Vietnam’s leather and footwear industry expects to reach a total export value of 18 billion USD this year, up 10 percent from last year, said the Vietnam Leather, Footwear and Handbag Association (Lefaso).
According to Lefasco, there are plenty of chances for expanding exports given that orders for footwear and bag processing may be diverted from factories in China that have cut back on incentives for investment in garment and footwear manufacturing to focus on high technology.
Another promising element is the European Union-Vietnam free trade agreement, which will take effect in 2018 and afford Vietnamese footwear makers more opportunities to boost exports.
To achieve this year’s target, the leather and footwear sector needs to boost technological innovation, invest in new equipment and modernise existing equipment, expand the production scale of domestic enterprises to increase productivity as well as improve the quality of products, Lefasco said.
Lafesco reported that the sector raked in 16.2 billion USD from export last year, up 8.8 percent from 2015. Of which, 13 billion USD came from footwear and the remaining was from handbags and leather items, marking respective annual increases of 8.2 percent and 11.1 percent.
According to Lefaso, leather and footwear exports last year faced many difficulties as orders from the EU market plummeted and the sector’s export to ASEAN markets was also unstable.
Since January 1, 2016, the tax levied on footwear and leather handbags and items circulated within the ASEAN bloc have been reduced to 0 percent, leading to stiffer competition from regional rivals.
Vietnamese enterprises also confronted obstacles due to the lack of capital and increasing input costs, which significantly affected the footwear sector’s export. Footwear currently ranks fourth and suitcase-bag-briefcase ranks tenth among Vietnam’s top 10 foreign currency earners.
The sector’s manufacturing index in 2016 rose a modest 3.7 percent year-on-year, much lower than the 17.4 percent and 22 percent growth in 2015 and 2014, respectively.