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VITAS proposed to the Prime Minister to remove difficulties for textile and garment enterprises

24/08/2022 04:06 PM
On the morning of August 11, VITAS attended the National Conference between the Prime Minister and businesses with the theme "Proactive adaptation, quick recovery and sustainable development" chaired by Prime Minister Pham Minh Chinh. The conference took place on the online platform at the Hanoi bridgehead, connecting with many bridgeheads across the country. Attending and managing the Conference were Deputy Prime Ministers Le Minh Khai and Le Van Thanh; representatives of leaders of departments, ministries, branches, localities and many businesses across the country.
National conference between the Prime Minister and businesses with the theme “Proactively adapt, recover quickly and develop sustainably” - Photo: VGP

Presenting at the conference, Mr. Truong Van Cam - Vice President and General Secretary of the Vietnam Textile and Apparel Association (VITAS) said that the business situation of textile enterprises in the first 7 months of 2022 can be said to be quite favorable. Orders were abundant, the workforce gradually stabilized after Vietnam quickly deployed the vaccine and transitioned to a new normal, flexibly adapting to Covid-19. The whole textile industry has achieved positive results. Total export turnover in the first 7 months of 2022 is estimated at 26.55 billion USD, up 16.5% over the same period in 2021, total import turnover of textile raw materials and accessories in 7 months is estimated at 15.48 billion USD. up 7.9%. Trade surplus reached 11.07 billion USD, up 31% compared to 7 months of 2021. Handling 1.9 million industrial workers with an income of about 8.5 million VND/person/month. However, according to VITAS Vice President, from the second half of 2022, businesses face many difficulties and challenges, although the whole industry still keeps the goal of striving to reach 43.5 billion USD for the whole year 2022.

Mr. Truong Van Cam, Vice Chairman and General Secretary of VITAS spoke at the Conference - Photo: VGP

Mr. Truong Van Cam said that Vietnamese textile and garment enterprises will face three big challenges.

Firstly, the textile and garment industry is a huge import and export industry and is directly affected by unpredictable fluctuations in the world. For example, at present, some countries with which Vietnam's textile and garment industry has great relations, such as China, Japan, and South Korea, are still applying strict measures against the Covid-19 epidemic, which has significantly affected the supply chain of raw materials, auxiliary materials and product consumption. Besides, inflation in the US and Europe also affected the purchasing power of consumer goods, including textiles, causing orders to tend to decrease. The conflict between Russia and Ukraine also causes input materials to increase, transportation costs are also very high (about 3 times higher than in the last 5 years), making the cost of businesses increase by about 20-25%. From the beginning of the year until now, the local currencies of many countries in the region have depreciated considerably against the USD, for example, the renminbi has depreciated by 5.3%; Korean Won 4.7%; NT$ 6%; Thai Bath 3.4% and Japanese Yen nearly 16%, while VND only depreciated 1.8%, which is detrimental to exporters. In addition, challenges from major Vietnamese markets such as the US and EU also create pressures for businesses in the coming time such as the issue of tracing the origin of cotton and products made from Xinjiang cotton when "Religious". Law on Prevention of Forced Labor with Uighurs” effective from June 21, 2022, or intended to collect carbon fees, requirements on recycled and reused content for imported goods in the EU market.

Secondly, the textile and garment industry is a labor-intensive industry and is greatly affected by the impact of Covid-19. Many workers who have returned to their hometowns have not returned, recruiting new workers is also facing difficulties and increasing training costs, and the productivity of newly recruited workers is low. Especially the situation of many employees withdrawing social insurance once, working for a short time and then applying for unemployment insurance, has caused labor instability.

Third, after a long period of focusing on fighting the epidemic and maintaining production as much as possible, many textile and garment enterprises have faced many difficulties in capital for production and business, while support packages were approved by the National Assembly 350,000 billion VND, were slowly implemented, tax policy, especially the State's tax refund for enterprises was very slow, making it even more difficult for enterprises.

Faced with the challenge, VITAS proposed to the Prime Minister and concerned ministries and agencies to take measures to support and direct remove obstacles for the business community. Specifically:

Firstly, it is proposed that the Government soon approve the "Strategy for development of the textile and garment and footwear industry to 2030, with a vision to 2035" to create conditions for the formation of large industrial parks with centralized wastewater treatment, with advanced technology, green technology to attract investment in textile dyeing, solving bottlenecks in fabric supply for garment export, and meeting origin requirements for tax incentives from FTAs.

Secondly, it is proposed to remove the regulation on paying import tax on the spot for goods used for production and export (currently, it must be paid first and refunded later) (Prescribed in Decree 18/2021/ND-CP dated 11/3/ 2021). This regulation causes many disadvantages because

(i) discourage export of manufactured goods;

(ii) causing inequality between export processed goods and export manufactured goods;

 (iii) Enterprises must pay VAT immediately (if late payment must be fined or charged interest), but when exporting, the tax refund is too long, some enterprises have accumulated capital of 140 billion VND this year such as Viet Tien Garment, 40 billion VND Phuong Dong Garment. Interests on bank loans during the tax refund delay period must also be borne by the enterprise.

Thirdly, Vitas proposed to soon implement the support package for business recovery and the support package to ensure social security and job support for employees in the support package of 350,000 billion VND. In particular, soon deploy the 2% interest rate support package according to Decree 31/2022/ND-CP dated May 20, 2022, to help businesses reduce difficulties.

Fourth, to ensure the stability of human resources for production:

- Proposing the Government to submit to the National Assembly to amend the Law on Social Insurance. Currently, the contribution rate is too high, especially reviewing the retirement period and pension enjoyment conditions to suit the production and business areas, avoiding the situation where employees apply for mass leave to withdraw one-time social insurance, causing changes in the Huge labor force for the Enterprise.

- Amend the regulations on enjoying unemployment benefits to avoid the situation of young workers changing jobs.

For example, only working for 12 months and applying for leave to enjoy 3 months of unemployment benefits causes labor instability.

- Suggest the Government have a mechanism to support the training of lecturers and students to learn textile, dyeing and digital transformation at universities and colleges because this is a longer and more complicated training field. More expensive costs are not suitable for the financial autonomy of the schools.

Fifth, propose to the Government and Ministries:

- Having orientation, recommending risks, solving problems related to payment mechanism, transporting goods and documents... for enterprises exporting and importing into regional countries and around the region with Russian-Ukrainian conflict.

- Working with countries and provinces that share a border, but have different anti-epidemic policies, coordinate to solve problems on the movement of people, vehicles and goods to create favorable conditions for export. , import, meet the supply of raw materials and accessories for production, avoid disruption of the supply chain

- Oriented to deal with issues related to the US Uyghur Forced Labor Act. Currently, businesses are very confused.

Sixth, currently, there is a situation where enterprise leaders receive many terrorist calls and messages to collect a debt because employees of the enterprise borrow black credit. Request the authorities to intervene to put an end to this situation.

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