POWER OF CONNECTIONS

Skills for Trade and Economic

Diversification
Analysis of the textile and garment
industry in Viet Nam
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 1

Skills for Trade and Economic

Diversification
Analysis of the textile and garment
industry in Viet Nam
2  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

© International Labour Organization and Viet Nam Textile and Apparel Association 2025.
First published 2025

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  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 3

X Acknowledgements

The International Labour Organization (ILO) and Viet Nam Textile and Apparel Association (VITAS) would
like to express sincere gratitude to the Governments of Japan and the Netherlands for their strategic
financial support. We also greatly appreciate the contributions and participation of ILO tripartite partners
and all stakeholders in the textile and garment industry in Viet Nam who played crucial roles in the
development and publication of this research report.
The government, employers’ and workers’ representatives, as well as sectoral stakeholders who served
as tripartite technical reference committee members are warmly acknowledged. Their contributions
from the outset and inputs during technical meetings and consultation workshops from September 2023
to August 2024 in Hai Phong, Ho Chi Minh City and Ha Noi were invaluable. The ILO and VITAS specifically
thank representatives from the following agencies and institutions for their valuable contributions: the
Directorate of Vocational Education and Training (DVET) of the Ministry of Labour, Invalids and Social
Affairs (MOLISA), the Viet Nam Industry Agency of the Ministry of Industry and Trade (MOIT), Viet Nam
General Confederation of Labour (VGCL), Viet Nam Chamber of Commerce and Industry (VCCI), Viet Nam
Textile and Garment Trade Union, textile and garment enterprises, education and training providers
across Viet Nam, as well as ILO specialists and officials from the Country Office for Viet Nam, Regional
Office for Asia and the Pacific, Sectoral Policies Department (SECTOR), and the Skills and Employability
Branch (SKILLS) in Geneva.
This research report was developed by Dr Dao Quang Vinh, an ILO national consultant and former
Director General of MOLISA’s Institute of Labour, Science and Social Affairs (ILSSA). It also benefited from
a thorough review and additional technical inputs provided by Souleima El Achkar, an ILO international
consultant. Additionally, a research team from the National Institute of Vocational Education and Training
(NIVT) under the DVET, MOLISA, contributed to the research.
On VITAS’s side, development of the publication was led by Dr Truong Van Cam, Secretary General
and Vice President with support from Ta Van Huyen, Tong Thi Bich Hue, Nguyen Thi Hong Thu, Phan
Thi Thanh Nga, Nguyen Canh Hung, and Nguyen Thi Thom. On ILO’s side, technical guidance was
provided by ILO specialists Akiko Sakamoto, Bolormaa Tumurchudur-Klok, and Maria Beatriz Mello da
Cunha. Additional inputs and comments during the finalization of the publication were provided by
Ingrid Christensen, Country Director, Felix Weidenkaff, Nguyen Hong Ha, Gulmira Asanbaeva, Nguyen
Hoang Ha, and Nguyen Ngoc Duyen from the Country Office for Viet Nam, with Hoang Nguyen Huan’s
administrative and logistics assistance. The research report was proofread by Simon Drought, an ILO
external consultant.
4  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Preface

Over the past four decades, Viet Nam’s textile and garment industry has grown significantly to become
a key part of the national economy. It has created millions of jobs, especially for women, and helped shift
the labour force from agriculture to manufacturing to contribute national poverty reduction efforts.
Despite this progress, the industry now requires a step change to upgrade its value chain and adopt a
more sustainable and competitive growth underpinned by enhanced workforce skills.
Despite investment and expansion, the industry today struggles with low productivity and a reliance
on imported raw materials. Future growth depends on effective resource management and green
production practices, necessitating a workforce skilled in new technologies and sustainable practices.
The demand for skills is evolving with the Industrial Revolution 4.0 reshaping the industry and requiring
technical and soft skills. New roles like digital fashion designers, supply chain managers, green and
sustainability specialists highlight the need for specialized training. Reskilling and upskilling are crucial
steps for the industry’s shift to higher value-added activities and compliance with increasingly stringent
international social, labour and environmental standards.
Despite the availability of vocational education and training (VET) institutions in Viet Nam, enterprise-
based training is common. Moreover, the skills supply side is characterized by training programmes that
are out of step with industry needs, outdated equipment and teachers’ and instructors’ lack of practical
experience. Coordination and partnerships between training institutions and enterprises are essential
to align education and training programmes with niche industry needs.
To seize growth opportunities and meet the demands of a dynamic global market, Viet Nam’s textile
and garment industry must invest in its most precious asset – its human resources assets. This includes
improving the quality of training, fostering stronger links between enterprises and education and training
institutions, and enhancing the image of the industry to attract and retain talent. By addressing these
challenges, Viet Nam can ensure its textile and garment sector remains competitive and sustainable in
the long term.
This report was developed under the project “Future of Work in Textile and Clothing: Forecasting
and Developing Skills in Viet Nam to Advance Decent Work and Productivity in the Sector” funded by the
Governments of the Netherlands and Japan, with the overarching objective to provide key inputs towards
developing a sector skills strategy for the country’s textile and garment sector. As such, the report will
also serve as a valuable resource for a variety of stakeholders, including the government, employers,
workers, industry professionals, educators, and training providers at university and VET levels, as well
as those interested in the dynamic world of textile and garment. By shedding light on the challenges,
opportunities and prospects of the industry, particularly in terms of skills development for a highly skilled
workforce that aligns with the industry’s vision, it can foster continued growth and sustainability in this
critical sector for Viet Nam.
The report should be considered conjunction with the companion document, “Towards a sector skills
strategy for Viet Nam’s textile and garment industry: Priority skills needs, actions, and recommendations for
education and training system”. This second strategic document provides more targeted and actionable
recommendations based on the findings and contextual factors presented in this research report,
incorporating outcomes from various consultations with sectoral stakeholders and relevant agencies.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 5

Acknowledgements 3
Preface 4
Contents 5
List of figures 8
List of tables 9
List of boxes 10
Abbreviations 11
Executive summary 13
Introduction 23

Chapter 1. Current status of Viet Nam’s textile and garment industry 25

1.1. Business development 26

1.2. Business performance 29
1.3. Labour productivity 32
1.4. Textile and garment exports and imports 34
1.4.1. Exports 34
1.4.2. Imports 36
1.5. Investment and technological innovation 38

Chapter 2. Viet Nam and the textile and garment value (GVC) 43

2.1. Current situation 44

2.1.1. Viet Nam’s participation in the textile and garment value chain 44
2.1.2. Viet Nam and textile and garment value chain stages 48
2.2. Decent work and skills implications of Viet Nam’s GVC participation 51

Chapter 3. Employment trends and working conditions 53

3.1. Labour and employment 53

3.2. Workforce characteristics 56
3.2.1. Demographic characteristics 56
3.2.2. Workforce education, technical and professional qualifications 58
3.2.3. Occupational structure and skills demand 60
3.3. Quality of work, decent work characteristics 61
3.3.1. Informality 61
3.3.2. Income of employees 62
3.3.3. Temporary employment 64
3.3.4. Working hours 65
3.3.5. Working conditions 65
6  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

3.3.6. Social dialogue and collective bargaining 66

3.3.7. Compliance with international standards and labour laws 66
3.4. Women in Viet Nam’s textile and garment industry 67

Chapter 4. Skills development in Viet Nam’s textile and garment industry 69

4.1. Drivers of change and impacts on the industry and skills 70

4.1.1. Climate change, green production, standards and consumer preferences 70
4.1.2. Technological advancement 72
4.1.3. Globalization and international trade 74
4.1.4. Demographic changes 76
4.2. Skills demand in the textile and garment industry 76
4.2.1. Emerging and high-demand occupations, recruitment challenges 76
4.2.2. Skill demands: current and evolving needs 79
4.3. Current skills supply for the textile and garment industry 80
4.3.1. Vocational education and training institutions 80
4.3.2. Universities 82
4.3.3. Other training providers 84
4.3.4. Training at enterprises 84
4.4. Limitations in skills development for the textile and garment industry 86
4.4.1. Training quality not meeting labour market needs 86
4.4.2. Institutional and policy issues 86
4.4.3. Decreased attractiveness of the industry 87
4.4.4. Underdeveloped labour market information systems 87

Chapter 5.Strategies and considerations for development of Viet Nam’s

textile and garment industry 89

5.1. Governance and policies for development of Viet Nam’s textile and
garment industry 90
5.1.1. Development plans and strategies and legislative framework 90
5.1.2. Governance and actors 92
5.2. Determinants of comparative advantage in Viet Nam’s textile and garment industry 93
5.2.1. Production factors 94
5.2.2. Demand-related conditions 95
5.2.3. Supporting industries 96
5.2.4. Business strategies, structures and competitive environment 96
5.3. Assessments of Viet Nam’s comparative advantage 97
5.4. SWOT analysis of the textile and garment industry 99
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 7

Chapter 6. Conclusions and recommendations 103

6.1. Recommendations to enhance the competitiveness of the textile and

garment industry 104
6.2. Recommendations to improve the quality of human resources for the textile
and garment industry 106

Appendix 108

Bibliography 112
8  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

List of figures

Figure 1.1 Distribution of textile and garments enterprises by economic region in 2021 27
Figure 1.2 Distribution of textile and garment enterprises by capital size in 2022 27
Figure 1.3 Distribution of textile, garments and manufacturing enterprises by
ownership type in 2021 29
Figure 1.4 Viet Nam Industrial Production Index, 2010–23 30
Figure 1.5 Net revenue from textile and garment enterpises, 2010–22 31
Figure 1.6 Profit rate of textile, garment and manufacturing enterprises, 2015–22 32
Figure 1.7 Net revenue per worker of textile and garment enterprises, 2010–22 33
Figure 1.8 Viet Nam’s textile and garments exports, 2011–22 34
Figure 1.9 Largest markets shares in Viet Nam’s textile and garments exports,
2019–24 35
Figure 1.10 Viet Nam’s textile and garments imports, 2011–22 36
Figure 1.11 Viet Nam’s main fabric import markets, 2019–22 37
Figure 1.12 Average annual production and business capital of textile and garment
enterprises 39
Figure 1.13 Fixed asset value and long-term financial invesments of textile and garment
enterprises 39
Figure 1.14 Proportion of textile and garments enterprises making investments in fixed
assests and technological innovation in 2021 40
Figure 2.1 Textile apparel relationship and production methods in the garment
value chain 45
Figure 2.2 Vietnamese textile and garment enterpises in the global value chain 50
Figure 3.1 Employees share in employment, textile and garment industry and
manufacturing sector, 2012–23 54
Figure 3.2 Workforce distribution by status-in-employment in Viet Nam’s textile and
garments industry, 2012 and 2023 55
Figure 3.3 Distribution of enterprises and of employment by enterprise size in 2021 55
Figure 3.4 Female share in employment in the textile and garments industries and
manufacturing sector, 2012–23 57
Figure 3.5 Labour structure of the textile and garment sector by age group, 2012
and 2022 57
Figure 3.6 Employment in the textile and garment sector by educational attainment
level, 2013–23 58
Figure 3.7 Employment in the textile and garment industry and overall manyfacturing
sector by technical and professional qualification levels, 2022 59
Figure 3.8 Informal workers share in employment, 2012–23 62
Figure 3.9 Average nominal wages in the textile and garments industry, 2013 and 2023 63
Figure 3.10 Nominal and real average wage growth in the textile and garments industry,
2013–23 63
Figure 3.11 Average nominal wages and average annual growth rates (AAGR) of wages by
occupational group in the textile and garments industries, 2013 and 2023 64
Figure 3.12 Share of temporary employees, 2013 and 2023 65
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 9

Figure 3.13 Gender wage gap by occupational group in Viet Nam’s textile and garments
industry 68
Figure 4.1 Textile and garment vocational training institutions, by training level and
ownership in 2022 81
Figure 5.1 Key actors in Viet Nam’s textile and garment industry 92
Figure 5.2 Global apparel market share (2011-22) 95

List of tables

Table 1.1 Number of textile and garment enterprises by subsector 2012–22 26

Table 1.2 Distribution of textile and garment enterprises by size (number of
employees) in 2012 and 2022 28
Table 1.3 Industrial production of key textiles and garments in Viet Nam, 2015–23 30
Table 1.4 Labour productivity in textile and garment industry compared to
manufacturing sector in Viet Nam, 2015–22 33
Table 1.5 Viet Nam’s main fibre and yarn import markets 37
Table 1.6 Viet Nam’s main cotton import markets 2019–22 38
Table 2.1 Examples of value added in textile and garment value chain 48
Table 3.1 Number of workers in the textile and garment industry 2012–23 54
Table 3.2 Employment of textile and garment workers by technical and professional
qualification levels (2012–22) 59
Table 3.3 Occupational and skills structure of textile and garment industry according
to ISCO-08 categories, 2012–23 60
Table 3.4 Average monthly textile and garment incomes compared to manufacturing
enterprises 64
Table 3.5 Women’s share of employment by and in occupational group, 2013–23 67
Table 4.1 Occupations in high demand at textile and garment enterprises 77
Table 4.2 Jobs facing skills shortages and recruitment challenges 78
Table 4.3 Textile and garment training programmes at college, intermediate and
elementary levels 81
Table 4.4 Enrolment size for textile and garment vocational training in VET institutions,
2021 (trainees) 82
Table 4.5 Textile and garment training programmes at undergraduate level at
Viet Nam’s universities 83
Table 4.6 Training places for new recruits and employees working at textile and
garment enterprises 85
Table 4.7 Training time for new recruits and existing employees at textile and
garment enterprises 85
Table 5.1 Cost of manufacturing garment components in some Asian countries 94
Table 5.2 Competitive advantages of some textile and garment exporting countries 98
Table 5.3 Surveyed brands and retailers’ assessment of competitiveness by selected
suppliers 99
10  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

List of boxes

Box 1.1 FDI and Viet Nam’s textile and garment industry 41
Box 2.1 Garment production methods 46
Box 2.2 Viet Nam’s textile and garment domestic value chain 47
Box 2.3 Production methods and labour structure at two leading enterprises in
Viet Nam’s textile and garment sector 52
Box 4.1 Technological advancement along the value chain of Viet Nam’s textile and
garment industry 73
Box 4.2 FTAs and Viet Nam’s textile and garment industry 75
Box 5.1 Policies that impact development of Viet Nam’s textile and garment industry 91
Box 5.2 Determinants of national comparative advantage 93
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 11

