Page 559 - ISC PROCEEDINGS 21.4

APPLYING ACTIVITY-BASED COSTING (ABC) MODEL TO VIETNAMESE

TEXTILE AND GARMENT ENTERPRISES IN THE DIGITAL ECONOMY

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Nguyen Thanh Trang* , Nguyen Thi Thu Thuy , Hoang Van Khoa , Phan Thi Hong Tham ,
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Pham Mai Lan 5
1, 2, 3, 4, 5 Hanoi Open University, Hanoi, Vietnam.
(*E-mail: thanhtrang.kt@hou.edu.vn)

ABSTRACT
Vietnamese textile and garment enterprises make a significant contribution to
export turnover, create jobs for millions of workers and are diverse in scale and products.
Notably, many businesses are applying smart factory models. The Activity-Based Costing
(ABC) model is an effective tool to help Vietnamese textile and garment businesses
increase operational efficiency, meet green export criteria, and enhance competitiveness
in the digital economy. Research on the appropriate application of the ABC model for
textile and garment businesses in the digital economy is essential. This article aims to
provide an overview of ABC models for textile and garment businesses, the characteristics
of Vietnamese textile and garment businesses in the digital economy, and the factors
influencing the application of the ABC model in these businesses.
Keywords: Activity-based costing, application, textile and garment businesses,
digital economy.

1. Introduction
Currently, Vietnam ranks third among the world's leading textile and garment
exporting countries. The Vietnamese textile and garment industry is one of the key export
sectors, providing employment for millions of workers with approximately 7,000
businesses of diverse sizes and product lines. Other small and medium-sized enterprises
(SMEs) have also achieved many positive results.
The textile and garment industry is also one of sectors that has accelerated the
digital transformation process. According to data from the National Steering Committee
on Digital Transformation, by the end of 2024, approximately 2,500 manufacturing
enterprises had adopted the smart factory model, mainly focusing on the mechanical,
electronics, and textile and garment sectors. However, Vietnamese textile and garment
businesses are currently facing numerous challenges in the digital economy. Firstly,
Vietnamese textile and garment businesses have not yet mastered new technologies and
the supply chain for raw materials, relied heavily on foreign sources, especially China.
Secondly, there is significant pressure from the need for investment capital to modernize
information technology infrastructure and green technologies in the garment industry, as
many textile and garment businesses are located in rural areas where infrastructure is not
yet strong enough to support digital transformation. Thirdly, businesses also face
challenges from sharply increasing production costs in the digital economy (increased
input costs, high logistics costs, increased wages after provincial mergers; costs of
maintaining compliance with evaluation criteria from various organizations, and high
costs for information and data security in the digital environment...). Fourthly, challenges

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