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Fibre2Fashion
Published
Mar 23, 2016
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‘TPP may pose problems for Vietnam textile industry’

By
Fibre2Fashion
Published
Mar 23, 2016

Despite the large number of advantages associated with the Trans-Pacific Partnership (TPP) pact, it poses its own set of problems for the local Vietnamese garment sector, according to a Vietnamese newspaper.




Owing to the clauses in the pact, Vietnamese garment manufacturers, who largely import raw materials from non-TPP countries, will be forced to source from local manufacturers. The local raw materials industry is largely underdeveloped, and will require huge investments for producing sufficient, good quality raw materials. Besides, sustainability requirements during production are also difficult for the local producers to match.

The Yarn Forward rule requires the TPP member countries to source raw materials for garment production either locally or from other TPP members. However, approximately 60 to 75 per cent of the total raw materials used in garment production in Vietnam are imported from non-TPP countries.

Vietnamese apparel manufacturers will not be able to take the benefit of TPP, if they do not work towards the development of the local supply chain. The local supply chain largely remains underdeveloped. Besides, sustainability issues plaguing the local supply chain also remain a major concern in the international community.

Additionally, Vietnam has seen the highest amount of foreign investments in recent years. Non-TPP countries like China, Japan and South Korea are investing in manufacturing in Vietnam in order to benefit from the pact.

This may result in majority of the tax benefits being received by non-TPP countries, while the local supply chain continues to remain underdeveloped.

The implementation of TPP will take almost two more years, as member countries seek approval from their respect governments. Meanwhile, Vietnam will have to pay attention to all the concerns to take full advantage of the pact.

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