from TPP.

At the same time, even when no preferential tax rate of 0 %, some of textile enterprises will also benefit indirectly from increased orders from foreign enterprises for processing.

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