Garment exports in Vietnam will exceed 45 billion dollars in 2023

The Vietnam Textile and Garment Association (VITAS) forecasts garment exports to reach more than $45 billion by 2023, up from $44 billion this year, driven by opportunities provided by trade agreements. free trade (FTA) of a new generation.

VITAS President Vũ Đức Giang stated that although textile and apparel exports will continue to experience difficulties in the first half of 2023, there are positive aspects that can be pinned on for the second half.

The European and US markets are expected to heat up from the second half of 2023, along with the opportunities brought by the new generation FTAs, Giang said. For example, under the EU-Vietnam FTA (FTA), many products exported from Vietnam to the EU will enjoy zero tariffs from 2023.

Prime Minister Phạm Minh Chính’s visit to Europe would also open up important opportunities to attract investment in the textile and clothing industry, especially in the production of raw materials.

The Vietnam National Textile and Garment Group (Vinatex) said that although forecasts had been made in advance, its members were still surprised by unforeseeable changes in 2022, such as the conflict between Russia and Ukraine and rising oil prices. , inflation and interest rates, which have caused a sharp drop in demand in importing markets.

However, Vinatex has estimated its 2022 consolidated revenue at more than VND 19.53 trillion ($826.84 million), up 15% from last year and 8% above target, and consolidated profits by more than VND 1 trillion, 14.6% more than the target. These figures are considered encouraging amid numerous market difficulties.

Vinatex’s president, Lê Tiến Trường, pointed out three scenarios: in the best case, the world economy will stabilize and geopolitical conflicts will have ended by the end of the second quarter, which means that exports in 2023 could increase between 4 % and 5% compared to 2022.

In the intermediate scenario -instability will persist, inflation will continue and interest rates will continue to rise until the third quarter- exports could remain unchanged compared to this year. And in the worst-case scenario, in which the world economy goes into recession, 2023 revenues could be 5% lower than this year.

Meanwhile, VITAS forecasts that its export revenue this year is likely to be close to $44.5 billion, up 10% from 2021.

By 2023, exports from the textile and clothing sector could reach US$47-48 billion in the positive scenario and US$45-46 billion in the pessimistic scenario, Vinatex said, adding that the way companies adapt to changes in the markets will affect their growth in any circumstance.

Prime Minister Phạm Minh Chính’s visit to Europe would also open up important opportunities to attract investment in the textile and clothing industry, especially in the production of raw materials.

In the positive scenario, global market instabilities will be under control and all activities in the sector could have recovered by the end of the first quarter of next year. In such a case, it is possible to achieve a revenue of 48,000 million dollars.

Giang, however, said that in the second scenario, under which the global market will recover in the second half of 2023, the export turnover can reach 45 billion dollars.

In the current context, when international markets do not place orders for textiles and clothing in the long term, companies can switch to producing lower value items. In 2022, as markets and products have begun to diversify, growth continues to be sustained.

In any case, the textile and clothing markets will not be able to recover at least in the first half of 2023.

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However, experts argued that there are still some bright spots next year, noting that the COVID-19 pandemic is getting under control, that the world is getting used to a new normal, that Asia-Pacific is expected to be the region fastest growing in 2023, that China is easing the zero-COVID policy, and that logistics costs show signs of declining.

Giang said that an important factor supporting the growth of the textile and garment industry is the domestic supply capacity of raw materials, which is increasing year by year. The national supply now satisfies between 45% and 47% of the demand for raw materials for the production of clothing and textiles.

Increasing the local sourcing rate was very important because only by doing so can Vietnam enjoy preferential tariffs under FTAs, Giang said, adding that this was a great motivation for Vietnam’s textile and garment industry to invest in the production of fibers, threads and raw materials, as well as to attract foreign direct investment (FDI).

Sustainability

Domestic garment companies are also switching to organic production to meet the demand of import markets.

According to Trường, the production of raw materials is the first step to apply the greening required by import markets, such as the US and Europe.

For this reason, Vinatex organized the production of yarn from recycled or organic materials. In the last five years, the production of cotton fiber with organic ingredients represented between 30% and 35% of the total production. In addition, the factories were equipped with solar energy, which covered around 20% of their energy consumption.

Organic production was the new norm that was introduced to push us to increase capacity and be able to participate in the global supply chain, Trường stressed.

Vitas submitted to the consideration of the Ministry of Industry and Commerce and the Government a draft strategy for the development of the textile and clothing industry in the period 2021-30, with a vision until 2030.

According to Giang, the strategy would be an important foundation for achieving the industry’s sustainable development goals, from which companies would develop practical solutions to catch up with global trends.

Emphasis will be placed on calling for investment to establish the supply chain of raw materials to solve the shortage of domestic supply, greening the textile and clothing sector, and training the workforce to meet demand, he said.

Investments in technology, automation and digital management will also be promoted, in addition to guaranteeing the transparency of production and the business market, he added.

Article republished from the Vietnamese state media VNA in the framework of an agreement between both parties to share content. Link to the original article:https://vietnamnews.vn/economy/1444947/garment-exports-expected-at-more-than-45-billion-in-2023-association.html