US $11 billion or US $9 billion?

Garment and footwear companies are making up 23% of total export turnover, and using some two million direct labourers.

The Ministry of Industry and Trade (MOIT) held an online meeting with representatives from enterprises on January 20 to discuss the way out for the garment and footwear industry. Deputy Prime Minister Hoang Trung Hai said at the meeting that the Government had to hold the online meeting because these are the two industries which make large contributions to the export growth and create many jobs.

Hai said that MOIT has submitted the new export plan which saw the export turnover to be US $2 billion lower than the previously set plan, which should be seen as something to worry about for the trade balance and job creation.

According to MOIT Deputy Minister Bui Xuan Khu, the garment export turnover reached only US $9.1 billion in 2008, just fulfilling 95% of the target.

Amid the current difficulties, MOIT dares only register to export US $9.5 billion worth of garment products in 2008, which means a modest increase of 5% over the implemented figure in 2008. Meanwhile, the ministry previously hoped the figure would be US $11 billion in 2009.

The Deputy Prime Minister has urged enterprises to look for the way out and obtain big contracts so as to make the previously targeted figure of US $11 billion become realistic.

“The outsourcing unit price is decreasing, but will you be able to obtain more contracts,” questioned the Prime Minister, who then received the complaint that it would be a very difficult task.

According to Le Quoc An, Chairman of the Vietnam Textile and Apparel Association (Vitas), six delegations of businesses have tried to promote exports to the US and they are now awaiting the answers from the partners.

An said that garment companies are trying to boost exports to Russia. However, as Russia has not joined the World Trade Organization, it is protecting its garment industry strictly by imposing 20% in import taxes.

Chairman of the Binh Duong Textile and Garment Association, Le Hong Khoa, said that over 300 garment companies in the province still have jobs until the end of the first quarter of the year, but will later face a serious lack of orders.

“Clients have been continuously asking for price reductions. Therefore, we will have to resume negotiations right after Tet,” he said.

Khoa cited several factors he said the big advantages of Vietnamese companies in comparison with producers from other countries.

For example, Bangladeshi producers will not be able to meet the requirements on shortening the delivery time. Besides, as Vietnam is next to China, a major garment material producer, it can save some expenses.

“If enterprises can cut down some kinds of expenses, like tax payment or unemployment insurance fee extensions, they can consider cutting down the production cost and get more contracts,” he said.

More jobs for labourers

An said that he has several times proposed the Government to give every labourer in the garment and footwear industry the unemployment allowance of a two-month salary to help them seek new jobs. An also said that enterprises should be allowed to delay the payment of unemployment insurance in order to ease the burden on businesses’ shoulders.

According to Diep Thanh Kiet, Deputy Chairman of the HCM City Footwear Association, most of labourers who lose jobs work in foreign invested enterprises. Meanwhile, domestic enterprises, though facing big difficulties, have not had any massive lay-offs yet.

Kiet said that the VND 17 trillion worth of demand stimulus package should prioritize creating jobs to labourers.

Source: TBKTSG