X Abbreviations

AAGR Average annual growth rate

ADB Asian Development Bank
AI Artificial Intelligence
ASEAN Association of Southeast Asian Nations
BWV Better Work Viet Nam
CMT Cut-Make-Trim
CPI Consumer Price Index
CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership
DVET Directorate of Vocational Education and Training
ESG Environmental, Social, Governance
EU European Union
EVFTA EU-Viet Nam Free Trade Agreement
FDI Foreign direct investment
FOB Free-on-board
FTA Free trade agreement
GDP Gross domestic product
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit
GSO General Statistics Office
GVC Global value chain
ILO International Labour Organization
ISCO International Standard Classification of Occupations
ITC International Trade Centre
kW Kilowatt
LFS Labour force survey
m2 Square metre
MOIT Ministry of Industry and Trade
MOLISA Ministry of Labour, Invalids and Social Affairs
MONRE Ministry of Natural Resources and Environment
MSME Micro, small and medium-sized enterprise
NGO Non-governmental organization
NIVT National Institute of Vocational Education and Training
12  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

OBM Own brand manufacturing

ODM Original design manufacturing
OEM Original equipment manufacturing
OSH Occupational safety and health
R&D Research and development
RCEP Regional Comprehensive Economic Partnership
SME Small and medium-sized enterprise
SOE State-owned enterprise
SWOT Strengths, weaknesses, opportunities, threats
UKVFTA UK-Viet Nam Free Trade Agreement
UNDP United Nations Development Programme
UNFCC United Nations Framework Convention on Climate Change
UNFPA United Nations Population Fund
UK United Kingdom
US United States
US$ US dollar
VCCI Viet Nam Chamber of Commerce and Industry
VET Vocational education and training
VGCL Viet Nam General Confederation of Labour
VITAS Viet Nam Textile and Apparel Association
VND Viet Nam Dong
WEF World Economic Forum
WTO World Trade Organization
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 13

X Executive summary
Over the past 40 years, Viet Nam’s textile and garment industry has experienced robust growth, with
particularly significant advancements in the last two decades. This has positioned the sector to make
an impactful contribution to the national economy through creating millions of jobs - especially for
women, commonly characterized by formal wage employment. It has played a key role in the structural
transition of Viet Nam’s labour force away from agriculture and towards manufacturing, where incomes
are relatively higher, thus contributing to poverty reduction. Despite these impressive steps forward,
amidst evolving global trends, the industry now requires a further step change to upgrade its value chain
and shift towards a more sustainable and competitive development model. To realize this transition,
enhancing workforce skills is crucial.

X Business development and industry characteristics

Since the “Doi Moi” reforms in the early 1990s, Viet Nam’s textile and garment sector has integrated into
global value chains (GVCs), attracting substantial investment and expanding production. Export turnover
surged to US$44.4 billion in 20221 accounting for nearly 12 per cent of the country’s total export turnover,
before dipping to US$39.5 billion in 20232, and reached approximately US$44 billion in 2024.3 To date,
Viet Nam-produced textile and garment products have been exported to 104 countries and territories.4
As a key economic sector, the industry has seen sharp increase in production, business capital, and
workforce size. The number of enterprises has doubled since 2012, surpassing 14,000 by 2022, with
nearly 90% being micro, small, and medium-sized enterprises (MSMEs).5 These enterprises are mainly
concentrated in the Southeast and Red River Delta regions but have recently expanded to central
provinces, the Mekong Delta, and the Northern Midland and mountainous areas.
Despite robust growth, labour productivity in Viet Nam’s textile and garment sector remains low
compared to export competitors and manufacturing peer averages domestically. The textile subsector’s
productivity remains more than four-fold that of the garment subsector, reflecting its capital-intensive
nature.6 The high proportion of MSMEs and prevalence of low value-added garment processing methods
constrain productivity growth and result in lower profit rates compared to manufacturing sector average.
Profit rates increase in step with enterprise scale, with most large-scale enterprises, often recipients of
foreign direct investment (FDI), pioneering technological adoption and achieving higher productivity.

1
VITAS reports US$44.4 billion, while the ITC states US$45.4 billion (2022).
2
VITAS.
3
VITAS, US$ 43.57 million.
4
VITAS.
5
GSO, Statistical yearbooks, 2013-23.
6
Calculations based on data from the GSO Statistical yearbooks, 2012-22 and Labour force surveys, 2011-23.
14  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

In 2021, FDI enterprises accounted for 40 out of the 44 large garment enterprises (more than 5,000
workers), and 48 out of the 53 large textile enterprises (more than 1,000 workers).7 FDI enterprises
which accounted for approximately 14 per cent of the sector in 2021, play a significant role in Viet Nam’s
textile and garment exports, accounting for 58–62 per cent of the sector’s export turnover.8 While FDI
enterprises have historically dominated the industry, large domestic corporations have recently grown
and expanded production, becoming strategic partners of international brands.

X Viet Nam and the textile and garment GVCs.

Although Viet Nam’s textile and garment sector is integrated into GVCs, its participation remains
characterized by weak linkages across subsectors and stages, which further dampen value addition and
competitiveness. Viet Nam’s participation in high value-added stages remains limited, such as branding,
design, marketing and distribution. Vietnamese firms’ limited capacity to provide services such as raw
material sourcing, design, logistics, package services for buyers implies their interactions with global
brands are often through intermediaries, often regional traders based in Hong Kong (China), Taiwan
(China) and Republic of Korea.
Despite some progress, Viet Nam remains heavily dependent on imports for raw materials, increasing
costs and complicating compliance with free trade agreements (FTAs). The country imports nearly all
its cotton, making the yarn and fibre subsectors vulnerable to price volatility. Paradoxically, while large
quantities of domestically produced yarn are exported, domestic textile enterprises import yarn.
The fabric weaving, dyeing, and finishing industry has yet to develop as desired, partly due to
environmental standards and weak support policies like centralized wastewater treatment. This has led
to a shortage of domestic material supplies, with the garment export sector importing 80–85% of its
fabric needs.9 However, strict rules of origin in FTAs have recently spurred investment in the textile
subsector, mainly from China, Taiwan (China), and Republic of Korea. Domestic sources remain limited,
but the domestic supply of fabrics is expected to increase, better aligning production chains.
In garment production, Viet Nam’s participation in GVCs is more prevalent, but methods involve simple
processing and low value-added activities. In 2021, 65–70% of enterprises used the cut-make-trim (CMT)
method, 20–25% used free-on-board (FOB) or original equipment manufacturing (OEM), and less than 5%
used original designed manufacturing (ODM) or own brand manufacturing (OBM).10 CMT manufacturers
often lack coordination and are supervised by international buyers. Most parent companies of FDI
enterprises are closely tied to GVCs and operate under ODM, OEM, or OBM methods, but their factories
in Viet Nam mainly use CMT.
While a shift from CMT to FOB would significantly boost the added value of production activities at
factory level, numerous barriers impede this transition, such as lack of dynamism and limited ability to
manage risks in the chain, difficulties in meeting quality standard and regulations of importing countries,
and delivery time. Enterprises also lack the financial capacity to mitigate against risks that arise during
contract execution. In addition, because they mainly focus on processing products, enterprises struggle
to develop design teams and products, as well as connect with domestic fashion and textile players.

7
GSO, Enterprise survey 2022.
8
VITAS.
9
MOIT, 2022. Report on the Strategy for development of the textile, garment, leather, and footwear industries in Viet Nam to 2030
and a vision to 2035.
10
VITAS.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 15

X Key employment trends

The number of workers in Viet Nam’s textile and garment sector has increased rapidly, from nearly 1.8
million in 2012 to 3.4 million in 2023, of whom more than three million were employed in the garment
subsector and more than 324,000 in the textile subsector.11 Women accounted for 75 per cent of the
sector’s workers in 2023, totalling 2.5 million. Most positions are characterized as wage and salaried
work, with the share of employees in total employment rising from 70 per cent in 2012 to 88 per cent in
2023. Large enterprises employ a disproportionate share of the sector’s workforce: in 2021 firms with
5,000 employees or more only accounted for 0.3 per cent of enterprises but employed more than a fifth
of the workforce. Conversely, enterprises with fewer than 50 employees accounted for 78 per cent of
enterprises but employed only 4.8 per cent of the industry’s workforce.12
The age structure of the textile and garment industry’s labour force is ageing, as enterprises face
challenges to recruit younger workers. The proportion of young workers (15–24 years old) fell by 12
percentage points from 2012 (26 per cent) to 2023 (14 per cent), while the share of young adults aged
24–34 years also dipped from 38 to 32 per cent. Despite the need to realize a more skilled workforce over
the past decade, the sector still predominantly employs workers with low educational attainment, and
technical and professional qualification levels, due to its structure and prevailing production methods.
In 2022, more than 80 per cent of the sector’s workers did not possess any technical and professional
qualifications.13
While the sector’s occupational structure has not evolved significantly, with middle-skilled occupations
continuing to account for the lion’s share (92–94 per cent) of employment14, significant fluctuations are
observed across middle-skilled occupational categories. Specifically, there has been a shift from the ‘crafts
and related trades workers’ group towards the ‘plant and machine operators and assemblers’ group.15 This
suggests that increased production automation and a shift towards employment in larger enterprises
has resulted in the substitution of semi-skilled labour engaged in manual processes, along with greater
demand for these semi-skilled workers able to operate and maintain machinery, for example a shift from
handicraft workers in smaller workshops towards sewing machine operators on larger factory floors.

X Employment conditions and decent work characteristics

The quality of employment in Viet Nam’s textile and garment industry has generally improved as
reflected by its informal employment rate halving in a decade since 2013 (52 to 26 per cent). Real wages
of employees have also risen rapidly, at an average annual rate of 7.2 per cent between 2013 and 2023
but remain slightly lower than the manufacturing sector average.16 Some textile and garment enterprises
reported increasing challenges to recruit workers due to fierce competition with other emerging
manufacturing sectors, such as electronics.

11
GSO, Labour force surveys, 2013–23.
12
GSO, Enterprise survey 2022.
13
GSO, Labour force surveys, 2012-22
14
Ibid.
15
Groups as defined by the International Standard Classification of Occupations (ISCO), and Decision No. 34/2020/QD-TTg
issuing the list of Viet Nam’s occupations by the Prime Minister on 26 November 2020.
16
GSO, Labour force surveys, 2013–23.
16  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

While overtime work remains a characteristic of the textile and garment industry, despite some recent
progress, temporary employment is increasingly evident–particularly in the garment subsector. The
prevalence of temporary contracts and overtime work is linked to the buyer-driven dynamics of textile
and garment GVCs, as most suppliers in Viet Nam operate under the CMT model, competing on a
cost basis with little control over input costs. This means they have limited scope to invest in modern
equipment, workers’ skills, or other strategies to raise productivity. Suppliers and particularly small and
medium-sized enterprises (SMEs) work as subcontractors on tight margins with pressure to deliver in a
timely and flexible manner, while keeping wages in check. This leads to decent work deficits in terms of
excessive working hours and arrangements that provide flexibility with temporary or casual work but
result in high insecurity for workers.
These same factors also increase the risk of substandard practices and non-compliance with
international standards, labour laws and regulations at factories and their subcontractors. In general,
export enterprises are more compliant than domestic enterprises as they receive more investment and
are monitored by buyers. Due to the COVID-19 pandemic, factories faced difficulties in complying with
Vietnamese labour-related regulations regarding wage payment, working hours, occupational safety and
health, and labour contracts. The nature of work in textile and garment factories poses several potential
risks to workers’ health with occupational hazards apparent. With the exception of some FDI and large
enterprises, workers in factories are commonly exposed to OSH, compounded by workers’ limited OSH
knowledge and awareness. In this context, strengthening OSH is essential.
Important efforts to promote social dialogue and improve collective bargaining were evident in recent
years, but challenges remain. The industry was the first in Viet Nam to implement the signing of a
collective labour agreement in 2010, signed between VITAS and the Textile and Garment Union. Currently,
80 textile and garment enterprises and their 120,000 workers are covered by the agreement, accounting
for 3.8 per cent of the industry’s total workforce, according to VITAS. However, industry awareness of
the agreement remains limited.

X Women’s evolving role in the sector

Viet Nam’s textile and garment sector remains a significant employer of women, creating more than a
million jobs over the past decade, to lift the number of women employees from more than 1.4 million in
2013 to 2.5 million in 2023.17 While this share has dipped in recent years from 80 per cent in 2012 to 75
per cent in 2022, it remains well above the manufacturing sector average. Women make up the bulk of
industry employment across most occupational groups. However, despite progress, the share of women
in management positions remained low at 30 per cent in 2023. While the share of women professionals18
increased significantly in the garment subsector over the past decade, it declined in the textile subsector.
The gender wage gap in the textile and garment industry declined from 17.2 per cent in 2013 to 9.3 per
cent in 2023, as men and women’s salaries converged across all occupational groups.19 Although women’s
working conditions have generally improved, there is scope for improvement in terms of addressing OSH
issues, non-compliance with labour laws and standards to protect women, particularly during pregnancy.

17
GSO, Labour force surveys, 2013-23.
18
As defined by the Decision No. 34/2020/QD-TTg of the Prime Minister issuing the list of Viet Nam’s occupations.
19
GSO, Labour force surveys, 2013–23.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 17

X Factors affecting the industry and skills supply and demand

The textile and garment industry faces several challenges, including climate change, technological
advances, globalization, and demographic shifts. Effective resource management is crucial for growth
and sustainability, especially as consumers and brands focus on sustainability and circular fashion.
Key markets like the European Union have tightened standards for imports. Viet Nam’s vulnerability to
climate change has led the government to develop strategies for the industry, but the greening process
poses challenges in resources, finance, technology, and skills, particularly for SMEs. Enterprises need to
skill, reskill and upskill workers for green production.
The Industrial Revolution 4.0 has introduced technologies that could revolutionize production, impacting
jobs and skills. The Vietnamese Government prioritizes these opportunities, but capacity challenges
remain. Technological advancement varies across the value chain and enterprise types. Innovation has
been slow, occurring mainly in cutting, product inspection, and design software. FDI and large domestic
companies have adopted new technologies like 3D design, automatic cutting machines, robotic arms,
and digitized management software to enhance efficiency and reduce costs.
Many enterprises, especially SMEs, are not ready for systematic Industry 4.0 investment due to high costs.
R&D investment is low due to low profit margins. In the short term, enterprises invest in machinery and
automation to address labour shortages. In the long term, they must invest in digitization, automation,
and skills improvement to remain competitive.
The omnichannel retail model, connecting online and offline sales, is popular among global fashion
brands. In Viet Nam, e-commerce use has increased, but businesses face challenges due to a lack of
strong operational foundations, digital strategies, and skilled human resources.
The industry has growth opportunities through international and regional integration, driven by FTAs.
To capitalize on these, the industry must comply with rules of origin, labour standards, environmental
protection, and transparency principles. Geopolitical factors have led multinational corporations to
adjust investment strategies towards closer and friendly markets. Viet Nam’s ability to benefit depends
on workforce skills across the value chain.
Demographic trends will increase the consumer market for garment, with geographic shifts. National
and industry-level policies are needed to mitigate the impacts of population aging on labour supply,
economic growth, and living standards, including measures to improve labour productivity, and
strategies to attract and retain workers, and initiatives to reskill and upskill.

