Flexibly adapting to 'new normality', textile sector strongly recovers
Despite the heavy impacts from the fourth wave of the COVID-19 pandemic, Viet Nam's textile and garment industry has actively and flexibly adapted to the "new normality", maintaining an impressive growth momentum in 2021.
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| The textile and garment industry has experienced impressive growth, despite the impacts of the COVID-19 pandemic. (Source: VNA) |
Early to "hit the finish line" of USD 39 billion
The textile and garment industry has shown an impressive and strong recovery with the total export turnover of the whole industry reaching 39 billion USD, up 11.2% compared to 2020 and 0.3% compared to 2019 (before the pandemic). The garments reached 28.9 billion USD, up 4% compared to 2020; Fiber, yarn is expected to reach 5.5 billion USD, up over 49%, mainly from the export to China.
Particularly in November, the General Department of Customs announced that textile and garment export turnover reached 3.04 billion USD, up 15.2%, equivalent to 401 million USD increase compared to the previous month.
Viet Nam had changed its COVID-19 pandemic prevention and control strategy from “Zero COVID” to "living with COVID" - both safely and flexibly adapting, effectively controlling the pandemic while recovering and developing the economy. After that, the businesses, especially the textile and garment industry, have overcome difficulties and quickly caught up with the new situation.
Speaking in an interview at the 31st Diplomatic Conference (December 10), General Director of Garment 10 Corporation Than Duc Viet affirmed that the vaccine diplomacy activities were implemented very quickly and drastically, which helped Garment 10 Corporation with 12,000 employees to stabilize its production and business. By the end of 2021, Garment 10 Corporation will have achieved a revenue of over 3,400 billion VND, up 17% over the same period in 2020.
According to Mr. Than Duc Viet, in 2020, the COVID-19 pandemic heavily affected the Garment 10 Corporation in particular and the textile industry in general, with the risk of disruption, then a crisis happened with disruption of import demand, leading to serious damage to the export revenue of the textile sector.
In 2021, the effect becomes more apparent. Although some export markets of Garment 10 Corporation such as the US, Europe, and Japan have recovered after COVID-19 pandemic was kept under control, the businesses have been greatly affected by the pandemic outbreak in Viet Nam, especially when the fourth pandemic wave disrupted the production process of the Corporation.
"However, the Government's Resolution 128 on safely adapting, flexibly and effectively controlling the COVID-19 epidemic was promulgated in a very timely manner, helping the business community to immediately implement needed activities. Especially during the fourth quarter, Garment 10 Corporation increased all production activities to compensate for delayed orders in the third quarter and additional orders in the fourth quarter.
By the end of 2021, Garment 10 Corporation will reach sales of over 3,400 billion VND, exceeding the output in 2019 when there was no COVID-19 pandemic. If we account for only the revenue from garment, we had the revenue from mask production, only in 2021, we grew by 17% compared to the same period in 2020", Mr. Viet excitedly said.
A representative of TNG Investment and Trading Joint Stock Company said that its net revenue in November 2021 reached 434 billion VND , up 37% over the same period in 2020. Deducting the expenses and taxes, the Company recorded a profit after tax of 20.7 billion VND, a sharp increase compared to the profit of 7.9 billion VND in the same period last year. The gross profit margin also improved from 13% to 16%.
Generally, in the first 11 months of the year, TNG's revenue reached nearly 5,000 billion VND and profit after tax reached nearly 214 billion VND , up 18% and 38% respectively over the same period in 2020. Compared to the business plan with revenue of 4,798 billion VND and profit after tax of 175 billion VND, the Company exceeded 4.2% and 22.3% of the yearly plan, respectively.
Three scenarios for 2022
At the 2021 annual review conference and the symposium on Sustainable Development of Viet Nam's Textile and Garment industry in the context of the COVID-19 pandemic on December 17, Mr. Truong Van Cam, Vice Chairman and General Secretary of the Viet Nam Textile and Apparel Association said that in 2022, the international and domestic situation would have advantages, opportunities intertwined with difficulties and challenges. The COVID-19 pandemic is forecast to develop complicatedly; the world economic growth would not be evenly stable.
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| Conference to review the textile and garment industry in 2021, held on December 17 at various video conference hubs. (Source: Youth Newspaper) |
In the country, experience, capacity and competence to cope with the pandemic are improved, but the resilience and resources of the State, businesses and people are decreased. The risk of slow economic recovery and growth slowdown is still hidden if the pandemic could not be controlled in a fundamental way to reopen the economy, leading to inflation, then natural disasters and climate change are always lurking in potential risks.
Accordingly, the Viet Nam Textile and Apparel Association prepares three scenarios for the growth of the textile and garment industry in 2022. Specifically, if the pandemic situation is basically controlled in the first quarter of 2022, the most positive scenario is, export turnover will reach 41.5-42.5 billion USD; the average scenario will reach 40-41 billion USD, if the epidemic situation is still complicated until the middle of 2022; the least positive scenario is that the epidemic situation is still complicated and lasts until the end of 2022, the export turnover of the industry is expected to reach only 38-39 billion USD.
Mr. Truong Van Cam suggested that the State should continue to implement the vaccine strategy as a fundamental solution for businesses to recover and develop in the new normality. It is necessary to expand fiscal and monetary policies, amend inadequate regulations, reduce the cost burden on businesses, and remove the regulation on overtime work per year to 400-hour limit.
Along with those countermeasures, the textile and garment industry hopes that the Government will soon approve the development strategy of Viet Nam's textile and apparel industry to 2030, with a vision to 2035 so that the industry can be self-sufficient in raw materials, meeting the rules of origin of the free trade agreements, applying 4.0 technology to modernize the production, digitalization, and branding.
In 2022, the International Monetary Fund (IMF) and the World Bank (World Bank) forecast global GDP growth to reach 4.9%. Particularly, the world demand for textile products will return to the level of 2019, reaching roughly 740 billion USD.
The research team of Vietcombank Securities Company (VCBS) said that free trade agreements signed between Viet Nam and its partners such as the EU-Viet Nam Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will continue to actively support Viet Nam's textile and garment exports. Meanwhile, Viet Nam's textile and garment market share in the US and EU is still expanding.
The increasing consumption index will bring great opportunities for the textile and garment industry, especially when the coverage of Covid-19 vaccines in key markets such as the US and EU is increasing. In particular, Covid-19 has changed a number of industry trends, including the tendency to shift the world's textile and garment supply away from China, and Viet Nam is one of the destinations for importers.
