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NEWS UPDATES 11 May 2010

Vietnam garment exports rise 19% in Jan-April 2010

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The rapid-fire signing of export contracts since the beginning of 2010 has put Vietnamese garments among six items with export revenues of over one billion dollars, reported VietNamNet Bridge.

Garment export revenues reached $3.04 billion over the last four months, an increase of 18.9 percent over the same period of 2009. Yet these exports are creating losses, not profits.

Despite the global economic crisis, the garment industry still fulfilled its export plans for 2009 and revenues continue to increase in the first four months of 2010. Statistics show that, to date, garments have fulfilled 1/3 of their yearly export plan, making the goal of exporting $10.5 billion in products for 2010 become feasible.

Nevertheless, insiders are now worried about the export revenue growth. The more products exported, the bigger the losses they suffer, even as the export price has increased by 5-7 percent over late 2009 and by 15 percent over the same period of 2009.

Input material prices are the problem. They have increased so sharply that modest export price increases of several percent cannot cover expenses.

Vietnam still relies on 90 percent imported input materials. Cotton prices have surged from $1.3-1.4 per kilo earlier this year to $1.9 per kilo as a result of India’s decision to halt cotton exports. The fiber has increased in price by 34.3 percent in comparison with the same period of 2009.

The price hikes of input materials have, in turn, caused a sharp rise in material import revenues at $738 million in the last four months, just below the import revenues for cars and steel.

Despite input material price increases, Vietnamese exporters cannot renegotiate export prices, which are fixed in their contracts.

Garment companies also worry about the labor shortage, which has led to a 10 percent decrease in production capability. Garment workers can generally earn no more than $200 a month, or four million dong. In 2009, despite the export price decrease of 10-20 percent, enterprises still had increase wages by 10 percent at retain workers. Now, the companies cannot keep workers at such low wages.


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