Attending the meeting were also representatives of units under the Ministry: Ministry Office, Departments: Industry, Import-Export, Local Industry and Trade, Trade Defense; Departments: Department of Planning - Finance, Domestic Market, Science and Technology; General Department of Market Management, National Competition Commission, Industry and Trade Newspaper.
On the side of the Vietnam Leather, Footwear and Handbag Association, there are: Mr. Nguyen Duc Thuan, Chairman of the Vietnam Leather, Footwear and Handbag Association; Ms. Phan Thi Thanh Xuan - Vice President of Vietnam Leather, Footwear and Handbag Association, and representatives of businesses in the industry.
Restore export turnover
Reporting to the Delegation, Ms. Phan Thi Thanh Xuan - Vice President of Lefaso said that Vietnam is the 3rd largest footwear producer in the world, after China and India, and ranks 2nd in the world in terms of exports. .
In 2023, the leather and footwear industry will be greatly affected by the global economic downturn. Businesses face many challenges such as reduced orders and increased input costs, leading to the need to shrink production and reduce working hours, greatly affecting business revenue and jobs. made by workers. However, businesses in the industry still strive to overcome difficulties and achieve export turnover of about 24 billion USD in 2023, greatly contributing to Vietnam's overall export growth.
Notably, according to the Association's statistics, entering the first quarter of 2024, the industry's exports have reached 5,6 billion USD, an increase of 10% over the same period. Regarding export markets, 5 markets: America, EU, China, Japan, and Korea account for 80% of total export turnover. In particular, footwear is an industry that makes good use of FTAs, especially in markets with EVFTA and CPTPP agreements.
However, according to Ms. Xuan, the leather and footwear industry is facing many big challenges. Among them, the biggest difficulty of the leather and footwear industry is the bottleneck in the supply chain of raw materials and accessories.
In addition, major footwear importing countries have introduced a series of new requirements for importing increasingly socially and environmentally responsible products. Typically, the EU market, from March 3, has begun to introduce new requirements such as ecological design with sustainable designs. Or like the issue of traceability and supply chain transparency. If we import raw materials from abroad, we will have to make the entire production process transparent in the production area.
According to Ms. Xuan, footwear is Vietnam's main export product. With 16 Free Trade Agreements (FTAs) signed, Vietnam approaches and establishes trade relations with nearly 230 markets. Therefore, policy changes in the import market will have a strong impact on businesses in the industry.
Therefore, exporting countries, including Vietnam, need to quickly improve and make their product supply chain information transparent, starting from raw materials and sustainable production towards a circular economy. responsibility to society and the environment.
Need breakthrough solutions in sustainable value chains
At the meeting, Mr. Nguyen Duc Thuan - Chairman of Lefaso, Chairman of the Board of Directors of Thai Binh Investment Joint Stock Company (TBS Group) - said that one of the major difficulties of the leather and footwear industry is the supporting industry. Raw material supply support is not yet developed. Enterprises mainly focus on processing without developing raw materials and accessories. Currently, most raw materials for export production are imported from China, Korea and ASEAN countries. Therefore, meeting the intra-bloc origin ratio required by FTAs is a big obstacle.
Vietnam's industrial development strategy to 2025, vision to 2035 issued under Decision No. 879/QD-TTG dated June 9, 6 identified textile, garment and footwear as two of the 2014 industries. Vietnam's priority. However, to continue developing the industry in the coming period, breakthrough solutions are needed to upgrade the industry value chain to create sustainable benefits.
"To do this, it is necessary to promote the development of the raw material supply market towards scale, standardization and transparency. From there, it helps businesses in the industry, especially small and medium-sized enterprises, improve their dynamism and efficiency, have the opportunity to rise and participate in the industry supply chain.”, Mr. Thuan admitted.
On that basis, Mr. Thuan proposed to build a trading center to develop raw materials and accessories and innovate the Vietnamese fashion industry in Binh Duong.
Regarding this proposal, Mr. Le Trieu Dung - Chairman of the National Competition Commission, said that the establishment of a trading center for raw materials and accessories for the leather and footwear industry is consistent with the industry's development practices and competition laws. . With this center, Vietnamese businesses will promote their internal resources and increase their competitiveness in the market.
Along with that, Mr. Trinh Anh Tuan - Director of the Trade Remedies Department, Ministry of Industry and Trade said that the US recently issued a policy allowing the application of cross-border subsidy investigations. This policy targets processing industries and many input materials. Accordingly, if Vietnam buys raw materials from a third country, and this country subsidizes the production of these raw materials, then when Vietnam buys and uses this product for production and export, it will be taxed. Not only the US, but also the EU is also researching and implementing this policy. Therefore, having a raw material trading center is necessary for businesses to diversify their sources of input materials, to avoid being dependent on one market.
Meanwhile, Mr. Tran Minh, Deputy Director of the Department of Science and Technology - said that footwear is one of the five priority industries for development. The Ministry of Industry and Trade issued Decision 5 dated September 1852, 15 on technology programs along the value chain. Accordingly, scientific and technological activities start from research - production. Therefore, if you propose to add raw materials and accessories transactions - applications need to refer to many laws such as the Law on Technology, Supporting Industries, Chemical Law...
