Textile and garment sector earns huge profits in first half

These positive signs can largely be attributed to an increasing consumer demand for garments in several major markets, such as the United States, the EU, Japan, and the Republic of Korea, many of which have been able to bring the COVID-19 pandemic under control.

Most notably, the Vietnam National Textile and Garment Group (Vinatex) has taken the lead among profitable businesses after recording after-tax profit of VND292 billion, a nine-fold increase compared to the same period from last year.

Industry insiders say the ongoing political crisis in Myanmar and the fresh coronavirus outbreak in key garment makers of India and Bangladesh have prompted importers to shift to the Vietnamese market.

In addition, Vietnam has also benefited from numerous free trade agreements (FTAs), such as the the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU–Vietnam Free Trade Agreement (EVFTA). Indeed, the implementation of these FTAs have made the selling price of Vietnamese products in the EU market become more competitive.

The country’s success in COVID-19 containment efforts last year has served to build considerable trust among foreign partners, leading to an increase in order numbers. Many textile and garment companies have even received production orders until the end of the year.

However, social distancing measures against COVID-19 recently adopted in various localities have seen numerous local firms encounter difficulties in export activities, leading to delays in delivery or the cancelation of orders, according to Tran Nhu Tung, chairman of the Thanh Cong Textile and Investment Joint Stock Company (TCM)'s board of directors,

The TCM representative anticipates that there will be several hurdles for the industry, particularly with a decrease in output in the near future as the latest wave of COVID-19 is hitting Vietnam leading to lockdowns in several localities. The Vietnam Textile and Apparel Association (VITAS) forecasts that garment exports will rebound providing that the pandemic is brought under complete control after August.

In line with this scenario, the garment industry is anticipated to earn export turnover of between US$32 - 33 billion this year, says the association.