X Occupational and skills demand

Although the occupational structure at aggregate level has not experienced significant shifts – except
from “crafts and related trades occupations” group to “plants, and machine operators and assemblers”
group – ongoing changes in the textile and garment industry will continue to impact occupational
demand. Some roles see changing tasks and new production processes (designers, tailors, cutters,
embroiderers, sewing machine operators), while others will become less relevant or disappear (primarily
in clerical occupation category such as stock and data entry clerks), and some will see emerging roles
(R&D directors, greening sector specialists, supply chain managers, digital fashion designers, digital
marketing, online business strategy developers, 3D printing and design-related specialists, Internet of
Things and other IT specialists).
18  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Going forward, it is essential to develop skill sets encompassing technical and soft skills relevant to each
occupation or occupational group. For instance, no training programmes currently focus on developing
specific skills needed for material sourcing. To address a skills gap for line leaders, a key role in the
industry, enterprises typically resort to selecting highly skilled and experienced technical workers and
provide them with additional training focusing on leadership, management, and other essential soft
skills, before assigning them as line leaders. Enterprises also report skills shortages related to technical
management, new product development, and design.
Skills demands will continue to evolve with Industry 4.0 technologies and the need for ‘greening’ processes
and value chain upgrading. Enhancing skilled labour for spinning, weaving, and dyeing subsectors and
operating modern machinery is crucial. Strengthening the workforce in design, branding, marketing,
distribution, and sales is also needed. New skills are required beyond manufacturing, including logistics,
finance, marketing, sales, and customer service. Furthermore, it is essential to equip workers with
requisite skills to meet increasingly stringent labour, social, and environmental standards of international
markets. Upskilling and reskilling can improve productivity and ensure workers’ skills remain relevant,
enabling reassignment from redundant jobs to new roles.

X Skills supply pipeline

Workers in semi-skilled occupational categories who constitute ‘skilled workers’’ in Viet Nam’s textile and
garment industry – encompassing crafts, related trades workers, machine operators and assemblers that
together account for 90 per cent of the industry’s workforce join from various sources. These include
universities, vocational education and training (VET) institutions, non-governmental organizations
(NGOs) and others. Many workers are also trained outside the formal training institutions. Senior
staff, who require undergraduate degrees or higher, represent two - three per cent of the workforce.
Companies often train new recruits and provide supplementary training for experienced workers.
In 2021, Viet Nam had 577 VET institutions that offered training in textile and garment-related
programmes, at three different levels (college, intermediate, elementary).20 These institutions comprised
113 colleges, 107 intermediate schools, 357 vocational training centres. Private institutions accounted for
16 per cent of colleges providing textile and garment related-training programmes, 27 per cent at the
intermediate level, and 8 per cent among the VET centres. In 2021, the VET system’s enrolment scale for
training was approximately 83,000 students in programmes linked to the textile and garments sector,
including approximately 4,000 students at the college level, 15,000 at the intermediate level, and 64,000
students at the elementary level (out of whom approximately 44,000 were enrolled at the elementary
level or in short-term courses of less than three months at vocational training centres). Additionally,
approximately 9,000 students were enrolled at the university level. There are 38 universities offering
majors related to textile and garment in Viet Nam, with programmes spanning a large number of
specializations.
Critically, enrolment in textile and garment majors and programmes face challenges due to
competition from other programmes, while initiatives to address human resource challenges have
faced implementation challenges. Other providers, such as government-run programmes and non-
governmental organizations (NGOs), provide short-term vocational training courses, typically less
than three months in partnership with local VET institutions to targeted groups such as rural workers,
the economically disadvantaged, ethnic minorities, and persons with disabilities. Training focuses
on imparting basic tailoring and sewing skills. Additionally, initiatives like the Better Work Viet Nam
Programme, along with various brands, frequently organize training for employees in compliance,
payroll, soft skills, OSH and supply chain management skills.

20
DVET.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 19

Although the textile and garment industry witnessed average annual increases of more than 200,000
workers over the past five years, it is estimated the total number of trained workers only meets 40
per cent of the workforce required by the sector.21 Enterprise-based training is common to address
skills shortages and is considered by employers for more effective meet job requirements. This includes
training newly hired employees who often have received theoretical training but lack practical application
and are unfamiliar with technological and equipment changes in factories. For existing employees, it
consists in retraining or upskilling.

X Skills development challenges

A range of skills development limitations are apparent. Viet Nam’s skills development system include a
fragmented management structure, which often results in a lack of coordination and weak system-level
governance; challenges faced by institutions in implementing the 2014 Law on Vocational Education
and Training; financial autonomy issues and resource constraints for training institutions; and complex
administrative procedures for in-company training components; outdated training equipment and
instructors with competencies that have not been enhanced and who lack practical experience. Current
shortcomings in labour and skills supply, in terms of meeting the requirements of textile and garment
enterprises, primarily stem from training gaps, linked to the absence of effective coordination and
partnership between the education and training system and the textile and garment enterprises.
Challenges to effective coordination include the lack of institutionalized approaches/mechanisms,
challenges for both institutions (teachers are not proactive, administrative procedures, insufficient funds)
and businesses (time constraints and tight production schedules). Moreover, attracting students to textile
and garment-related programmes has become increasingly challenging across all education levels.
Career guidance activities for students often lack depth and insufficient quality. In addition, the lack of
labour market information hinders training institutions from effectively planning their programmes and
providing career guidance to students.

X Comparative advantage assessments

The textile and garment market is projected to continue its robust growth in coming decades, with
Viet Nam is forecast to benefit. While the country’s labour cost advantage is gradually diminishing,
other factors such as low energy costs and improved transportation infrastructure contribute to the
sector’s ability to manage and reduce production costs. In terms of human resources, the industry
benefits from a demographic dividend – a large and still relatively young population that with
improved vocational education and training and skills enhancement, has the potential to boost labour
productivity and competitiveness. Depending on the criteria and indicators used in assessments, Viet
Nam’s position relative to its competitors in the textile and garment industry varies. In one study22,
Viet Nam’s comparative advantage lags that of Bangladesh and India and significantly trails China. In
another study23, Viet Nam outperforms other countries, including China, in product quality, delivery
time and political stability, but performs less well regarding tariffs, financial stability, compliance and
sustainability. According to a third study24, the most significant gap between Viet Nam and China lies in
supporting industries. Additionally, factors such as low labour productivity, limited R&D spending, and
notably lower FDI and outward investment by Viet Nam’s enterprises contribute to this disparity.

21
Calculation based on GSO, MOET, and DVET data and information and consultations with relevant stakeholders.
22
Wazir Advisors, 2016. Existing and prospective FTAs and their impact on Indian textiles exports. Final report.
23
WTO and others, 2022. Textiles and clothing in Asian graduating LDCs: Challenges and Options.
24
Do Khac Dung, 2021. The Competitiveness of the Textile Industry in Viet Nam: An analysis to the Period of a Decade.
20  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Recommendations for development of the

industry and its workforce skills
The rise in global competition among countries within value chains, coupled with rapid automation,
renders trade competitiveness reliant solely on low labour costs unsustainable. This further emphasizes
the importance of the textile and garment sector shifting towards higher value-added activities. Thus
far, efforts to upgrade this sector’s value chain, foster domestic textile and garment linkages, and
develop supporting industries have not seen significant progress. In response, Viet Nam must enhance
productivity and shift its industry’s growth model towards sustainable development, green practices and
technological innovation. Realizing this requires addressing structural challenges along the value chain,
which also necessitates a workforce with essential skills to drive this transition.
While specific recommendations for development of a strategy to elevate the sector’s workforce in line
with its aspirations are provided in the report “Towards a sector skills strategy for Viet Nam’s textile and
garment industry: Priority skills needs, actions, and recommendations for education and training system”,
the following key messages are based on findings of this background research, and consultation with
sectoral stakeholders and relevant agencies:
Broad recommendations at a systemic level, include measures to:
X Strengthen the domestic value chain through better linkages between the textile, garment and accessory
subsectors and by promoting development of supporting industries in Viet Nam.
X Gradually upgrade processes (CMT to FOB) and focus on upstream and downstream value chain stages.

X Tackle technology gaps through investment and technology transfer promotion, digital transformation,
and targeted measures to support MSMEs.
X Enhance the direct interaction between Vietnamese textile and garment enterprises and final retailers.

X Accelerate the green transformation and transfer to a circular economy, in the context of a just transition.

X Develop and implement a skills strategy for the sector, in alignment with existing national laws, policies
and strategies to boost economic growth, strengthen industries and promote productive employment.
Broad recommendations to improve the quality of human resources working in Viet Nam’s textile and
garment industry include:
X Enhance the policy environment as well as the effectiveness and implementation of policies to
encourage training: The primary focus is to foster requisite skills to upgrade the industry’s value
chain as well as to create and promote a lifelong learning environment for workers. Improve workers’
productivity, wages, working conditions, career progression pathways, and change social perceptions
towards employment in the sector to enhance its attractiveness and address recruitment and retention
challenges.
X Solidify industry and training linkages alongside the quality and relevance of training: Expand
investment in teaching equipment, capacity building of teachers, renovation and updating training
programmes. Strengthen links between enterprises and training institutions, encompassing the
development of training programmes to supplement as well as address skills mismatches, including
technical and soft skills, and those needed for green and digital transitions. Improve the quality of
labour market information, labour supply and demand forecasting as a basis for career guidance,
employment services, human resource training planning and labour recruitment plans. Create an
information exchange mechanism between enterprises and training institutions.
X Implement inclusive and gender-responsive training policies and practices: Develop training
programmes specifically targeting women, including enabling such workers to access managerial
positions, boost OSH training and awareness of workers’ rights, particularly for women.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 21

X Strengthen quality assurance and certification processes for training in priority areas: This
encompasses a vocational assessment and certification system for trainees and workers as well as
support the quality assurance of training providers, courses and evaluators.
X Promote industry voices and participation in skills development and institutionalize coordination
mechanisms for multi-stakeholder engagement and collaboration: Build upon the recent
establishment of a working group25 to boost skills and sustainability in the sector, and promote
establishment of a “Sector Skills Council” to mobilize participation by social partners in consulting and
implementing policies on industry-based vocational education and training.
X Boost financing for sector-specific skills and training: Explore models for budgetary subsidies to
train institutions based on outputs or a combination of inputs and outputs, rather than relying solely
on current input-based mechanism. In addition, it is important to explore mechanisms to address
resource constraints that prevent investment in equipment and training, particularly among smaller
enterprises such as a “Sectoral Skills Development Fund”.

25
https://www.ilo.org/resource/article/working-group-launches-boost-skills-and-sustainability-viet-nam%E2%80%99s-tex-
tile
22  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 23

X Introduction

As part of a 40-year success story, Viet Nam’s textile and garment industry has been a shining light in
the country’s development and industrialization journey. As a key industry in the consumer goods
manufacturing sector,26 Viet Nam’s textile and garment industry has developed rapidly since the “Doi Moi”
(Reforms) in 1986, boosted by the landmark Foreign Investment Law in 1987 and an evolving openness
to international trade. This increasingly open-door policy started with the Viet Nam-US Bilateral Trade
Agreement effective from 2001, joining the World Trade Organization (WTO) in 2007 and participating
in FTAs such as ASEAN-Japan (2008), ASEAN-Korea (2009), Comprehensive and Progressive Agreement
for Trans-Pacific Partnership (CPTPP) (2018) and the EU-Viet Nam Free Trade Agreement (EVFTA) (2019).
In terms of domestic sectoral development, with Decision No. 55/2001/QD-TTg in 2001, the Vietnamese
Government approved the strategy for development of the Vietnamese textile and garment industry
until 2010, with the goal of transforming it into a key industrial sector to spearhead exports, enhance
competitiveness, create jobs and achieve greater economic integration. To date, the government has
issued three development strategies for the industry, including the most recent third iteration to 2030
with a vision until 2035.
In the early years of the Doi Moi reforms, the textile and garment sector was a major contributor to the economic
and labour structure transition. It attracted a significant number of workers from agricultural-focused
rural areas, generating employment, income, and serving as a stepping stone for workers to transition
to the industrial production environment. The textile and garment industry also attracted domestic and
foreign investors, with the number of enterprises rapidly mushrooming, and export turnover increasing
by an annual average of US$2.7 billion during 2011–22, reaching US$44.4 billion27 in 2022, accounting
for nearly 12 per cent of national total export turnover before dipping to US$39.5 billion in 2023, then
reached approximately US$ 44 billion.28 The number of workers in the textile and garment industry has
also climbed rapidly, reaching close to 3.4 million in 2023.29
Despite significant achievements, the industry faces several development challenges. They stem not only from
insufficient investment capital, outdated technology and underdeveloped supporting industries, but
also from a shortage of skilled workers. In particular, highly skilled workers, management staff, industry
experts and technical workers at all levels30 are in high demand, but fierce competition from other sectors
such as services, commerce and electronics has made labour recruitment challenging.
The research presented in this report was conducted to gain a better understanding of Viet Nam’s textile and
garment industry. This meant exploring its achievements, opportunities and challenges to its continued
development in the context of increasingly deep international integration and participation in GVCs.
This report delivers a deep analysis of the current skills-related challenges and opportunities facing the
industry to support evidence-based policy formulation. These insights inform the development of the
report towards a sector skills strategy for the textile and garment industry.

