Page 45 - Ebook HTKH 2024

produced 256 parts and assemblies for cars with fewer than nine seats, 14 parts for cars
with more than nine seats, and 17 parts for trucks, which is very minimal compared to

the total number of components needed to assemble a car. The reliance on imported
components has led to production costs being 10-20% higher and vehicle prices being
about 20% higher than in neighboring countries.
Developing the automotive supporting industry will drive growth in other
industries such as metallurgy, plastics, rubber, chemicals, textiles, and electronics,
contribute to job creation, add value to the economy, and stimulate economic growth.
Secondly, the textile and garment industry, with over 13,000 enterprises, is the
leading export sector in the country. Vietnam ranks fifth globally in textile and garment

exports and has a workforce of over 2 million people in this sector, with 1.3 million
directly employed. Textiles and garments consistently lead in Vietnam’s export
categories. In 2020 and 2021, the export turnover for the sector was $29.8 billion and
$32.8 billion, respectively. In 2022, textile and garment exports reached $37.5 billion,
ranking third after China and Bangladesh. However, in terms of growth rate, Vietnam
ranks second after Bangladesh, with a growth rate of 10.5-11%.

Vietnamese textile and garment products are now well-established in most global
markets. Major markets include the United States, Japan, South Korea, the United
Kingdom, Germany, and China. However, the textile industry exhibits imbalances
between production stages, being strong in export processing but weak and
underdeveloped in dyeing and weaving. About 70% of Vietnam's textile and garment
products are processed using imported fabrics and materials, primarily from China and
South Korea. There is a growing trend in increasing the import of textile materials.

Statistics from the Vietnam Textile and Apparel Association (VITAS) show that
among over 3,800 textile and garment factories, only 6% produce yarn, 17% produce
fabric, and 4% are dyeing facilities. The value added in textiles and garments is higher
than in some other sectors mainly due to the high labor content in products. Domestic
enterprises’ participation in the supply chains of FDI enterprises is negligible. Currently,
domestic cotton production meets only about 1% of demand; fibers and yarns meet about

30%; fabric meets 20%; and supporting industries are underdeveloped. The sewing stage
is well-developed but mainly focuses on export processing (CMT), with material
purchase and semi-finished product processing by customers (FOB I and FOB II)
accounting for about 25%; self-design, production, and branding (ODM and OBM)
represent only 10%.
The government has some incentives for the industry, but these have been broad
and not focused on the most challenging and complex stages (such as weaving, dyeing,
and supporting industries), leading many enterprises to choose the “easier to manage”

method, investing primarily in sewing and export processing to avoid risks.
The Vietnamese textile industry faces fierce competition from other countries.
Customers are not only demanding quality, price, and delivery times but also higher
environmental protection standards when placing export orders. Major textile-
producing countries like India, Bangladesh, and Myanmar are developing green

37