Vietnam’s textile industry is bucking heads with government policy one again.
A few days after the Vietnam Textile and Apparel Association, or VITAS, came out against a proposed government plan to increase the country’s minimum wage, it now said it has appealed to the country’s government not to impose import tariffs on polyester fiber.
VITAS has written to the Ministry of Finance and the Ministry of Industry and Trade urging them to abstain from lifting import tariffs up to 2 percent, saying the move would add to the challenges facing textile and garment exporters.
With Vietnam not a major raw material supplier, companies have to import fabric and fibers to produce apparel, and with costs rising, the import duty would further pit factories at risk.
VITAS has also proposed the government consider adjusting the insurance premium rates paid by firms to a more reasonable level, so that the enterprises can improve their competitiveness to expand production, and revisit the tax law on the import of raw materials for fabric production.
Also recommended was an amendment stipulating the conditions for licensing importers of printers for textile and garment products.
“The owner of the enterprise must have a college diploma or higher in the printing industry or be issued a certificate of professional training in print management by the Ministry of Information and Communication,” VITAS said.
[Read more about Vietnam minimum wage: Vietnam Textile & Apparel Association Calls for No Minimum Wage Hike]
In the first six months of the year, Vietnam’s textile and garment exports are estimated at $14.1 billion, up 10 percent over the same period of 2016, while imports were up 16.27% to $9.5 billion.
Even with the U.S. pulling out of the Trans-Pacific Partnership, Vietnam’s apparel shipments to the U.S. increased 5.6% to $7.7 billion for the first eight months of the year, gaining over a percentage to hold 14.4% of U.S. apparel import market share, according to the International Trade Administration’s Office of Textiles and Apparel.
VITAS is also opposing a proposed 6.5% increase in the minimum wage from the beginning of next year, saying the move will reduce competition, shift the labor structure and prevent expansion.
The proposed monthly wage hike of $8 to $10 a month is said to be the lowest raise ever offered. VITAS said minimum wage in domestic enterprises increased 21.8% between 2007 and 2017, leading many to reduce workers’ annual bonuses and turn to more automation.