26
For the purposes of this report, the industry is defined according to the International Standard Industrial Classification
(ISIC) rev. 4, as including industry groups “13 – Manufacture of textiles” and “14 – Manufacture of wearing apparel”.
27
Based on ITC data: US$ 45.4 billion and according to VITAS, the figure is US$ 44.4 billion.
28
VITAS. US$ 43.57 billion in 2024.
29
GSO, Labour force survey 2023.
30
MOIT, 2022. Report on the strategy for development of the textile, garment and footwear industries in Viet Nam
to 2030 and a vision to 2035.
24  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

This research report used a combination of research methods to gain these important insights. This included
analysis of data from the General Statistics Office (GSO) labour force surveys and other sources, in line
with the ILO’s Skills for Trade and Economic Diversification (STED) framework.31 Specialists from the
Decent Work Team of the ILO Regional Office for Asia and the Pacific in Bangkok, the ILO Sectoral Policies
Department (SECTOR), and the Skills and Employability Branch in Geneva (SKILLS) and the ILO Country
Office for Viet Nam provided valuable guidance and technical support. VITAS offered comprehensive
sectoral insights and robust coordination support, enabling stakeholders to make informed decisions
and fostering effective collaboration across various actors. This report also incorporated information and
data from various sources, including DVET, MOIT, National Institute of Vocational Education and Training
(NIVT) and VITAS. Additionally, the report leveraged survey results from businesses and vocational
education institutions in the textile and garment industry, conducted by the NIVT in 2020, and a rapid
assessment of training and upskilling needs conducted by NIVT and VCCI with support from ILO and
GIZ in 2023. Additionally, data were obtained from 15 textile and garment enterprises, representing
different ownership types (FDI, state-owned, private) and sizes (large, medium, small), including two
enterprises among the 10 most prominent in Viet Nam’s textile and garment industry. The research
team engaged in in-depth consultations with experts from various entities, including VITAS, DVET, MOIT,
VCCI, VGCL, the textile and garment industry trade union, textile and garment enterprises and education
and training institutions at university and college levels. Furthermore, this report incorporated insights
from discussions held during tripartite technical reference committee meetings, expert seminars, and
two STED technical and policy foresight workshops and one consultation and validation workshop
during November 2023 to August 2024 with senior representatives from businesses, industry experts,
ministries, branches, and agencies. Finally, the report referenced related articles, scientific publications,
and research papers.
While inclusion of the most recent data available as of 2024 was prioritized, for some indicators the latest
datapoints were for 2021 and 2022. Additionally, research did not encompass sector-wide or training
provider surveys. Instead, it relied on in-depth consultations. Furthermore, this report did not attempt
to provide detailed recommendations for addressing structural and workforce-related challenges, but
rather offered broad directions. More targeted recommendations, based on the findings and contextual
factors presented in this report, along with additional inputs from stakeholders, are provided instead
in the companion document “Towards a sector skills strategy for Viet Nam’s textile and garment industry:
Priority skills needs, actions, and recommendations for education and training system”.
This report is structured as follows: Chapter 1 describes the current status of Viet Nam’s textile and
garment industry, encompassing business development and performance, exports and imports,
investment and technological innovation. Chapter 2 examines the industry in the context of GVCs, which
continue to play a key role in shaping the industry and determining its developmental and labour market
outcomes. Chapter 3 focuses on employment, workforce characteristics and working conditions in the
sector. Chapter 4 explores skills development in the industry, looking at change drivers and their impacts
on the industry and skills demand and supply, the current situation and limitations with respect to skills
supply. Chapter 5 spotlights the legislative framework and policies affecting the industry and provides
an assessment of Viet Nam’s comparative advantage and a SWOT analysis of the industry. Chapter 6
concludes with broad recommendations for improving competitiveness and human resources quality
to drive the industry’s sustained development.

31
The ILO/STED methodology for skills development is a comprehensive, forward-looking approach designed to align
skills policies with sectoral strategies to boost export growth, economic diversification, and job creation. This approach
is widely applied in more than 30 countries globally.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 25

1
Chapter
Current status
of Viet Nam’s textile
and garment industry
26  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

1. Current status of
Viet Nam’s textile and
garment industry
1.1. Business development During this period, the number of textile and
garment enterprises increased at an annual
The number of textile and garment enterprises in average rate of 7.1 per cent, slightly slower than
Viet Nam has approximately doubled in a decade. the overall manufacturing sector (7.4 per cent),
It reached 14,313 enterprises in 2022, of which with growth in textile enterprises (7.7 per cent)
4,687 were textile enterprises and 9,626 were outperforming that of garment sector peers (6.9
garment firms, together accounting for 12.5 per per cent) (Table 1.1).
cent of all manufacturing sector enterprises.

X Table 1.1 Number of textile and garment enterprises by subsector 2012–2232

2012 2015 2016 2017 2018 2019 2020 2021 2022

Textile 2 238 2 789 3 150 3 518 4 404 5 086 4 858 4 693 4 687

Garment 4 950 5 981 6 413 6 961 7 627 8 655 8 370 9 108 9 626

Textile and garment 7 188 8 770 9 563 10 479 12 031 13 741 13 228 13 801 14 313

Manufacturing 56 305 67 490 75 351 84 142 96 715 109 917 107 100 111 077 114 723

Source: GSO, Statistical yearbooks, 2013–23.

Textile and garment enterprises are primarily destinations in more recent phases, capitalizing
concentrated in the Southeast and Red River on improved infrastructure and leveraging a
Delta regions. As early pioneers, they attracted local workforce with lower labour costs. In 2021,
signif icant inves tment , including foreign nearly half of textile and garment enterprises
capital, into the textile and garment industry. were located in the Southeast region, with
The Mekong Delta, North Central Coast, and another 30 per cent in the Red River Delta (see
Central Coastal regions also became investment Figure 1.1).

32
Textile and garment enterprises are those operating with reported business outcomes (as defined by the GSO).
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 27

X Figure 1.1 Distribution of textile and garment enterprises by economic region in 2021

Unit: (%)

60.0
51.1
50.0 45.8 47.6
40.0
30.0 31.3 30.9
30.0

20.0
11.4 9.8
6.7 8.6
10.0 6.1 6.9
2.5 4.8 4.0 1.1 0.6 0.8
0.0
Red River Northern North Central Highlands South East Mekong Delta
Delta midlands and and Central
mountains Coast

Textile Garment Textile and garment

Source: GSO, Enterprise survey 2022

Small and medium-sized enterprises (SMEs) in the at VND 1 billion to VND 50 billion. Enterprises with
textile and garment industry account for a large capital exceeding VND 500 billion accounted for
proportion of enterprises, a trend also evident in only 2.4 per cent of textile and garment firms,
most economic sectors in Viet Nam. Based on the with a higher share in the textile (4.1 per cent)
size of capital33, in 2022 more than 72 per cent of than garment (1.6 per cent) subsector (Figure 1.2).
textile and garment enterprises were capitalized

X Figure 1.2 Distribution of textile and garment enterprises by capital size in 2022
Unit: %, VND billion

37.9%
40.0% 36.1%
35.0% 32.4%

30.0%
20.9%
25.0%
23.0%
19.9%
20.0%
16.5%
14.7% 15.9%
15.0% 10.9% 8.7%
6.3% 7.9% 7.7%
10.0% 6.2% 7.4% 2.8%
4.8% 5.8% 3.8% 2.3% 4.1% 2.4%
5.0% 1.6%
0.0%
< 0.5 bill. 0.5 - 1 bill. 1 - 5 bill. 5 - 10 bill. 10 - 50 bill. 50 - 200 bill. 200 - 500 bill. > 500 bill.

Textile Garment Textile and garment

Source: GSO, Statistical yearbook 2023.

33
The GSO defines capital as the “advance amount for business activities of the enterprise including total available capital
(owners’ equity) of the enterprise and liabilities (loans and other payables). The size of capital refers to the annual average
capital of the enterprise, calculated as the average capital of the enterprise at the beginning and end of a year.
28  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Considering the scale of employment, the vast majority expansion among micro-enterprises (under five
(90 per cent) of textile and garment enterprises in employees) (Table 1.2). While enterprises with
2022 were SMEs (defined as having fewer than 200 fewer than five employees comprised 18.9 per
employees). Notably, 54 per cent of all enterprises cent of textile and garment enterprises in 2012, by
had fewer than 10 employees. Medium-sized 2022 their share had jumped to 40.1 per cent. This
enterprises (200–499 employees) made up 5.4 trend reflects a greater reliance on outsourcing
per cent, and large firms (500 employees or and subcontracting, as micro-enterprises primarily
more) accounted for 5.1 per cent. Among large engage in subcontracting for garment enterprises
enterprises, 39 had 5,000 employees or more (0.3 or clothing stores, weaving ethnic fabrics, making
per cent of enterprises)34. carpets, traditional fabric weaving, sewing bags,
scarves as well as manufacturing, repairing clothes
Compared to 2012, the number of enterprises had
and household goods for individuals and families.
nearly doubled a decade later, with the largest

X Table 1.2 Distribution of textile and garment enterprises by size (number of employees) in 2012
and 2022 (%)

5,000
<5 5-9 10-49 50-199 200-299 300-499 500-999 1,000-4,999
employees TOTAL
employees employees employees employees employees employees employees employees
or more

2012

Textile 19.2 18.2 36.6 17.1 3.6 2.1 2.0 1.1 0.0 100

Garment 18.7 15.2 30.9 16.7 3.8 4.5 4.7 5.1 0.3 100

Total 18.9 16.2 32.7 16.8 3.7 3.8 3.9 3.8 0.2 100

2022

Textile 41.5 15.5 24.5 12.0 2.2 1.9 1.4 1.0 0.1 100

Garment 39.4 13.0 22.7 12.4 2.8 3.3 2.9 3.1 0.4 100

Total 40.1 13.8 23.3 12.2 2.6 2.8 2.4 2.4 0.3 100

Source: GSO, Statistical yearbooks, 2013–23.

The share of FDI enterprises in Viet Nam’s textile in operation accounted for 13.4 per cent, a share
and garment industry exceeds that of the overall higher than for the entire manufacturing sector
manufacturing sector. Regarding the industry’s (9.7 per cent). The proportion of FDI enterprises
ownership structure, among the 13,801 textile was higher in the textile (approximately 16 per
and garment enterprises in 2021, private cent) than garment (nearly 12 per cent) sectors
enterprises accounted for 86.4 per cent, state- (Figure 1.3). FDI enterprises have made a
owned enterprises (SOEs) only made up 0.2 per significant contribution to the growth of yarn and
cent, while the 1,857 foreign-invested enterprises fabric products in recent years.

34
GSO, Statistical yearbooks, 2013–23.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 29

X Figure 1.3 Distribution of textile, garment and manufacturing enterprises by ownership

type in 2021
Unit: (%)
Textile Garment

0.4 0.1
12
16.2

83.4% 87.9

SOEs Private enterprises FDI SOEs Private enterprises FDI

Textile and Garment Manufacturing

0.2 0.4
13.4 9.7

86.4 89.9

SOEs Private enterprises FDI SOEs Private enterprises FDI

Source: GSO, Enterprise survey 2022

Although FDI enterprises and SOEs account for a production considerably and become strategic
relatively small share of enterprises, they tend to partners of international brands.
be larger than private enterprises. While 18.5 per
cent of SOEs and 16.7 per cent of FDI enterprises
had 1,000 employees or more in 2021, 82.5 per
1.2. Business performance
cent of private enterprises had fewer than five In general, the Industrial Production Index of textile
employees. Of 44 textile and garment firms and garment enterprises fluctuates in line with overall
with 5,000 employees or more in 2021, 40 were manufacturing and broader industry sector trends,
FDI enterprises. In the textile industry, out of 53 which includes manufacturing along with mining,
enterprises with 1,000 employees or more, 48 construction and utilities (see Figure 1.4). Notably,
were FDI enterprises35. Although FDI firms have the production growth rate of the textile industry
dominated the Vietnamese textile and garment was significantly higher than other sectors for
industry in the past, in recent years, large domestic several years.
competitors have grown significantly, expanded

35
GSO, Enterprise survey 2022.
30  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Figure 1.4. Viet Nam Industrial Production Index 2010–23

Unit: (%)

125

120

115

110

105

100

95

90
Prel.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2023
Industry 110.5 109.1 105.8 105.9 107.6 109.8 107.4 111.3 110.1 109.1 103.3 104.7 107.4 101.3
Manufacturing
111.4 109.7 105.5 107.6 108.7 110.5 111.3 114.7 112.2 110.4 104.8 105.9 107.7 101.5
industry
Textile 116.5 108.0 104.2 121.0 119.7 114.0 116.9 109.8 112.5 110.9 99.5 108.4 102.6 106.9
Garment 108.2 109.9 107.5 110.9 112.2 104.6 107.5 109.1 110.9 107.6 95.1 107.5 115.2 99.1

Source: GSO, Statistical yearbooks, 2011–23.

Table 1.3. shows that high output growth for main rate of 9.7 per cent, fabric output at 8.9 per cent
textile and garment products during 2015–23. Yarn and clothing at 3.6 per cent.
output increased with an average annual growth

X Table 1.3 Industrial production of key textile and garment in Viet Nam, 2015–23

Textile
Average
and Preliminary
2015 2016 2017 2018 2019 2020 2021 2022 annual
garment 2023
growth (%)
products

Yarn
(1,000 1 905 2 180 2 479 2 835 3 246 3 255 3 525 3 787 3 992 9.7
tonnes)

Fabric
(million 1 525 1 701 1 787 2 000 2 299 2 389 2 521 2 756 3 021 8.9
m2)

Casual
clothing
4 320 4 530 4 844 5 247 5 502 5 232 5 540 5 857 5 713 3.6
(million.
piece)

Source: GSO, Statistical yearbooks, 2015–23.

  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 31

In 12 years to 2022, the net revenue36 of textile five-fold, growing at an average annual rate of 15
and garment enterprises increased more than per cent (Figure 1.5).

X Figure 1.5 Net revenue from textile and garment enterprises

Unit: thousand billion VND

600
549

500 495 497

452 446
429
412 407
400 394
373
341
300
297 303
268 254
228 222
205
200 175 191
145 139 153 155
105 98
100 77 73

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment

Source: GSO, Statistical yearbooks, 2010–23.

In general, textile and garment enterprises in Viet Nam – include the prevalence of MSMEs, especially in
have a lower profit rate37 than the manufacturing the garment sector and the majority of enterprises
average. Reasons for the relatively low profit producing under the CMT model, as further
margin – which sees textile enterprises slightly explored in Chapter 2.
outperform garment-making peers (Figure 1.6)

36
Net revenue is the amount of money an enterprise receives from the sale of goods, finished products, real estate in-
vestment, service revenue and other revenue minus deductions (trade discounts, sales discounts, sales returns) in the
reporting period. Net revenue does not include: (1) revenue from financial activities, (2) revenue from unusual activities
such as liquidation, sale of assets, collection of contract violations, collection of bad debts that have been settled and
adjusted according to the inflation index.
37
The profit rate is calculated as the ratio of “total profit before tax earned from production and business activities, finan-
cial activities and other activities of the enterprise in the year and total net turnover gained by selling products, goods,
services and other income” (GSO, Statistical yearbook).
32  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Figure 1.6 Profit rate of textile, garment and manufacturing enterprises, 2015–22

Unit: (%)

7.95

5.6 5.39
5.07
4.83
4.51 4.52 4.44
4.26
4 3.82 3.73
3.27 3.16 3.07 3.47
2.72 2.75 2.86
2.51
1.82 1.87
1.43 1.36

2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment Manufacturing

Source: GSO, Statistical yearbooks, 2015–23.

