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Lack of capital threatening garment exports
The garment industry needs to export $5.3bil worth of products in the second half of the year to fulfill its export target of $9.5bil this year. Meanwhile, it is seriously lacking capital and workers.
Vu Duc Giang, General Director of the Vietnam Textile and Garment Group (Vinatex), said that garment companies are facing a lot of difficulties, including high interest rates, high input material prices, high labour costs and a lack of workers.
More and more orders are coming which offer higher unit production costs, but enterprises cannot borrow money from banks to fulfill orders.
According to Pham Xuan Hong, Deputy Chairman of the Vietnam Textile and Apparel Association (Vitas), it is difficult to borrow money even when accepting high interest rates.
The Deputy General Director of a big garment joint stock company said that he has signed a contract on exporting 300,000 jackets in the last two quarters of the year.
The Deputy General Director estimated that he would have to borrow $2.4mil to import materials. Meanwhile, none of the three banks he contacted have given an answer on whether they will lend him money. The Director of T. Company also complained that he needs to borrow $150,000 to make products for export to Japan, but banks have agreed to lend just $45,000.
The massive number or workers leaving their jobs is also giving business leaders headaches, as this further puts them at risk of failing to deliver exports on schedule.
Phung Dinh Ngo, Director of HCM City-based Binh Hoa Garment Company, said that his company has raised workers’ salaries by 20%, but he is not sure if the move can help settle the problems with the workforce.
Vitas’ Chairman Le Quoc An has called for the government’s support to help garment companies overcome difficulties.
An said that if companies cannot access loans, it is highly possible that the goal of $9.5bil in export turnover will not be reached.
“With the current interest rates of 18% per annum for VND loans and 9-10% for US$ loans, no garment company will survive,” An said.
Vitas has asked for VND lending interest rates to be cut to 15% and foreign currency lending interest rates to 8% in order to ensure financial sources for the companies which have signed export contracts.
Giang of Vinatex has proposed cutting the fibre import tax rate from 3% to 0% as domestic supplies cannot meet the demand.
Garment companies are trying to manage somehow to retain labourers. An said that enterprises should consider the task of improving workers’ lives as a priority long-term development plan. “It is necessary to push up dialogues between workers and leaders in order to well understand the desires of labourers,” An said.
Vitas is compiling a plan on a collective labour agreement, which will be applied among Vitas’ members in the time to come. The plan will be ready by early fourth quarter this year at the latest.
VNN
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