From the perspective of the Import-Export Department, Mr. Nguyen Anh Son - Director of the Import-Export Department discussed on-site export issues and noted that there are two important legal documents, which are Decree 2 and Decree 69/ 90 on Commercial Law. According to Mr. Nguyen Anh Son, in recent times, leather and footwear businesses have been concerned about the amendment of Decree 2007/08 on removing point c, clause 2015, article 1. When removing this clause, it is related to taxes and concepts. export at site.
Therefore, the Ministry of Industry and Trade requested the Ministry of Finance to re-evaluate the transition from processing to domestic trading because this requires an assessment of the impacts on the leather and footwear industry.
Also according to Mr. Son, the Ministry of Industry and Trade has sent a document to the Ministry of Finance, specifically the General Department of Customs to re-evaluate these impacts. And the General Department of Customs is also issuing a written explanation, it is expected that if the Decree is approved, it will not be until the end of 2024. "The Import-Export Department will closely monitor and give comments when there are related moves, The Department will report to participate and give opinions. Regarding the Department's responsibilities, Decree 90/2007 submitted by the Ministry of Trade to the Government for promulgation, the Import-Export Department will review and submit opinions to the Ministry's leadership to consider and amend this decree" - Mr. Son affirmed. .
Mr. Truong Thanh Hoai - Director of the Department of Industry highly appreciated the Association's proposal. Based on Resolution 115/2020 issued by the Prime Minister on supporting industry development, 5 centers have been built, including 3 centers for the mechanical industry and 2 centers for the textile, garment, and footwear industries. Currently, the Ministry of Industry and Trade has started construction of two mechanical centers in Hanoi and City. Ho Chi Minh.
According to Mr. Hoai, for the Textile, Garment and Footwear Center, there are currently all the necessary and sufficient conditions for construction and the Department of Industry fully supports it. “Resolution 115 itself assigns project incentives and support policies. Therefore, the Association and businesses need to clarify in what form the center will be developed and what support is needed" - Mr. Hoai noted.
Drastically deploy 5 key tasks
Speaking at the meeting, Minister Nguyen Hong Dien emphasized the importance of the leather, footwear and handbag industry. The Minister said that although we currently have an Industry Development Strategy, a project to restructure the Industry and Trade sector and Government Resolutions, the actual implementation has not been as expected, there are still some problems. exist that need to be resolved.
"The Ministry of Industry and Trade also shares with the difficulties that businesses encounter related to some businesses in the industry that still mainly produce in the form of outsourcing, low added value, and do not have enough power and strength to participate. into the global production and supply chain”– Minister Nguyen Hong Dien emphasized.
According to Minister Nguyen Hong Dien, raw materials industry is identified as one of the key industries, but we have not been able to develop it, so businesses have to accept outsourcing. Besides, the capacity to exploit opportunities from FTAs such as CPTPP, EVFTA, RCEP... is still limited. In addition, the level of automation, digital transformation, and development of production towards sustainability and circular economy is not high.
Regarding the above shortcomings and limitations, the Minister said that there are both objective and subjective reasons, of which the main subjective reasons are: Due to labor shortage in key economic regions, labor productivity is low. Dynamics are not high, causing labor costs to increase rapidly; Human resources do not meet quality requirements, labor competition is fierce; Most businesses are small and medium sized, with limited financial capacity...
Commenting on the current situation, the Minister said that in the coming time, the world economy and politics will have many unpredictable risks and challenges, geopolitical instability in the world will negatively impact the world and the world. investment, import and export business activities of enterprises, including enterprises in the leather and footwear industry. Besides, there are a series of new policies of importing countries. Typically, in the leather and footwear industry, there are 9 technical barriers. If all 9 of these barriers are erected at the same time, overcoming them will be extremely difficult. Therefore, the recommendations set forth by the Association are very important to consider.
In addition, major footwear importing countries have introduced new requirements for importing increasingly socially and environmentally responsible products (such as EPR - extended producer responsibility, CBAM - Carbon pricing mechanism). While our country's economy is highly open, policy changes in the import market will have a strong impact on businesses in the industry.
Recently, the Government of Vietnam and the Ministry of Industry and Trade have made efforts to negotiate and sign a series of free trade agreements to expand export markets for products with competitive advantages; In this regard, the Leather and Footwear industry is one of the key export industries that the Government pays special attention to and always creates favorable conditions for development. The Government has issued Decree 111 on the development of supporting industries, in which leather and footwear is one of six industries eligible for support policies that prioritize businesses investing in the production of raw materials and accessories. Besides, in 1, the Government approved the Vietnam Textile, Garment and Footwear Industry Development Strategy to 6, vision 2022; The Ministry of Industry and Trade is also developing a sustainable development program for the Textile, Garment - Leather and Footwear industry and submitting it to the Prime Minister for approval in the near future to orient the sustainable and long-term development of the industry.