The profit rate increases significantly with the improvements in decent work outcomes. Textile
scale of enterprise. Calculations from 2022 GSO and garment employers have often emphasized
enterprise survey data indicate that while small- the need for wage growth to be commensurate
scale enterprises have low profits or even losses, with that of labour productivity (ILO, 2022). Labour
enterprises with a workforce of 5,000–10,000 productivity is determined by numerous factors,
employees have profit rates of 15.9 and 2.6 per cent including workforce skills, alongside capital,
for textile and garment enterprises, respectively. technology and equipment, process efficiency,
For enterprises with more than 10,000 employees, ease of access to transportation and infrastructure.
the profit rate reaches nearly 19 and 7.6 per cent In Viet Nam, as is commonly the case in the
for textile and garment subsectors, respectively. region, the sector’s labour productivity is largely
As discussed, these large enterprises are mainly determined by the fact that most enterprises apply
FDI firms as pioneers of technological innovation. CMT methods and rely on imported raw materials
and accessories. In 2022, Viet Nam’s textile and

1.3. Labour productivity garment industry’s labour productivity, measured

as gross value added per worker, was just over half
Despite recent robust growth, labour productivity in that of the overall manufacturing sector (Table
Viet Nam’s textile and garment sector remains low 1.4). A recent comparative study indicated that its
compared to the manufacturing average and some labour productivity was equivalent to one-third of
export competitor countries. Labour productivity Hong Kong’s (China), one-quarter of China’s, one-
growth is a critical determinant of sustained eighth of Republic of Korea’s and 85 per cent of
Thailand’s. 38

38
Tran Thi Bich Nhung, Tran Thi Phuong Thuy, 2018. Viet Nam’s textile and garment: An overview
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 33

X Table 1.4 Labour productivity in textile and garment industry compared to manufacturing
sector in Viet Nam, 2015–22

Textile and garment All manufacturing

2022 (thousand US$) Average annual labour 2022 (thousand US$) Average annual labour
productivity growth productivity growth
2015-22 (%) 2015-22 (%)

Gross value added

(thousand US$) per 4.7 3.6 8.2 4.4
worker

Output (thousand
17.6 4.6 41.7 4.2
US$) per worker

Source: Calculated using gross value added and output data from ADB’s input-output database and employment from
GSO, Labour force surveys 2015 and 2022

Textile sector labour productivity outstrips that worker at current prices can provide insights.
of the garment sector by more than four-fold, This comparison showed the textile subsector
reflecting the capital-intensive nature of the former considerably outperformed its garment subsector
and labour-intensive nature of the latter (Figure peers, despite slightly higher growth for the latter,
1.7). Although gross value added and output during 2011–22. The annual average growth rate
data are not available at a disaggregated level to based on total net revenue was 9.5 per cent during
assess the labour productivity of the textile and this period, slightly lower among textile (9.1 per
garment sectors separately, the net revenue per cent) than garment enterprises (10.2 per cent).

X Figure 1.7 Net revenue per worker of textile and garment enterprises, 2011–22

Unit: million VND

1,800

1,600 1 609

1,400 1 289
1,200 1 191
1,000

800 912
760 580
600

400 367
246
200
144
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment Textile and garment

Source: Calculated from GSO, Statistical yearbooks, 2012–22 and Labour force surveys, 2011–23.
34  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

1.4. Textile and garment US$16.8 billion in 2011 to US$45.4 billion40 in 2022,
exports and imports growing at an average annual rate of 9.8 per cent.
While accounting for nearly 12 per cent of the
Viet Nam’s textile and garment sector makes country’s total export turnover in 2022, a year
significant contributions to the country’s export later exports decreased to US$39.5 billion, but
and import turnover. In 2021, around a quarter of bounced back in 2024 to approximately US$44
textile and garment enterprises were engaged in billion. 40 Specifically, garment exports have
import-export activities, compared to an 8 per cent more than doubled over the past decade, from
average for the manufacturing sector.39 FDI firms, US$13.7 billion in 2011 to US$36.1 billion in
despite representing only approximately 14 per 2022 (Figure 1.8). The main exported garment
cent of enterprises, accounted for 58–62 per cent products include jackets, t-shirts, trousers,
of Viet Nam’s textile and garment export turnover shirts, children’s clothing, and blouses, which
in 2021, as reported by VITAS. together make up 70 per cent of the total.
High-end products, such as dresses and suits,
only account for 10 per cent of total export
1.4.1. Exports turnover. Additionally, the export turnover
of textile yarns and fabrics also increased
As one of the world’s leading textile and garment
significantly, exceeding US$9 billion in 2022.
exporters, Viet Nam’s export turnover surged from

X Figure 1.8 Viet Nam’s textile and garment exports, 2011–22

Unit: billion US$

50.0
45.40
45.0 41.3
40.0
39.4 37.1
36.7
35.0 31.8 36.1
28.7
30.0 27.3 31.9 31.4
25.2 29.7 30.2
25.0 21.5
25.8
18.1 23.8
20.0 16.8 22.8
21.0
15.0 17.9
15.0 9.9 9.3
13.7
10.0 6.9 7.6 6.9
4.9 6.0
3.1 3.2 3.6 4.2 4.5
5.0
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment Textile and garment

Source: Calculation based on data from ITC statistics, 2011-2022.

39
GSO, Enterprise survey 2022.
40
ITC data (https://www.trademap.org). VITAS reports exports totaling US$ 44.4 billion, but ITC data is utilized in this ses-
sion for further analysis. This approach ensures consistency by unifying the entire textile and garment export data chain
through the use of ITC’s subsector export data during 2011-2022.
41
VITAS.
42
MOIT, 2023. Viet Nam import and export report 2022.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 35

The rapid growth in textile and garment exports export turnover of domestic enterprise textile and
can be attributed to the effective utilization of FTAs. garment products in Viet Nam in 2017 was 45.3
These include the Comprehensive and Progressive per cent, compared to Thailand (67.5 per cent), the
Agreement for Trans-Pacific Partnership (CPTPP), Philippines (71 per cent) and Indonesia (81.4 per
EU-Viet Nam Free Trade Agreement (EVFTA), and cent).45
Regional Comprehensive Economic Partnership
In 2023, four markets accounted for the majority
(RCEP) (see Chapter 4, Box 4.2). Notably, significant
(nearly 68 per cent) of Viet Nam’s textile and garment
export growth to the EU is evident, particularly in
export turnover. Particularly the United States, as
product categories that benefited from a 0 per cent
the largest market, maintained its position with
tariff rate as soon as the EVFTA came into effect in
37.6 per cent in 2023, followed by the EU, Japan,
2020.43 The textile and garment industry ranked
and Republic of Korea (Figure 1.9). While these
fourth most important of Viet Nam’s exporters in
markets comprise the largest shares of Viet Nam’s
2020, having been surpassed by exports various
garment exports, fibre and yarn exports mainly go
types of computers and electronic products.
to China (46.3 per cent), Republic of Korea (10.2 per
However, the garment industry’s contribution to
cent) and ASEAN (9.7 per cent).46 The Vietnamese
the country’s total exports exceeds 10 per cent
Government and the textile and garment industry
annually.44
are pursuing a strategy to diversify markets,
FDI enterprises play a significant role in national products, customers, partners and to reduce
textile and garment exports. According to VITAS, dependence on traditional markets. To date,
from 2017–2021, FDI enterprises’ share of textile Vietnamese textile and garment products have
and garment exports fluctuated between 58.7 been exported to 104 countries and territories
and nearly 62 per cent. A 2020 report by the globally (VITAS).47 In the EU, Viet Nam exports to
ASEAN-Japan Centre estimated that the share of 26 out of 27 countries.

X Figure 1.9 Largest markets share in Viet Nam’s textile and garment exports, 2019–24

Unit: billion US$

45.0 42.0
40.6 40.5
38.9
40.0 37.6 38.0

35.0

30.0

25.0

20.0

15.0 11.6 10.8 10.6 10.9 10.4

9.2 8.6 10.5 10.1 9.8 8.6 9.8
9.9 9.5 9.1 8.9 9.0 8.9
10.0

5.0

0.0
US EU Japan Republic of Korea

2019 2020 2021 2022 2023 Estimated 2024

Source: MOIT, Viet Nam import and export report, 2019-2023 and VITAS, 2024

43
MOIT, 2023. Viet Nam import and export report 2022.
44
GSO, Statistical yearbook 2022.
45
ASEAN-Japan Centre, 2020. Global Value Chains in ASEAN textiles and clothing (Paper 14, March 2020).
46
MOIT, 2023. Viet Nam import and export report 2022.
47
https://via.gov.vn/linh-vuc-cong-nghiep-che-bien-che-tao/chu-tich-hiep-hoi-det-may-viet-nam-3-bai-hoc-lon-cho-nganh-
det-may.htm. Accessed on 9 June 2024.
36  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

1.4.2. Imports fibres. Textile and garment imports also increased

from US$10.7 billion in 2011 to US$24.1 billion in
Despite being among the world’s leading exporters48, 2022 (Figure 1.10). Textile imports with a value of
Viet Nam’s textile and garment industry still heavily more than US$23 billion in 2022, consisted mainly
depends on imported raw materials. These include of input materials for the garment industry.
fabrics, textile raw materials, cotton and woven

X Figure 1.10 Viet Nam’s textile and garment imports, 2011–22

Unit: billion US$

30.0

25.0
22.8 24.1
20.5 18.7
18.0 20.8 23.2
20.0 22.0
16.1
15.4 19.9
14.5 17.3 20.2 18.0
15.0 12.8
10.9 15.4
10.7 14.0 14.9
12.4
10.0 10.5
10.4

5.0

0.4 0.4 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.9
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment Textile and garment

Source: Calculation based on ITC statistics

In 2022, imports of raw fabrics amounted to fabrics climb from 58.3 per cent in 2019 to 62.4 per
US$14.7 billion, a 2.7 per cent rise against 2021.49 cent in 2022, followed by Taiwan (China), Republic
Fabric imports mainly originated from China, of Korea, Japan and ASEAN countries with high-end
which saw its share of the total value of imported fabrics (Figure 1.11).

48
In 2023, Viet Nam ranked third with a 5.3 per cent share of the global textile and garment export market, behind China
(33.4 per cent) and Bangladesh (5.7 per cent) (VITAS, 2024).
49
MOIT, 2022. Report on the strategy for development of the textile, garment, and footwear industries in Viet Nam to 2030 and a
vision to 2035.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 37

X Figure 1.11 Viet Nam’s main fabric import markets, 2019–22

Unit: %

2019 2020 2021 2022

70.0
63.3 62.4
61.3
60.0 58.3

50.0

40.0

30.0

20.0
15.2 13.7
12.1 11.7 12.0 12.3 12.5 12.1
10.0 6.2 5.4 4.4 4.6
3.6 3.4 3.9
0.0
China Taiwan (China) Republic of Korea Japan ASEAN

Source: MOIT, Viet Nam import and export reports, 2019–22

To meet the demands of domestic tex tile US$2.55 billion. Of these imports, more than
enterprises, Viet Nam must import a significant 59 per cent originated from China, followed by
quantity of fibres annually, particularly high- Taiwan (China), ASEAN countries, Republic of
quality yarns and fibres. In 2022, the import Korea, India, and Japan (Table 1.5).
value of various yarns and fibres reached

X Table 1.5 Viet Nam’s main fibre and yarn import markets (%)

Country 2019 2020 2021 2022

China 54.9 54.2 56.6 59.3

Taiwan (China) 14.5 13.5 13.1 13.0

ASEAN 10.7 19.2 10.1 10.5

Republic of Korea 7.2 6.9 6.0 5.6

India 4.2 6.0 6.7 4.1

Japan 2.8 2.9 2.1 2.2

Source: MOIT, Viet Nam import and export reports, 2019–22

38  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

The heavy dependence on imported cotton, in the imports reached more than 4 billion USD, up 24.5
context of volatile prices, greatly affects Viet Nam’s per cent compared to 2021.51 The United States,
fibres and yarn subsectors. Viet Nam imports almost followed by Australia and Brazil are the three main
all cotton – the main input of the yarn industry – as cotton suppliers to Viet Nam, accounting for more
domestic supply only meets 1 per cent of demand. than 80 per cent of import value. Recent years have
Unsuitable climatic and soil conditions means Viet seen a spike in imports from Australia, from 3.5
Nam has not developed its own cotton industry, per cent of total imports in 2019 to 31.6 per cent in
which is currently characterized by small-scale 2022 (Table 1.6). More than half of Viet Nam’s total
growing areas and producers with no centralized cotton imports are made by FDI companies such as
production areas, low levels of mechanization and Brotex, Huafu, Kyungbang, Tainan and Texhong.52
productivity.50 In 2022, Viet Nam’s cotton material

X Table 1.6 Viet Nam’s main cotton import markets, 2019-22 (%)

Country 2019 2020 2021 2022

United States 61.0 58.0 36.3 32.5

Australia 3.5 2.1 18.7 31.6

Brazil 15.0 23.7 21.8 18.4

India 6.3 6.7 9.8 5.5

Argentina 1.4 1.3 2.1 3.1

Ivory Coast 1.7 1.36 2.3 1.3

Source: MOIT, Viet Nam import and export reports, 2019–22

Despite an increase in imports, the textile and business capital increase sharply in recent years.
garment sector trade surplus remain large and From 2012–2022, average production capital
has risen rapidly over the past 10 years. In the five nearly quadrupled from VND 141.2 trillion to VND
years to 2022, the average annual trade surplus hit 523.4 trillion for textile enterprises and from VND
US$17.5 billion, making a significant contribution to 110.5 trillion to VND 431.7 trillion for garment firms
the national trade surplus. For example, in 2022, (Figure 1.12). The average annual growth rate of
the country’s trade surplus was US$12.4 billion, textile and garment firms’ production capital was
while that of the textile and garment sector was 14.3 per cent during this period, slightly above
US$21.3 billion.54 the manufacturing sector average (13.8 per cent).
By 2022, the value of fixed assets and long-term

1.5. Investment and financial investments in textile and garment

enterprises was more than three times the
technological innovation corresponding value in 2012 (Figure 1.13), reflecting
growing industry scale and potential. FDI has
As a key economic sector prioritized by the State to
played a major role in the industry’s development
attract domestic and foreign capital, the textile
with nearly 3,000 FDI projects between 1988 and
and garment industry has seen its production and
2021 (see Box 1.1).

