Vietnam's Garment Producers Demanded Lower Import Duty on Raw Material Imports

In Vietnam, garment and seafood companies have appealed the government to lower the tariffs on import materials to make them more competitive in the domestic market.

Because of high import duty and price rise of cotton fiber, companies are facing very hard time, losing grounds in domestic as well as international markets.

They have warned the government that, China could capture the domestic market too, taking benefit of the situation. They have demanded low tax rates of 0-0.5 percent on imports.

At present, import duty on input materials for garments is as high as 12 percent. In addition to that, because of shortage, domestic cotton fiber prices have increased by 50-60 percent.

Due to this adversity, companies are not able to buy enough input materials. Though both garment companies have big orders from their foreign partners, it is not possible for them to fulfill those orders, nor is it profitable.

They are really struggling to procure input material to fulfill their orders as the volume of available fiber is enough to meet 50 percent of their needs only.

Due to this problem, companies in Viet Thang region, have stopped production for domestic consumption since the beginning of the year, since they have to fulfill their foreign commitments.

In 2010, import bill of garment companies was nine billion dollars which mainly constituted raw materials. They have also gradually regained control on domestic market, in growing by around 20 percent.

But now, they are loosing the ground. In this situation, Chinese garment products can occupy the domestic market again. To avert such scenario, tax on import materials must be lowered, say experts.

On the other hand, some experts have warned against lowering tariffs. They believe that the companies will prefer importing materials, leading to a drop in investments in the textiles raw material industry and will also affect domestic producers badly, they fear.