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Shortage causes footwear, furniture headaches
Vietnam’s footwear and furniture making sectors have become reliant on foreign suppliers, importing 80 percent of the materials they require.
The shortage of materials has existed for more than a decade, worsening year by year, but this year the shortage has reached crisis point, industry leaders claim.
Diep Thanh Kiet, deputy chairman of the Vietnam Leather and Footwear Association (Lefaso), said 80 percent of the leather the industry need – estimated at 350 million square feet – was now being supplied by foreign manufacturers.
The footwear sector generated US$4.5 billion from exports in 2008 but imported materials cost about 60 percent of the value of exports, Kiet said.
Ironically, seven years ago Vietnam set a target to lift the local content in its products to 65 to 70 percent by 2010.
As well as importing leather, the main input material, the footwear sector also sources secondary materials, such as metal rings, shoelaces and ornamental items, from overseas, Kiet said.
Vietnamese firms do produce materials that footwear makers could use but the goods are more expensive and of lower quality than similar imported materials, he said.
The wooden furniture sector is experiencing a similar situation.
The sector exported $2 billion of goods last year but imported about $1 billion of materials from overseas, according to Nguyen Chien Thang, chairman of the Ho Chi Minh City Fine Arts and Woodwork Processing Association.
Thang said Vietnam’s banks were contributing to the shortage of locally-available materials.
Timber, the industry’s main input material, is usually sourced from forestry projects, which take at least 15 years to begin producing timber, he said.
But few firms invest in forestry projects because banks will not provide such long-term loans, Thang said.
The timber available from Vietnam’s forests was limited so the sector’s only option was to import materials, he said.
Le Nguyen Minh, Tran Vu Nghi
vietnews
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