50
Cotton productivity in the United States reached 960 kg/ha, in contrast to 400 kg/ha for Viet Nam.
51
MOIT, 2023. Viet Nam import and export report, 2022.
52
Vinatex: https://vinatex.com.vn/tong-quan-ve-mua-vu-bong-2021-2022/
53
GSO, Statistical yearbook 2022.
54
Calculation from ITC statistics. VITAS reports US$ 21.8 billion.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 39

X Figure 1.12 Average annual production and business capital of textile and garment
enterprises

Unit: trillion VND

600.0
523.4
504.8
500.0 471.6
438.2 431.7
397.6
400.0 382.3
366.1
352.7
319.5
298.4
300.0 276.4
261.3
239.4
215.6
186.4
200.0
141.2
110.5
100.0

0.0
2012 2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment

Source: GSO, Statistical yearbook, 2013–23.

X Figure 1.13 Fixed asset value and long-term financial investments of textile and garment
enterprises

Unit: trillion VND

300.0

246.5 245.3 243.6

250.0 238.1

204.4
200.0
178.6
162.9 169.7
158.9 156.1
150.0 136.7 137.2 135.2
120.9
104.1
100.0 85.3
77.6
49.7
50.0

0.0
2012 2015 2016 2017 2018 2019 2020 2021 2022

Textile Garment

Source: GSO, Statistical yearbook, 2013–23.

40  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Limited investment in technological innovation 2020 estimated that only 10 per cent of garment
remains apparent in Viet Nam’s textile and garment enterprises had invested in automated machinery
industry. This is evidenced by the 28.5 per cent of and equipment, primarily concentrated in
textile and garment enterprises with investments large enterprises. However, among the latter
in basic construction, fixed asset purchases, enterprises, automation represented only 5–10
upgrades, and major repairs of fixed assets, higher per cent of total machinery and equipment. Even
than the manufacturing sector average, according among those with modern equipment, automated
to data from the 2022 GSO enterprise survey. technology only makes up 20 per cent of the
Moreover, just 0.9 per cent of textile and garment total machinery and equipment. 55 In general,
enterprises invested in technological innovation automation and technological approaches vary
in 2021, equivalent to the manufacturing sector across Viet Nam’s textile and garment value chain
average (Figure 1.14). Another study conducted in (see Chapter 4, Box 4.1).

X Figure 1.14 Proportion of textile and garment enterprises investing in fixed assets and
technological innovation in 2021

Unit: %

29.1 28.2 28.5 27.9

30.0

25.0

20.0

15.0

10.0

5.0
0.7 1.0 0.9 0.9
0.0
Textile Garment Textile and garment Manufacturing

Investing in basic construction, purchasing fixed assets, upgrading and major repairs of fixed assets
Technological innovation

Source: GSO, Enterprise survey 2022

55
Pham Thu Lan, 2020. Automation and its impact on employment in the garment industry in Viet Nam.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 41

X Box 1.1: FDI and Viet Nam’s textile and garment industry

In 1988, following initiation of the reform process and introduction of the Law on Foreign
Investment, FDI projects were licensed to open textile and garment industry factories in Viet Nam.
By November 2024, there were 3,261 foreign-invested textile and garment projects with total
registered capital of US$35 billion (Box table 1). Since 2017, foreign investment has been increased
sharply in the sector in anticipation of new-generation FTAs. In particular, this influx of foreign
investment was driven by apparel-specific restrictive rules of origin of these agreements. 56 This
process began early as new agreements were still being negotiated. 57

X Box table 1. FDI projects invested in textile and garment industry 1988–2024

Total registered capital

Year Number of projects
(million US$)

1988–2018 2 613 29 793.5

2019 175 1 728.5

2020 95 935.3

2021 61 610.8

2022 57 732.5

2023 102 578.1

November 2024 158 731.8

Total 3 261 35 110.5

Source: VITAS, 2024

In 2023, Viet Nam attracted US$23.5 billion in foreign investment in the manufacturing industry,
accounting for 64.2 per cent 58. The textile and garment industry ranked after electronics, metal
production, electrical equipment, plastics and rubber products in terms of FDI attraction.

Foreign investment in Viet Nam’s textile and garment industry primarily originated from northeast
Asian countries and territories, including China, Republic of Korea, Hong Kong (China), Japan and
Taiwan (China), which together accounted for 64 per cent of total registered capital between 2019
and 2024 (Box Table 2). FDI allows these countries to leverage Viet Nam’s favourable position in FTAs
to boost exports of their goods. 59

56
Rules of origin apply to goods with preferential tariff and non-tariff preferential agreements in FTAs. Each agreement has
its own rules of origin to ensure that goods meeting the rules of origin enjoy preferential tariffs from member countries.
57
Platzer, M. (2016). U.S. Textile Manufacturing and the Proposed Trans-Pacific Partnership Agreement. Congressional Research
Service, Washitngton, D.C. https://sgp.fas.org/crs/misc/R44610.pdf
58
GSO, 2024. Tình hình thu hút đầu tư nước ngoài năm 2023 – General Statistics Office of Vietnam at link https://www.gso.
gov.vn/du-lieu-va-so-lieu-thong-ke/2024/01/tinh-hinh-thu-hut-dau-tu-nuoc-ngoai-nam-2023/. Accessed on 9 June 2024.
59
https://trungtamwto.vn/hiep-dinh-khac/17498-tan-dung-uu-dai-thue-quan-tu-cptpp-doanh-nghiep-fdi-toi-uu-hoa-co-
hoi-tot-hon. Accessed on 9/6/2024.
42  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Box 1.1: (cont.)

X Box table 2. FDI projects in the textile and garment industry in Viet Nam by country of
investment 2019–24*

Country Number of projects Total registered capital (million US$)

China 175 745.63

Republic of Korea 126 461.75

Hong Kong (China) 110 1 534.65

Japan 46 503.08

Singapore 44 751.81

Taiwan (China) 33 162.49

All other countries/ territories 114 1 157.67

Total 648 5 317.08

Source: VITAS

FDI textile and garment projects are mainly concentrated in Dong Nai, Binh Duong and Long An
provinces and Ho Chi Minh City, accounting for 57.2 per cent of the total by 2021, according to VITAS.
Specifically, Ho Chi Minh City accounted for 20.7 per cent and Binh Duong (18.2 per cent) of projects.
In the northern region, such projects are mainly concentrated in Hanoi (136 by 2021) and Bac Ninh
province (81). While these provinces continue to account for the largest shares of sectoral FDI, other
provinces such as Nam Dinh, Quang Ninh and Tay Ninh are also increasingly home to many such
FDI projects, including large ones with high average registered capital.

Source: VITAS
* Note: to 15 November 2024
 Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 43

2
Chapter
Viet Nam and the
textile and garment
value chain
44  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

2. Viet Nam and the

textile and garment
value chain

2.1. Current situation competition domestically and internationally. The

participation rate in GVCs is a useful indicator of
2.1.1. Viet Nam’s participation in how well a country’s exports are integrated into
international production networks. According to
the textile and garment value chain calculations by the ASEAN-Japan Centre in 2017,
The integration of Viet Nam’s textile and garment although Viet Nam’s total export turnover was
sector into global value chains (GVCs) followed significantly higher than that of Indonesia, the
the landmark “Doi Moi” reforms and increasing Philippines and Thailand, Viet Nam’s export-
international integration since the early 1990s. added value was only US$6.9 billion, compared
The textile and garment value chain involves to Indonesia (US$26.9 billion), the Philippines
multiple stages that increase the value of the (US$7.5 billion) and Thailand (US$22 billion).
textile industry, from raw material production Moreover, the industr y ’s share of domestic
to spinning, weav ing, d yeing and fabric added value was also significantly lower in Viet
printing to provide inputs to allow the garment Nam (45.3 per cent) than in these countries:
industry to increase its value, such as through Indonesia (81.4 per cent), the Philippines (71
branding, design fashion patterns, tailoring per cent) and Thailand (67.5 per cent). 60 Key
and distributing products to wholesalers and reasons for these differences are a relatively
retailers (Figure 2.1). The domestic textile and underdeveloped textile export subsector in
apparel value chain is closely linked to GVCs. Viet Nam relative to Indonesia for instance,
and lower value-added production methods
Although Viet Nam’s textile and garment sector used by Vietnamese garment manufacturers.
is integrated into GVCs, participation remains Box 2.1 describes the main garment production
characterized by weak linkages and low levels of methods.
value-added. The garment GVC is subject to high

60
ASEAN-Japan Centre, 2020. Global Value Chains in ASEAN textiles and clothing.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 45

X Figure 2.1 Textile-apparel relationship and production methods in garment value chain

Textile Spinning Weaving

Dyeing/
Fabric
sector finishing

Garment Raw
Cutting/ Distributing/
sector Brand Design materials
sewing Marketing
sourcing

Desing CMT

OEM/FOB

ODM

OBM

Source: Established on the basis of ASEAN-Japan Centre 2020, Global Value Chains in ASEAN textiles and clothing
46  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Box ‎ 2.1 Garment production methods

The main garment production methods are listed according to increasing levels of added value:
u CMT (Cut-Make-Trim): This is the simplest production method, commonly for export. Enterprises
are provided with all inputs including designs, raw materials, and transportation. They only need
to cut, sew and finish products.
u FOB (Free-On-Board): Involves buying raw materials and selling semi-finished products. FOB
production is divided into three levels: FOB level I, garment enterprises receive product samples
from foreign buyers and buy input materials from suppliers designated by foreign buyers. FOB
level II, garment enterprises receive product samples from foreign buyers and are entitled to order
materials as required by design from any supplier without instructions of buyers. For FOB level
III, the garment enterprise initiates the process of manufacturing products based on its design,
sourcing inputs on its own, not bound by commitments from buyers.
u OEM (Original Equipment Manufacturing): Manufacturing enterprises provide products according
to the customer’s design, the product will bear the customer’s brand. Enterprises and customers
are independent and customers/buyers are not in control of distribution.
u ODM (Original Design Manufacturing): In this format, the manufacturer provides customers with
all services related to product such as R&D, product orientation as well as production. The customer
only provides the manufacturer with the requirements, performance or even just provides a
concept, and the manufacturer will perform the finished product.
u OBM (Own Brand Manufacturing): Manufacturers have their own brand, whereby a manufacturer
brings the products they produce to the market with their own brand.

Source: Trinh Thi Thu Trang, 2015. Position of Viet Nam’s textile and garment industry in the global textile and gar-
ment value chain

Viet Nam’s textile and garment value chain is develop sustainably, improve efficiency, provide
constrained by weak linkages, which dampen value stable and proactive inputs for the garment
addition and hamper industry competitiveness. industry. The reality in many countries including
Linkages between the two stages is critical Viet Nam is the dependence on impor ting
(Figure 2.1), as they help the textile subsector fabrics, yarns and auxiliar y materials from
accurately gauge garment subsector demand abroad disadvantages garment enterprises as it
for raw materials, reducing dependence on raw hinders proactive production scheduling as well
material imports, intermediary and garment as delivery times.61 Box 2.2 provides key figures
product costs. The textile-garment linkage is and insights into Viet Nam’s textile and garment
also the driving force for the textile industry to domestic value chain.

61
Ha Van Hoi, 2012. Analysis of Viet Nam textile and garment export value chain.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 47

X Box 2.2 Viet Nam’s textile and garment domestic value chain

Regarding distribution of textile and garment enterprises along the value chain, the Worldwide Fund
for Nature (WWF) estimated that in 2016 Viet Nam had:
u Four cotton material producers, that produced 600 tonnes of cotton yarn and 1,380 tonnes of cotton
seeds.
u 1,204 spinning factories, with 7.2 million spinning mills and 1.25 million tonnes of yarn.
u 1,335 textile and dyeing enterprises that completed production of 2 billion m2 of fabric.
u 4,458 garment enterprises used up 8.5 billion m2 of fabric to produce nearly five billion products,
of which 6.5 billion m2 in fabric had to be imported.
u Participating in the domestic textile and garment value chain, there are also 157 enterprises in other
supporting industries such as transportation and trade, packaging and labelling.

X Box Figure 2.2. Distribution of Vietnamese textile and garment enterprises along the
domestic value chain (2016)

• Countrywide: 4 • Countrywide: 1 204 spinning mills; • Countrywide: • Countrywide: 157

companies 1 335 weaving and dyeing 4 458 companies companies
companies • Mekong Delta + (transport and
• Mekong Delta + Southeast area: Southeast area: trading,
350 companies 3 689 companies packaging,
labelling..)

Weaving & Supporting

Cotton Spinning Garment
Dyeing industries

• Cotton fiber • Spindles • Output • Produce nearly

production quantity: 7.2 (weaving and 5 billion
(2016): 0.6 million knitting): 2 products/ year
thousand tons • Output: 1.25 billion m2/year
• Fabric use: 8.5
• Seed cotton trillion • Capacity billion m2, in
production tons/year (dyeing and which 6.5
2016: 1.38 finishing): 2 billion m2
thousand tons billion m2/year imported

Box Figure 2.2 reveals loose and unbalanced linkages in stages along the domestic textile and garment
value chain. As most garment enterprises apply the CMT method, raw materials must be purchased
as specified by the buyer, mainly by international suppliers. This leaves Viet Nam’s textile and garment
sector dependent on imported raw materials. Annual import and export figures show that spinning
imports cotton to export fibres, while textile enterprises import yarn to weave. In 2022, Viet Nam ex-
ported 1.57 million tonnes of fibres of all kinds, equivalent to US$4.7 billion, but also imported US$2.55
billion in fibres and textile fibres of all kinds.62
Additionally, there is a lack of synergy in technological innovation in the textile and the garment sub-
sectors that impedes a cohesive approach to production and sectoral development.
Source: WWF, 2018. Mapping policies, initiatives, stakeholders and gaps to support the textile sector with a sustain-
ability transition in Viet Nam.

