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Shortage of material
Textile and garment firms face a sharp rise in the price of cotton and wool, their main raw materials. Global cotton prices are at their highest in the last 15 years.
The Viet Nam Textile & Apparel Association blamed this on India's clampdown on cotton exports and the droughts and floods in other major cotton producing countries like China and Pakistan.
Viet Nam, which can produce only 5 per cent of its cotton needs, has to import large volumes from the US, India, and African countries.
The association said last year its members imported some 300,000 tonnes. In the first half of this year the country shelled out US$500 million to import 260,000 tonnes of cotton, a year-on-year increase of 30 per cent.
Around 370,000 tonnes will be imported for the whole year.
Vu Huy Dong, chairman and CEO of the Thai Binh Province-based Damsan Textile JSC, said the increase in cotton prices this year, especially in the last two months, had increased production costs.
Nguyen Ngoc Binh, former general director of the Viet Nam Cotton Corp, has been quoted as saying that cotton prices will continue to increase through the end of next year.
Due to the rising prices, many countries have imported and stockpiled large volumes, but not Viet Nam because of its limited financial capacity.
Nguyen Son, deputy secretary general of VITAS, said Vietnamese enterprises could only afford to import cotton for three months at a time.
But VITAS feared the increase in prices of textile products was too low and could not make up for the rise in cotton prices.
The country textile and garment exports have been worth around US$7.5 billion in the first nine months, a year-on-year increase of 17 per cent.
Whole year exports are likely to reach $10.5 billion, according to VITAS.
In the domestic market, one of the major concerns for textile and garment firms was the quantity of goods smuggled in from China, VITAS said.
Le Hung Vong
vietnamnews
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