The great potential that the textile industry has brought and is bringing

Although it is possible that the current textile and garment industry is only bringing modest wages to many workers, imagine if the textile and garment industry in Vietnam were not as developed as it is now, a few million people would be employed. Where will you go, what will you do and how will you live in this industry?

For a long time, we often hear a lot of complaints and warnings from many people inside and outside the industry that the textile and garment industry only brings relatively low added value, because it mainly relies on outsourcing. wages are cheap, so even if the Trans-Pacific Partnership (TPP) becomes a reality, it will be difficult for Vietnam’s textile and garment industry to take advantage of the opportunities that TPP brings. again.

First, we need to immediately admit that a very large part of the textile industry is often based on outsourcing, using a lot of labor  with a salary of only a few million VND/person per month. , so it is true that the added value for this industry in Vietnam is still low, especially compared to other segments such as design, distribution and retail, which are largely held by foreigners. .

But no matter what, we must also recognize fairly that the added value of the textile industry does not stop at wages, and only for workers in the textile industry. The growing textile and garment industry also offers many other growth opportunities that spread such as accessories manufacturing, packaging manufacturing, transportation, distribution, services, energy issues, construction. etc… In turn, these industries will again drag along with the development of many other industries. Just like that, related industries will also promote each other to grow together, creating superior added values ​​than if just staring at each individual industry and developing on its own.

Second, we also cannot ignore the contribution of the textile industry from a very obvious issue that almost no one thinks about when discussing the contribution of the whole textile industry. It is this industry that has been bringing to the budget a small amount of revenue in the form of import tax on raw materials, value added tax, personal income tax, corporate tax, etc. fees according to the regulations. Taking the example of import tax, the preferential tax rate for importing cotton fabric is about 12%; Some fabrics imported from China also have higher tax rates, up to about 15%-20%. Therefore, if you calculate briefly, in terms of taxes and fees of all kinds to be paid to the budget, it has reached tens of USD or more for a shirt with a selling price of 100 USD abroad. .

For the same reason, the taxes and fees collected from the above “additional” industries should and should be included in the contribution of the textile industry to Vietnam’s economy.

Third, the textile and garment industry is also one of the initial and necessary foundations to be able to create a transformation within the economic structure of almost any developing economy. laborers with low qualifications and skills, cheap as in Vietnam in recent decades. Even the “dragons of Asia” such as Hong Kong and Taiwan used to have a thriving textile industry before it went into decline because of the rising cost of labor,  recruiting workers  difficult. to the extent that the costs are too expensive, uneconomical following the growth and development of the economies of these territories, forcing them to “relocate” this industry to countries that are at a low level of development. than, whose labor cost is said to be cheaper.

With Vietnam, although it is possible that the current textile and garment industry is only bringing modest wages to many workers, imagine if the textile industry in Vietnam was not developed as it is now. About a few million people working in this industry will go, what to do and how will they live?

And even if it is an industry that only brings low added value, the textile industry is still a “promising land”, a fiercely competitive battleground with many developing countries like Vietnam, Cambodia, Bangladesh, Sri Lanka, Pakistan, and Myanmar too… Not many developing countries are looking down on, denying the opportunity to develop this industry if any. The main evidence is that many Vietnamese textile and garment enterprises are speaking out and are concerned about losing orders to businesses in Cambodia and Bangladesh with cheaper labor costs than in their own countries, while those in Vietnam are not satisfied with their orders. Outsiders seem to want to talk about the future of this industry in Vietnam.

Fourth, we can also consider TPP as a strong catalyst to promote the development of the textile industry in Vietnam. TPP will effectively reduce import tax on products to 0% in the main market, the US. Thanks to the tax reduction to about 0%, the competitiveness of Vietnam’s textile and garment products compared to current competitors such as Cambodia, Bangladesh and even China naturally skyrocketed overnight (when the tax rate was reduced to about 0%). for which the TPP comes into force).

And yet, TPP will also promote the development of upstream industry in the textile and garment industry with the rule “From yarn onwards”. Of course, a very large part of this upstream industry will be the first step (as it is now) will be in the hands of FDI enterprises, from China, Hong Kong, Taiwan, Malaysia or the US, but That wouldn’t be a shame because it’s as obvious as it is with almost any other industry in the beginning of the economic transition, when it’s beginning to grow, when investors The domestic market still does not have enough financial capacity, management capacity and technology to compete with foreign investors.

In other words, Vietnam’s textile and garment industry has been contributing more and more important to what many people have been and are seeing. This role and contribution is expected to be much higher when TPP comes into effect.