The textile and garment industry is Vietnam’s pillar industry and an important livelihood industry. According to data released by the Vietnam Textile and Apparel Association, as of 2018, there were nearly 7,000 textile and apparel companies in Vietnam, with 2.8 million industrial workers, accounting for approximately 25% of the total labor force in Vietnam’s industrial sector, and playing an important role in maintaining local social stability. The textile and apparel industry is also Vietnam’s largest export sector and an important source of foreign exchange earnings and foreign trade surplus for Vietnam. In 2018, Vietnam’s textile and apparel exports totaled US$36.2 billion, jumping from fourth to third in global textile and apparel exports, second only to China and India.
The main advantages of Vietnam’s textile and apparel industry are reflected in the following four aspects.
Rich labor resources
Currently, Vietnam is in a demographic dividend period, with a total population of about 93 million, mainly distributed in the Red River Delta with Hanoi as the core and Ho Chi Minh City as the core. The southeastern region with the city as the center has huge development potential. Among them, the working-age population is about 50 million, the median age of the population is only 31 years old, and the population under 35 years old accounts for about 55.6% of the total population. The labor force participation rate of Vietnam’s working-age population has remained stable, reaching more than 78% in recent years. The fact that there are more female labor force than men meets the needs of textile companies to prefer female employees.
Good business environment
Vietnam’s political environment is stable, and the Communist Party of Vietnam is its only legal political party. In 2016, Vietnam’s top leadership achieved a smooth transfer of power. The term will be until 2021, and various domestic reforms and opening-up policies will continue. The Vietnamese government’s ability to maintain power and control over the political situation makes it less likely that political unrest and terrorism will break out in Vietnam. In the “Doing Business Report 2019” released by the World Bank, Vietnam’s business environment index ranked 69th among 190 economies in the world.
Tax preferential policies
In order to attract foreign investment, the Vietnamese government has made huge concessions in terms of corporate income tax and land rent. According to Vietnamese tax regulations, companies investing in Vietnam can enjoy a preferential tax rate of 10% for 15 years and a preferential tax rate of 17% for 10 years according to different conditions. At the same time, for Vietnam’s open parks, some enterprises that meet the conditions can enjoy the tax policies of “four exemptions and nine half % reductions” and “two exemptions and four half % reductions”, which has played a huge role in promoting foreign investment in Vietnam’s textile and garment industry.
Tariff advantages
Currently, Vietnam Having joined multiple free trade agreements, its tariff advantages provide opportunities for Vietnam to further integrate into global value chains and production networks. According to data from the Department of International Cooperation of the Ministry of Finance of Vietnam, as of December 22, 2019, Vietnam has participated in or is negotiating a total of 20 free trade agreements. Among them, 12 free trade agreements have taken effect and are being implemented, which gives Vietnam’s export products certain preferential tariffs. At the same time, the Vietnamese government is actively promoting negotiations on other agreements, such as RCEP (ASEAN+6), Vietnam-Norway, Vietnam-Switzerland, and Vietnam-Ireland. If the negotiations go smoothly, Vietnam’s advantage in tariffs will become increasingly obvious. </p
