A tough time for garment sector over coming months

7/10/2021| 14:58

The Vietnamese garment and textile sector has found itself in dire straits to meet its US$39 billion export target this year as it is now facing supply chain disruption, order shifting to rivals and a shortage of workers as a result of the COVID-19 pandemic, according to industry insiders.

Statistics compiled by the Vietnam Textile and Apparel Association (VITAS) indicate that the local garment and textile sector raked in US$29 billion from exports over the opening nine months of the year, thereby representing a rise of 13.2% against the same period from last year.

However, the prolonged COVID-19 outbreak accompanied by social distancing measures in place has forced many garment makers to suspend production or not to operate at full capacity. Many makers could not meet their deadline of goods delivery with partners, causing supply chain disruption that has dealt a big blow to garment production.

VITAS  says the coming months would be a challenging period of time for the garment sector as several importers have shifted their orders to other makers and employees are yet to return to work due to COVID-19 prevention and control measures.

VITAS has devised two scenarios for the local garment sector, with its exports likely to reach between US$37.5 - 38 billion this year, providing that the pandemic is fully brought under control.

In the event of the negative scenario, garment exports would only achieve between US$33.5 - 34 billion if the pandemic remains complicated, particularly if social distancing measures are eased until the beginning of December.

VITAS president Vu Duc Giang points out that rate of labour shortage from now until the end of the year will be between 35% and 37% as local firms are finding it difficult to seek alternative labour sources, mainly due to the application of social distancing measures in several localities neighbouring Ho Chi Minh City.

According to the  president, it is necessary to enhance co-ordination between businesses and local authorities by deploying anti-pandemic measures in production activities in a proper manner.

In addition, domestic firms are also advised to maintain supply chains by implementing the ‘three on-site’ model, with staff working, eating, and resting at their workplaces, or the ‘one route, two destinations’ model, with workers only travelling between their homes or accommodation facilities and the factory on a set route.

Moreover, businesses are encouraged to fulfill their unfinished orders and try to convince their importers not to shift their orders to other makers.

Le Tien Truong, chairman of the Vietnam Textile and Garment Group (Vinatex), predicts that the global market would continue to recover next year, especially in developed countries.

Yet, the price of input materials such as cotton, fiber, yarn, and fabric for the textile sector would continue to escalate, while high logistics costs would become a challenge for enterprises.

In the Vietnamese market, garment makers are required to take preventive measures until the vaccination rate reaches 75% of the population and the country achieves herd immunity in the first half next year, Truong says.