Raw materials for the leather and footwear factories produced in Bình Dương Province. Việt Nam is discussing the establishment of a centre of raw materials for textile and footwear industries to meet with green requirements and increase competitiveness. — VNA/VNS Photo Hồng Đạt
HANOI: Vietnam is discussing the establishment of a centre for raw materials to support the textile, leather and footwear industries, signalling a bold effort for the billion-US-dollar sectors to enhance sustainability and climb higher up the global value chain.
According to the latest updates from the General Statistics Office, leather and footwear exports totalled US$17.67bil in the first eight months of this year, or a rise of around 10% over the same period last year.
The Vietnam Leather, Footwear and Handbag Association (Lefaso) reported an export value of US$15.2bil from January to July. Of this, footwear exports reached US$12.8bil, up 10.1%, while handbag exports rose to US$2.35bil, up 7.9% year-on-year.
“The leather footwear industry has been gradually recovering since the end of 2023, with clear improvements in recent months,” Phan Thi Thanh Xuan, deputy president and general-secretary of Lefaso, said.
Many enterprises in the industry have secured contracts until the end of 2024, and the sector is expected to reach a total export value target of US$27bil for the year.
However, the Industry and Trade Ministry said that despite the sector’s significant contribution to Vietnam’s total export earnings, the added value of domestic producers remained limited.
This was primarily because Vietnam mainly engaged in contract manufacturing and relied heavily on raw materials imported from China, South Korea, and Asean countries.
Statistics from the General Department of Customs show that Vietnam spent US$13.42bil importing raw materials for the garment and footwear industries in the first half of this year, up 14.11% year-on-year.
“The heavy dependence on imported raw materials could negatively affect the overall development of the industry, especially as many countries push for net-zero emissions by 2050 and impose stricter import requirements,” Xuan said.
This emphasised the need for a domestic raw materials centre to boost the local procurement rate, she added.
Xuan further highlighted the industry’s challenge in meeting new demands from importing countries, focusing on sustainability in production and social responsibility.
“Previously, sustainability was encouraged by customers, but now it is being enforced by policies in major importing countries,” Xuan said.
For example, since March, the European Union (EU)–Vietnam’s second-largest importer of leather and footwear products – had introduced policies related to ecological requirements, traceability, supply chain transparency, and carbon emissions.
“While these policies aim to improve quality and promote circular economy principles, they pose significant challenges for producers throughout the supply chain,” Xuan said.
As the world’s second-largest exporter of leather and footwear, Vietnam must urgently enhance its supply chain, from raw materials to sustainable production, with a focus on circular economy practices and social and environmental responsibility.
Gerwin Leppink from the Worldwide Responsible Accredited Production programme noted that expanding export to markets like the United States and EU required compliance with regulations, particularly those focused on sustainability, which are impacting both importers and producers.
Vietnam’s leather and footwear industry is identified as a key export sector, with a goal of reaching an export value of US$38bil to US$40bil by 2030, according to the industry’s development strategy approved in late 2022. The strategy also aims to develop the industry sustainably following the circular economy model by 2035, improving the domestic value chain, and integrating further into the global value chain.
However, the global trend toward greening industries is putting pressure on leather and footwear production, which is still regarded as a polluting sector, according to Lefaso president Nguyen Duc Thuan.
For Vietnam, which accounts for 7.3% of the global market, second only to China, this presents both significant opportunities and challenges.
“The application of automation, artificial intelligence, and green transition is essential for companies that want to stay competitive and climb higher in the global value chain,” Thuan said.
The proposal to establish a raw materials centre for the garment and footwear industries was a hot topic at a recent meeting of MoIT.
Truong Van Cam, deputy president and general secretary of the Vietnam Textile and Apparel Association, said that the idea had been raised several times before, but successful models had yet to be realised.
Past attempts to develop such centres in Hanoi and Ho Chi Minh City in 2004 failed due to various reasons, including lack of support and coordination among relevant stakeholders. — Viet Nam News/ANN
