Vietnam's textile industry urged to source for raw materials from Malaysia and India

Workers at a textile company in Gò Vấp District, Ho Chi Minh City. — VNA

HANOI (Vietnam News/ANN): Vietnam's textile industry has been urged to source for raw materials from Malaysia and India while its main supplier China rides out the storm created by the outbreak of Covid-19.

Phạm Xuân Hồng, president of HCM City’s textile association said textile firms might start experiencing a shortage of raw materials by the second quarter, as Chinese firms have said there would be no outgoing shipments before the end of February.

As Vietnamese firms rely on China for 30 to 40 per cent of input materials, production would likely be hampered.

Hồng thus advised firms to pool their resources to keep their workshops running through March and April while talking to suppliers in Malaysia and India.

“This is, however, is only a temporary solution as it will be extremely difficult to replace China as our main supplier of raw input materials, ” he said.

Industry leaders and economic experts warned that although some firms may still have some breathing space having stocked up before the Lunar New Year holidays, things could get tricky soon.

The rubber and plastic industries too will face severe shortages as some 80 per cent of Vietnam's raw materials are imported from China, said president of HCM City’s rubber and plastic association, Nguyễn Quốc Anh.

If China’s industries cannot resume operations by the end of February, firms must start looking to alternative sources, possibly South Korea and the EU.

Longer transport distances and higher prices, however, would likely result in higher costs and massive disruption to operations.

Anh said the outbreak had already started hurting a number of Vietnamese firms such as automakers Hyundai and Kia.

Anh said looking for other partners at this point was near impossible as firms would be unable to negotiate new contracts within a short amount of time due to the auto industry’s complexity and numerous technical barriers. — Vietnam News/Asia News Network