In that context, in order for the Leather, Footwear and Handbag industry to continue to develop rapidly and sustainably, contributing more positively to the development of the Industry and Trade sector as well as the entire country's economy, the Minister requested the Association to The Vietnam Leather, Footwear and Handbag Association needs to coordinate closely with functional units of the Ministry of Industry and Trade to implement a specific Action Plan to implement the Strategic goals approved by the Prime Minister, in which Focus on some of the following key contents:
One is, promote propaganda and widely disseminate to member businesses about the Party's views and policies and the State's policies and laws related to the Industry and Trade industry in general and the Leather, Footwear - Handbag industry. in particular; especially: (1) Central Resolution 6 (term XIII) on continuing to promote industrialization and modernization of the country until 2030, with a vision to 2045; (2) Project to restructure the Industry and Trade sector for the period to 2030 approved by the Prime Minister and (3) Strategy for developing Vietnam's Textile, Garment and Footwear industry to 2030, vision 2035 and opportunities mechanisms and policies related to the development of the Leather, Footwear - Handbag industry.
Continue to propagate, raise awareness, and support businesses in building and adjusting strategies and converting production and business to suit the needs, trends, strategies and new regulations of markets, especially is the trend of transforming green and sustainable production and export, effectively taking advantage of opportunities from free trade agreements of which Vietnam is a member, especially CPTPP, EVFTA, RCEP, VIFTA Agreements. ,…
Secondly, closely coordinate with functional units of relevant ministries and branches to promptly update and convey information related to the Leather, Footwear - Handbag industry on the market situation and regulations and policies. New policies from foreign markets for member businesses.
In particular, the Association needs to closely monitor the new Leather and Footwear Strategy and the EU's circular shoe leather development trend; Research experience in adjusting policies of countries with strengths and potential in footwear (such as China, India, Bangladesh), then propose to the authorities appropriate solutions to ensure maximize national and ethnic interests as well as legitimate interests of businesses; At the same time, warn, orient, disseminate, share information and provide timely guidance to avoid being passive in the face of new policy adjustments and regulations from the EU and global markets.
Invest in upgrading the system to regularly update and operate the database system of manufacturing and supporting industries, including the footwear industry, to enhance connectivity and information sharing. Support businesses to participate deeply in the global production and supply chain.
Third, Promote the role of consulting and reviewing policies, actively participating in giving comments to competent agencies in the process of building mechanisms and policies related to production, business and export of Footwear - Bags (especially participating in giving comments to the Ministry of Industry and Trade in the process of building and completing the Program for sustainable development of Vietnam's Textile, Garment, Leather and Footwear industry until 2030, with a vision to 2035) and participating in building FTA negotiation plan with partners to ensure maximum benefits for the State and businesses when the Agreement is signed and implemented, thereby helping to enhance the role of the Association as both a support organization and a support organization. , accompanying member businesses, as well as being an extended arm, helping state management agencies capture information, criticize policies, and facilitate the operations of businesses.
Four is, Strengthen coordination with functional units of the Ministry of Industry and Trade and relevant ministries and branches to support businesses in research to absorb the transfer of solutions and application of new technology in the footwear industry according to production trends. export, green, sustainable, suitable to the conditions of our country. At the same time, promote the organization of trade promotion activities, market search, trade connections, and support textile, garment, and footwear enterprises in trade promotion activities, especially for products green, circular textiles in the EU market and potential markets.
Year is, Focus on organizing training courses on skills to penetrate target markets and exploit preferential commitments in FTAs; Guide and support textile, garment, and footwear export enterprises to effectively respond to technical barriers of new markets and trade defense measures; Coordinate the fight at all levels and all forums against excessive trade protection measures inconsistent with international commitments of import markets, protecting the legitimate rights of member businesses. .
Minister Nguyen Hong Dien also agreed with the proposal to establish a trading center for developing raw materials and accessories for the Vietnamese fashion industry in Binh Duong. At the same time, we request the relevant units of the Ministry of Industry and Trade, according to their assigned functions and tasks, to urgently coordinate to review and report to the Ministry's leadership to consider and resolve the Association's recommendations according to their authority. at the earliest possible time, ensuring compliance with the guidelines and policies of the Party and State and the actual situation and capabilities of the enterprise.
Accordingly, the Minister requested the Department of Industry to preside over and coordinate with units under the Ministry in coordinating with the Association to research and propose the development of a project to establish a trading center to develop industrial raw materials and accessories. Vietnamese fashion. The Import-Export Department presides over and coordinates with the Association to propose solutions to amend and supplement Article 35 of Decree No. 08/2015/ND-CP on on-site import and export.
The Minister also affirmed that the Ministry of Industry and Trade will continue to accompany the Association and businesses in the Vietnamese Leather and Footwear industry; Proactively coordinate with ministries, branches and relevant agencies to promptly solve or advise competent authorities to remove difficulties and obstacles of enterprises in investment, production and business activities. , import and export. At the same time, research and advise competent authorities to amend, supplement or promulgate new policy mechanisms to encourage, create favorable conditions and promote the development of industries in general and The Leather, Footwear and Handbag industry in particular, contributes to promoting industrialization and modernization of the country.
