Exports of the country’s leather and footwear sector have long depended
upon foreign direct investment (FDI) businesses, as 77 percent of the
total export value came from foreign enterprises.
Phan Thi Thanh
Xuan, General Secretary of the Vietnam Leather and Footwear Association
(Lefaso) told news portal ndh.vn that domestic leather and footwear
firms have mainly manufactured for exports.
Competitive labour costs have attracted FDI inflows, as well as orders from Taiwan and the Republic of Korea.
Xuan
said it could not be denied that contributions from the FDI sector
promoted export growth in the industry and provided jobs for labourers.
Local firms have received management experiences, modernising technologies and deeply joining in the value chain.
However,
she said the significant presence of FDI companies in footwear exports
reflected the low level of competition exhibited by domestic businesses.
The
sector should put in place effective and long-term solutions to balance
the portion of exports between Vietnamese and FDI enterprises, as the
FDI sector has an advantage in capital, experience and technology.
In addition, these businesses have markets they supply throughout the world.
Vietnam
has been negotiating several trade pacts, which were expected to bring
benefits to the sector. This was the reason that local footwear firms
should take advantage of such trade pacts to promote their exports.
Diep
Thanh Kiet, the association’s vice chairman, was quoted by the
newspaper as saying that another reason for the situation was the
limited support industry in the sector, noting that the industry
supplies only 30 percent of its needed raw materials, while spending
1.1-1.5 billion USD each year for imports of leather for production.
Kiet
said local producers should be more active in supplying materials,
while setting strategies and studies to meet consumers’ tastes, thus
increasing the value of exported products.
Phan Chi Dung, head
of the Ministry of Industry and Trade’s Light Industry Department, said
commercial agreements have strict regulations about the origin of
products.
Dung proposed that localities should provide favourable
conditions for the footwear industry to build concentrated industrial
parks and become involved in supplying materials.
Lefaso’s
figures revealed that the leather and footwear sector has always had
high growth rates, with export values at the top of the processing
group.
In the first half of the year, the sector earned 6.09
billion USD from exports, of which shoes reached 4.84 billion USD,
increasing 22 percent, and the value of exported bags was 1.25 billion
USD, posting a 38 percent year-on-year increase.
It added that the target of export revenues of 12 billion USD this year would be possible.-VNA