62
MOIT, 2023. Viet Nam import and export report 2022.
48  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

2.1.2. Viet Nam and textile and chain, the greatest added value is generated in the
garment value chain stages sewing process with the OBM production method,
which delivers 25-fold greater value-added than
Different stages of the value chain are associated with raw material production, followed by garment
various levels of value addition. Additionally, the level production according to the ODM method (18-
of added value created in the garment industry fold), garment production according to FOB/OEM
depends greatly on the production method, which method (12-fold), fabric production (five-fold),
also determines profit margins. It is possible to garment production according to CMT method (2.5-
divide participation in the global textile and garment fold), and yarn spinning (1.75-fold) (Table 2.1). Along
value chain into four broad stages: 1) research, with added value, the profit margin of enterprises
design and develop new products, 2) production also varies according to the production methods
of raw materials, 3) product manufacturing and 4) used. Enterprises operating on CMT basis have a
marketing and product distribution. According to typical profit margin of 1-3 per cent, compared to
the Viet Nam Cotton and Yarn Association, of all 3-5 per cent for FOB contracts and 6-7 per cent for
production stages in the textile and garment value ODM production.63

X Table 2.1 Examples of value added in textile and garment value chain

Fabric Products by sewing method (US$/Kg)

Raw material Spinning
Stages production
(US$/Kg) (US$/Kg)
(US$/Kg) CMT OEM ODM OBM

Value 2.00 3.50 10.0 5.0 24.0 36.0 >50

Added value 1.75 times 5.0 times 2.5 times 12 times 18 times >25 times

Source: Viet Nam Cotton and Yarn Association (2019), Current situation of participation in global value chain of Viet Nam’s
textile and garment industry

The following analysis examines the current status design and product styling in Viet Nam, is slow to
of Viet Nam’s textile and garment industry value meet market requirements. A key reason is the lack
chain, incorporating insights from stakeholder of good designers and difficulties in researching
consultations, for each of the value chain’s four and determining consumers’ needs given a lack of
stages64: engagement with the final consumer market.
1. Research, design and develop new products The domestic fashion industry has not been identified
as a driving force for textile and garment industry
This stage remains weak with insufficient attention
development, while growing Vietnamese brands do
paid to its development. Despite being an important
not participate in GVCs. By 2022, the Vietnamese
link in the value chain that offers high potential for
textile industry had numerous brands that
added value, with the style and pattern determining
were well recognized in the domestic market.65
the value of a product, the role of design in Viet
Additionally, other brands66 have become relatively
Nam’s fashion industry has not been considered
familiar to Vietnamese consumers. Notably, some
important. Capitalizing on this stage requires a
Vietnamese textile and garment manufacturing
high level of knowledge and investment in quality
enterprises such as Viet Tien Garment company,
raw materials and technological equipment,
Phuong Dong garment company and Viet Nam
however the gap between the Vietnamese and
fashion company have tried to build their brands
global fashion industry remains large. In particular,
as exports, but few reaches global retailers.
the pattern-making stage, including fabric pattern

63
FPTS, 2017. Textile and garment industry report. https://www.fpts.com.vn/FileStore2/File/2018/01/11/FPTS-Textiles%20
and%20Clothing%20Industry%20Report-Dec.2017.pdf. Accessed on 12 March 2024.
64
Dang Thi Tuyet Nhung, Dinh Cong Khai, 2020. Policy research brief: Viet Nam’s textile and garment value chains.
65
Viet Tien fashion products (Viet Tien Garment Corporation), Merriman brand (Hoa Tho Textile Garment Joint Stock
Corporation), Mattana & Novelty brand (Nha Be Garment Corporation), An Phuoc garments (An Phuoc Garment
Embroidery Shoes Company), May 10 Series, May 10 Suits & Eternity Grusz (May 10 Corporation), Thai Tuan fashion (Thai
Tuan Group Corporation) and Mollis towels (Phong Phu Joint Stock Corporation).
66
Aristino, Canifa, Chic-land, Elise, Eva de Eva, Format, Ivy Moda, NEM, Ninomax and Seven AM.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 49

2. Raw material production FTA rules of origin requirements.69 In 2020, total

domestic fabric consumption was estimated at 10
Domestic textile material production capacity has
billion m2. Of this, garment exporters consumed
made significant progress in recent years, but
8.5 billion m2 (85 per cent), and the domestic
shortcomings remain. For example, yarn production
consumption production sector 1.5 billion m2 (15
increased from 810,000 tonnes in 2010 to nearly 3.2
per cent). Domestic fabric production averaged
million tonnes in 2020, fabric production jumped
2.2 billion m2 over the last three years, of which
from 1.1 billion square meters (m2) to 2.3 billion m2
fabric exports accounted for 8 per cent, with 92
during the same period.67 However, compared to
per cent the domestic demand. However, fabric
market demand, limitations are apparent68:
supplied for domestic demand only met 20 per
u Cotton production: The country can only produce cent of fabric consumption used for domestic
5,000 tonnes of cotton per year, meeting 1.2 per production and met 15 per cent of fabric used for
cent of domestic market demand. Thus, Viet Nam garment exports. Thus, garment exporters in Viet
basically must import all cotton for domestic Nam must import 80–85 per cent of fabric needs.70
needs. Recently, due to strict requirements on rules of
origin of FTAs with major trading partners, textile
u Yarn production: While the fibre industry has
subsector investment in Viet Nam has tended to
experienced rapid development, Viet Nam’s yarn
increase (see Box 1.1). Most foreign investment
products are not diversified, the quality of yarn
originates from China, Taiwan (China) and Republic
products is not high and only concentrated in low-
of Korea, while domestic textile investment
and medium-end product segments. This means
remains low. In the near future, the domestic
they cannot meet the needs of high-end textile
supply of fabrics is expected to increase, with
and garment enterprises that require different
domestic textile and garment production chains
yarn materials with special input materials
better developing and closer linkages.
produced by modern equipment. Therefore,
large quantities of domestically produced yarn 3. Product manufacturing
are exported, while domestic textile enterprises
Viet Nam’s garment subsector remains highly
import yarn from abroad.
dependent on simple production methods associated
u Weaving and dyeing: These subsectors are with lower levels of value addition (Table 2.1).
slow to develop and face difficulties attracting According to VITAS, in 2021, around 65–70 per cent
investment, due to high environmental of domestic enterprises applied the CMT method,
standards and weak support policies. Provinces 20–25 per cent applied FOB/OEM, less than 5 per
and localities commonly decline weaving and cent each applied ODM and OBM. CMT garment
dyeing investment projects due to environmental manufacturers often participate in the value chain
concerns. In addition, meeting weaving and discretely subject to coordination and supervision
dyeing discharge standards, equivalent to by international buyers. Most parent companies
those of developed countries, is challenging for of FDI firms are closely tied to GVCs and operate
enterprises due to limited support measures under ODM or OEM methods (in some cases OBM),
and policies (centralized wastewater treatment, but their factories in Viet Nam apply the CMT
investment support for wastewater treatment method which is not a sustainable choice to escape
systems). underdevelopment.71
u Fabric production: The fabric weaving, dyeing, and A shift from CMT to FOB would represent a significant
finishing industry has not developed as desired, improvement in the added value of production at
failing to attract domestic and foreign enterprises, factory level,72 but numerous barriers remain.
leading to a domestic material supply shortage,
heavy reliance on imports and difficulties meeting

67
GSO, Statistical yearbooks 2010 and 2020.
68
MOIT, 2022. Report on the strategy for developing the textile, garment and footwear industries to 2030 and vision to 2035.
69
For example, EVFTA stipulates that fabric for making clothes exported to the EU must be produced in Viet Nam or the EU.
70
MOIT, 2022. Report on the strategy for developing the textile, garment and footwear industries to 2030 and vision to 2035.
71
WTO and others, 2022. Textiles and clothing in Asian graduating LDCs: Challenges and Options.
72
Goto, K., Natsuda, K. and Thoburn, J. 2010. Meeting the challenges to the Cambodian garment industry in the global
garment value chain. Blackwell Publishing Ltd. & Global Networks Partnership 2011.
50  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Garment enterprises are slow to move up to 4. Marketing and distribution

higher production methods partly due to a lack of
Marketing and distribution activities constitute the
dynamism and ability to control the value chain.
stage that could potentially deliver the highest added
This is due to limited capacity to manage the chain,
value, but which is currently an “Achilles heel” of
mitigate risks and meet quality standards and
Viet Nam’s textile and garment industry. Domestic
regulations of importing countries and delivery
enterprises mainly meet processing orders under
times. Enterprises also lack the financial capacity to
CMT and FOB level I methods and distribute
deal with risks that arise during contract execution.
wholesale products to buyers. The network of
In addition, because they mainly focus on processing
buyers includes retailers, manufacturers and
products, enterprises struggle to develop their own
merchants (Figure 2.2). Retail enterprises – mostly
design teams and products, as well as connect with
from the EU, Japan and the US – own leading
the domestic fashion and textile industry. 73
international brands, supermarkets, wholesale and
retail stores.

X Figure 2.2 Vietnamese textile and garment enterprises in GVCs

Design, GLOBAL BUYERS

Branding,
Consumers
(Retailers)
Marketing,
Distribution,
Product
Development
Regional
Office
Missing Link

TRADERS
Sourcing,
Outsourcing,
Placing orders

Regional
Cut-Make-Trim or Manufacturers
Cut-Make (1st tier suppliers) Vietnamese T&G
firms

Source: Dang Nhu Van (2005), Vietnamese T&G firms in the global value chain.

73
MOIT, 2022. Report on the strategy for developing the textile, garment and footwear industries to 2030 and vision to 2035.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 51

Enterprises importing Viet Nam-origin products 2.2. Decent work and skills
include international and regional tailors, while
regional traders play a key role as intermediaries
implications of Viet Nam’s GVC
linking Viet Nam’s textile and garment industry to participation
the world. Large international retailers rely on
Specific characteristics of textile and garment GVCs
merchants to develop supply networks in Viet Nam
have played a major role in shaping employment
to reduce transaction costs. Suppliers for foreign
structure and working conditions in the industry. In
businesses often have representative offices in
the global garment market, Western buyers create
Hong Kong (China), Taiwan (China) or Republic of
fashion, control the market and drive the value
Korea, while Vietnamese enterprises rely heavily
chain.75 Just 20 large companies generate about 97
on regional traders based in these countries.
per cent of the economic profit of the entire global
Another reason why most textile and garment
garment industry.76 Thus, textile and garment
orders from Viet Nam’s international customers
GVCs are buyer-driven, led by global brands or
are through intermediaries is that currently, only a
multinational enterprises which have promoted
few local manufacturers can provide raw material
the ‘fast-fashion model’, and interact with suppliers
sources, design, logistics, packaging services
in a landscape that is highly competitive, complex
for buyers, often prerequisites for customers to
and multilayered (ILO, 2021). This, in addition to the
directly source goods from a country.
fact that most suppliers in Viet Nam still operate
Compared to famous international brands entering under the CMT model, competing on a cost-basis
Viet Nam, domestic ones still display distribution and and having little control over the cost of their
marketing weaknesses. Although some Vietnamese inputs, do not have much room to invest in modern
products have brand recognition, their ability to equipment, enhancing workers’ skills, or other
leverage the sizable domestic market of 100 million pursue other strategies that could help raise their
people remains constrained by weaknesses such productivity. Suppliers, in particular SMEs working
as marketing and brand recognition. as subcontractors, operate on tight margins facing
pressures to reduce ‘lead times’ – the time it takes
E-commerce’s potential to drive the textile and
to produce an order for a buyer – while keeping
garment industry remains untapped. Despite
wages in check, leading to decent work deficits
e-commerce’s rapid development, the number
in terms of excessive working hours and working
of transactions is still limited by the absence of
arrangements that provide them with flexibility
strategies to apply digital technology to support
(subcontracting, resorting to temporary or casual
e-commerce deployment and difficulties accessing
work), but result in high insecurity for workers (see
major global e-commerce platforms.74
Chapter 3, Section 3.3).
Enhancing value chain participation, including
through shifting production processes, is critical to
improve the sector’s productivity and sustainability.
Doing so has important implications linked to the
need for human resources with adequate skills to
carry out the transition. This is reflected by cases of
some companies hiring foreign workers due to the
lack of qualified domestic candidates with required
skills to transition from the CMT to FOB methods
(see Box 2.3).

74
https://digital.fpt.com/chien-luoc/thuong-mai-dien-tu-kinh-doanh.html
75
Mohammad B. Rana and Matthew M.C Allen. Upgrading the global garment industry: Internationalization, capabilities
and sus tainabilit y. ht tps: // w w w.elgaronline.com /conf igurable /content /edcoll$ 0 02 f 9781789 9 076 4 3$
002f9781789907643.00006.xml?t:ac=edcoll%24002f9781789907643%24002f9781789907643.00006.xml date 23/3/2024
76
ILO, Better Work, ILR School, 2021. The post-COVID-19 garment industry in Asia.
52  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Box 2.3 Production methods and labour structure at two leading enterprises in Viet Nam’s
textile and garment sector

1. May 10 Garment Corporation

Established in 1952, May 10 is one of Viet Nam’s oldest garment companies. As of 2023, May 10 operated
12 factories across six provinces and cities (Hanoi, Ha Tinh, Nam Dinh, Quang Binh, Thai Binh and Thanh
Hoa) employing 7,300 people. May 10 collaborates with prominent global fashion industry names,
such as Arrow, Asmara, Brandtex, Camel, C&A, Jacques Britt, Seidensticker and Tesco. Each year, the
corporation produces nearly 30 million high-quality products, with 80 per cent exported to markets
in the EU, Germany, Hong Kong (China), Japan and the US. However, in the long term, May 10 aims to
prioritize domestic consumers.
May 10 has gradually invested in technological innovation and improved management, shifting from
the CMT to FOB method. Currently, it is among the top enterprises in Viet Nam in terms of modern
equipment, exports and production efficiency, with production methods comprised of FOB (90 per
cent), CMT (8 per cent), and ODM (2 per cent). With this shift in production methods, May 10 has had to
recruit more sales experts, brand/merchandise sales personnels; raw material purchasers, technical
experts, IT specialists, fashion designers, environmental managers, labour safety experts, and market
trend analysts. The company has even recruited foreign lawyers and consultants for specific roles.
Consequently, the labour structure has shifted, with its number of high-skilled workers (university level
or higher) increasing by 25 per cent, and its middle-skilled workers climbing by 37 per cent compared
to the CMT method.

2. PPJ Group
Established in 2007, PPJ Group has pursued a strategy of investing in modern equipment, digital
transformation, green development, and production using FOB and ODM methods. According to PPJ
leaders, the company is currently among the top five textile and garment enterprises in Viet Nam in
terms of technology, equipment, digital transformation, synchronized management, and application
of Industry 4.0 technologies.
PPJ currently operates 12 subsidiaries, with a total of 33 affiliated factories and branches, including
garment, washing, printing, textile and dyeing factories. As of the end of 2023, the company employed
17,673 workers. PPJ’s main products include jeans, casual and formal wear, knitwear, light woven
garments and workwear, all produced for brands and export markets, not for domestic consumption.
The workforce structure at PPJ is as follows:
- Garment department: high-skilled workers (university level or higher): 6 per cent and intermediate-
skilled workers: 5 per cent
- Weaving and dyeing department: highly skilled (university level and above): 12 per cent and
intermediate-skilled: 10 per cent
To meet the demands of FOB and ODM production methods, PPJ must recruit additional sales experts,
merchandise specialists, denim weaving technical experts, and supply chain managers. Recently, PPI
sought to recruit 50 foreign engineers and experts due to the lack of domestic candidates who met
technical and English proficiency requirements. High-skilled workers represent a greater share in
employment at PPJ than the industry’s average.

