Last year was tough for Vietnam’s garment industry with an export revenue of $39 billion, $1 billion lower than its target, according to Le Tien Truong, general director of Vietnam National Textile and Garment Group (Vinatex), who said it is critical for the sector to make moves to comply with origin rules to enjoy the preferential tariffs in free trade deals.

Lower-than-expected export revenue last year showed the industry was facing problems in participating more deeply in the global value chain and expanding exports to niche markets, according to a report in a Vietnamese newspaper.

Truong said Vietnam needs to invest in fabric production to meet origin requirements when exporting to countries with which it has bilateral or multilateral trade deals.

This would not be easy as the country must compete in designs, quality, prices and delivery time with other major fabric producers like China and India, he said.

He said investing in fabric production needs careful consideration in terms of production scale because Vietnam’s garment industry uses less than a billion metres of woven and knitted fabric every year, or 18 per cent of global exports.

If fabric production targeted only Vietnam, production scale would be too small while investing in large-scale production and competition with China and India must be taken into account, Truong added.

A report from the industry ministry said many garment firms had only 80 per cent of the order volume for 2020 as they did the same time last year.

According to statistics by the Vietnam Garment and Apparel Association (VITAS), the garment and textile industry ran a trade surplus of $16.62 billion in 2019, up $2.25 billion compared to the previous year.