Vietnamese textile firms face TPP challenges

by VTV406 October 2015 Last updated at 16:11 PM

Once VN joins the TPP, Vietnamese textile firms would no longer be liable to pay the current 20% current tax rate. However, in order to enjoy this preferential rate, the country must use raw materials from countries that are signatory to the TPP.

80% of fabric Đức Giang textile firm use made in China or Taiwan, neither of which are TPP negotiators. For months, the company has been trying to buy raw materials within the country in order to enjoy the preferential tax rate. However, the very limited number of domestic suppliers remains a major challenge.

Pham Tien Lam, CEO, Duc Giang Corporation said: It will take more than 1-2 years for us to improve the supply base. Foreign and domestic investors will have to take couple more years to establish a strong fabric base for exports to the EU and TPP markets.  

Another textile firm, the Bắc Giang Garment Corporation, exports millions of items to the US every year. However, it’s likely that the firm will still face taxes.

Luu Tien Chung, Deputy Director, Bac Giang Garment Corporation added: Most of the time customers will choose the supplier of raw materials. And they may choose those from China, because it’s cheaper, or it’s the supplier they used to work with. And we have to follow them.   

According to the Vietnam Textile and Apparel Association, 70% of raw materials are imported from China. If domestic textile firms are able to import materials from other TPP countries, an 8 dollars T-shirt will fall in price to 6 dollars. This remains a big challenges for textile sector in the coming time./.

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