The EU economy interspersed with the resignation of the Italian Premier and the exit of the UK and Northern Ireland from the EU may now start to adversely impact Vietnam’s exports to the large markets.
Le Tien Truong, General Director of Vinatex, the nation’s leading textile and garment group, had predicted that Brexit would show its impact on Vietnam by the end of the first quarter of 2017. The EU is the second largest export market for Vietnam.
Meanwhile, the Vietnam-EU FTA (EVFTA) has been approved, but it will only come into effect in two years. This year, Vietnamese garment companies plan to focus on small- and medium-scale orders, while striving to get orders for high-end products so as to compete with countries which can enjoy preferential GSP.
Vinatex’s subsidiaries have enough orders to ensure jobs until the end of the first quarter of 2017. However, they have been told that difficulties may come in the second quarter.
Soon after the information about Brexit, the textile & garment sector sent a document to the Ministry of Industry and Trade, requesting to lower the export turnover target from US $ 31 billion to US $ 29 billion.
Vu Duc Giang, Chairman of the Vietnam Textile & Apparel Association (VITAS), then explained that the enterprises which export 50 per cent of their products to the UK faced difficulties in obtaining orders. The UK is the biggest importer of Vietnam’s garment products in the EU, which consumes 21 per cent of total exports to the EU. The demand from the market has fallen sharply.
Brexit has not only affected Vietnamese enterprises which export products to the UK, but also had an impact on British investment in Vietnam. Some British investors have scaled down their production and tried to sell their factories.