12% 6% 3.4%
PPJ weaving and PPJ garment Textile and garment
dying department department enterprises average

Source: Interviews with May 10 and PPJ Group representatives.

 Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 53

3
Chapter
Employment
trends and working
conditions
54  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

3. Employment trends and

working conditions
3.1 Labour and employment 1.8 million in 2012 to 3.4 million in 2023, of whom
more than three million were employed in the
Workers play a key role in development of the garment subsector and more than 324,000 in the
labour-intensive textile and garment industry. Its textile subsector (Table 3.1).
total number of workers increased from nearly

X Table 3.1 Number of workers in the textile and garment industry 2012–23 (thousands)

Sectors 2012 2015 2016 2017 2018 2019 2020 2021 2022 2023

Textile 277.1 269.6 276.2 294.0 279.6 263.1 307.4 299.6 336.6 324.3

Garment 1 516.3 1 822.7 2 035.6 2 148.3 2 270.5 2 659.3 2658.7 2 691.1 2 931.4 3 064.5

Textile and garment 1 793.4 2 092.3 2 311.8 2 442.5 2 550.1 2 922.4 2 966.2 2 990.6 3 268.0 3 388.9

Source: GSO, Labour force survey, 2012–23

Most created jobs consist of wage and salaried work. (own-account work) decreased sharply from 23.6
The percentage of salaried workers increased by to 9.6 per cent, and the share of contributing
18 percentage points from 70.3 per cent in 2012 family workers also dropped during this period,
to approximately 88 per cent in 2023 (Figure reflecting positive labour market developments
3.1). Meanwhile, the rate of self-employment (Figure 3.2).

X Figure 3.1 Employees share in employment, textile and garment industry and
manufacturing sector (2012–23)
Unit: %
95.0
88.0
90.0 87.9
83.1 86.3 85.4
85.0 83.3
79.9 85.7
79.0 83.8
77.4 79.8 81.9 82.8
80.0
74.1 77.9 78.9
71.1 77.9
75.0 77.4
71.1
72.6
70.0 71.1
70.3
65.0

60.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Textile Garment Textile and garment All manufacturing

Source: GSO, Labour force surveys, 2012–23.

  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 55

X Figure 3.2 Workforce distribution by status-in-employment in Viet Nam’s textile and

garment industry, 2012 and 2023
Unit: (%)

2012 2023
3.8 1.4
9.6
1.2
23.6

2.3 70.3

Employees Own-account workers 87.9

Employers Contributing family workers

Source: GSO, Labour force surveys 2012 and 2023

X Figure 3.3 Distribution of enterprises and employment by enterprise size in 2021

Unit: (%)

Textile and garment

100.0
78.0
80.0
60.0
38.4
40.0 21.1
11.6 9.2 13.3 13.1
20.0 4.8 3.0 2.6 2.5 0.3
-
Enterprise < 50 50-199 200-499 500-999 1,000-4,999 >= 5,000
workers workers workers workers workers workers

Share of enterprises Share of employment

Textile Garment
90.0 82.4 80.0 75.0

80.0 70.0
70.0 60.0
60.0
50.0 40.3
50.0
38.4 40.0
40.0 29.5
30.0 23.1
30.0
16.9 18.2
20.0 11.2 13.2 11.9 20.0 11.8 12.2 13.1
10.2 7.6 6.3
10.0 4.0 1.3 0.1
10.0 3.6 3.2 3.2
0.4
- -
Enterprise < 50-199 200-499 500-999 1,000-4,999 >= 5,000 Enterprise < 50-199 200-499 500-999 1,000-4,999 >= 5,000
50 workers workers workers workers workers workers 50 workers workers workers workers workers workers

Share of enterprises Share of employment Share of enterprises Share of employment

Source: GSO, Enterprise survey 2022

56  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Large textile and garment enterprises employ a migrant labour from rural areas, which accounts
disproportionate share of the sector’s workforce. for 83.7 per cent of Viet Nam’s garment labour
In 2021, enterprises with 5,000 workers or more force.77
only accounted for 0.3 per cent of textile and
garment firms but employed more than a fifth
of the workforce. Conversely, enterprises with
3.2. Workforce characteristics
fewer than 50 workers accounted for 78 per cent
of textile and garment firms but employed only
3.2.1. Demographic characteristics
4.8 per cent of the industry’s workforce (Figure Women workers remain a key feature of the textile
3.3). Enterprises with fewer than 50 workers and garment landscape. Although the share of
account for a higher share of enterprises and of women in the industry has decreased in recent
employment in the textile than garment sector. years from 80 per cent in 2012 to 75 per cent in
It is important to note that, in the employment 2022, it remains well above the manufacturing
distribution by firm size presented in Figure 3.3, sector’s average. In particular, women’s share
the share of enterprises with less than 50 workers of employment in the garment industry remains
may be underestimated due to data sources. more than 20 percentage points higher than in
For instance, the number of workers in textile the textile industry and the entire manufacturing
and garment enterprises reporting business sector (Figure 3.4).
outcomes reached 1.8 million people in 2021 (as
per the GSO Statistical Yearbook), constituting The age structure of the textile and garment ’s
60.4 per cent of the total industry workforce, as labour force is shifting, as enterprises struggle to
per labour force survey estimates. The remaining recruit young workers. To illustrate the challenge,
workforce is employed in unregistered or family the proportion of young workers (15–24 years old)
businesses, or consists of self-employment decreased by 12 percentage points from 26 per
and work in cooperatives, which suggests that cent in 2012 to 14 per cent in 2023 (Figure 3.5). The
MSMEs’ share in employment and the total share of young adults aged 25–34 also declined
number of production units is higher when from 37 to 32 per cent during this period. The fall
informal and household sector is included. in youth employment is highest among females
in the garment industry, and male peers in textile.
The industry’s development in some provinces Key reason for this trend, according to enterprise
and cities has led to a concentration of labour representatives and industry experts, was the
in industrial zones. For example, in Southeast industry no longer appealing to the younger
region provinces, more than 70 per cent of the generation and fierce competition from other
workforce operates in industrial zones which manufacturing industries such as electronics, and
attract labour from other regions, especially services sectors such as tourism.

77
Pham Thu Lan, 2020. Automation and its impacts on employment in the garment industry in Viet Nam.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 57

X Figure 3.4 Women’s share in employment in the textile and garment industries and the
manufacturing industry, 2012–23

Unit: %

85.0
82.0
80.2 79.4 80.0 79.5 80.0 79.7
80.0 77.3 78.5 77.8 77.1 76.7
79.7
75.0
78.0 77.2 77.4 77.4 77.6
77.8 75.3 76.0 75.9 75.2 74.8
70.0
67.2
66.4
65.0
63.4 60.0
60.2 61.5 62.7
60.0 58.6 58.4
55.2
54.9 56.1
55.0
54.5 54.7 54.8 55.5 54.4 55.0 55.1
53.3 54.5 54.0
52.6 53.0
50.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Textile Garment Textile and garment All manufacturing

Source: GSO, Labour force surveys, 2012 and 2023.

X Figure 3.5 Labour structure of the textile and garment sector by age group, 2012 and 2023

Unit: (%)
2012 2023

3 4 14
26

34
50

32
37

15-24 25-34 35-54 55+ 15-24 25-34 35-54 55+

Source: GSO, Labour force surveys, 2012 and 2023.

58  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

3.2.2. Workforce education, 2023, nearly half of the industry’s workers (48.5
technical and professional per cent) had completed primary education or
less, compared to 59.2 per cent in 2013. Conversely,
qualifications the share of workers with secondary or post-
secondary non-tertiary education increased from
Despite a national shift towards higher workforce
36.2 per cent in 2013 to 43.5 per cent in 2023,
educational attainment over the past decade,
while the share of workers with tertiary education
Viet Nam’s textile and garment industry workers
(bachelor’s degree or higher) climbed from 4.5 to
are characterized by low education, technical and
7.9 per cent during the same period (Figure 3.6).
professional qualification levels. For instance, in

X Figure 3.6 Employment in the textile and garment sector by educational attainment level
(2013–23)
Unit: %
100%
4.5 5.4 5.9 6.2 6.5 6.2 4.0 7.5 6.8 5.9 7.9
90%

80% 30.6
36.2 34.7 33.8 33.6 32.9 37.9
36.1
70% 44.1 45.7 43.5

60%

50%

40%

30% 59.6 63.4 60.1 59.8 60.9

59.2 58.1 56.4
49.2 48.4 48.5
20%

10%

0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Primary or less Secondary and post-secondary Tertiary

Source: GSO, Labour force surveys, 2013–23

An increasing proportion of workers are gaining higher) seemed to peak in 2019 for college (3.6
technical and professional qualifications compared per cent) and in 2020 for university (4.3 per cent)
to educational attainment, with those without before declining (Table 3.2). In 2022, more than 80
degrees or certificates exceeding the manufacturing per cent of the sector’s workers did not possess
average. Specifically, the number of workers technical or professional qualifications (Figure
without qualifications or degrees or certificates 3.7). The percentage of workers with college-level
decreased by 4.4 percentage points between 2012 education or higher in the textile and garment
and 2023, mainly due to an increase in workers industry remained 2.5 percentage points lower,
with elementary level technical and professional while workers without technical qualifications/
qualifications (training durations from three degrees or certificates was nearly 4 percentage
months to less than one year). The proportion points higher than the manufacturing sector
of workers with high technical and professional average.
qualifications (college level, or university or
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 59

X Table 3.2 Employment of textile and garment workers by technical and professional
qualification levels (2012–22)

Sectors 2012 2015 2016 2017 2018 2019 2020 2021 2022

Untrained 1 524 399 1 679 606 1 962 701 2 088 158 2 208 352 2 573 021 2 592 476 2 344 772 2 615 621

Elementary 134 506 89 341 92 471 80 596 76 502 71 143 59 257 364 875 357 859

Intermediate 66 356 910 326 97 095 95 249 89 252 97 822 88 885 77 760 78 078

College 30 488 55 590 76 289 83 038 89 252 106 715 94 811 92 714 91 091

University or higher 37 662 69 487 83 224 95 249 86 702 115 608 127 402 110 659 110 611

Total 1 793 410 1 985 350 2 311 780 2 442 290 2 550 060 2 964 310 2 962 830 2 990 780 3 253 260

Notes: ‘Untrained’ refers to workers without degrees or certificates provided by technical or vocational/professional training
units. ‘Elementary’ refers to workers having completed a vocational training course of 1-3 months duration. ‘Intermediate’
workers have completed a vocational training course of 1-2 years duration and ‘college’ and ‘university or higher’ refers to
workers with degrees or certificates at the respective levels.
Source: GSO, Labour force surveys, 2012–22

X Figure 3.7 Employment in the textile and garment industry and overall manufacturing
sector by technical and professional qualification levels, 2022
Unit: %

Textile and garment Manufacturing

2.8 3.4 5.4

2.4 4.3
11 3.7

10.1

No technical qualifications/
certificates
Elementary
Intermediate
76.6
80.5 College
University or higher

Source: GSO, Labour force survey 2022

60  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

3.2.3. Occupational structure 3.3). This suggests that increased automation

and skills demand78 in production and a structural shift towards
employment in larger enterprises has resulted in
The industry’s occupational structure has not the substitution of semi-skilled labour engaged in
changed significantly over the past decade, as middle- manual processes, along with greater demand for
skilled occupations continue to account for the lion’s semi-skilled workers able to operate and maintain
share (92–94 per cent) of employment. However, machinery, evidenced by the shift from handicraft
fluctuations are observed across textile and workers to sewing machine operators. Women
garment middle-skilled occupational categories, represent the largest share of employment across
specifically a shift from group (7) Crafts and most occupational groups in the sector (see
related trades workers, towards group (8) Plant Section 3.4 for more details on gender dimensions
and machine operators and assemblers (Table of the sector’s occupational and skills structure).

X Table 3.3 Occupational and skills structure of textile and garment industry according to ISCO-08
categories, 2012–23

2012 2015 2019 2023

(000s) (%) (000s) (%) (000s) (%) (000s) (%)

High skill level 72.4 4.0 89.4 4.3 131.5 4.5 104.9 3.1

1 – Managers 9.0 0.5 7.4 0.4 6.4 0.2 5.6 0.2

2 - Professionals 31.1 1.7 45.9 2.2 70.6 2.4 61.9 1.8

3 - Technicians and
32.3 1.8 36.1 1.7 54.6 1.9 37.4 1.1
associate professionals

Medium skill level 1 679.0 93.6 1 927.2 92.1 2 679.7 91.7 3 142.3 92.7

4 - Clerical support
28.8 1.6 56.1 2.7 76.1 2.6 60.3 1.8
workers

5 - Service and sales

28.2 1.6 32.2 1.5 44.6 1.5 50.3 1.5
workers

7 - Craft and related

830.7 46.3 816.8 39.0 975.4 33.4 953.2 28.1
trades workers

8 - Plant and machine

operators and 791.4 44.1 1 022.0 48.8 1 583.6 54.2 2 078.4 61.3
assemblers

Low skill level 41.4 2.3 73.9 3.5 110.6 3.8 141.2 4.2

9 - Elementary
41.4 2.3 73.9 3.5 110.6 3.8 141.2 4.2
occupations

Total 1 792.8 100.0 2 090.5 100.0 2 921.8 100.0 3 388.4 100.0

Source: GSO, Labour force surveys, 2012–23.

78
This section refers to Vietnamese occupational classifications as per Decision No. 34/2020/QD-TTg (26 November 2020).
These classifications generally correspond to the international occupational classification standard (ISCO-08).
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 61

The workforce structure by qualification levels varies in the industr y, whereby workers are not
across subsectors and production methods. In the employed in occupations that correspond to their
textile subsector, basic tasks such as yarn rolling, qualification levels. The higher the educational
spinning, weaving, and knitting employ about attainment level, the higher the rate of workers
80 per cent of the workforce, typically requiring employed in occupations that do not dovetail with
skills at elementary and intermediate levels. their qualifications.80 The proportion of workers
Nevertheless, textile companies have a higher with post-secondary or university degrees in roles
proportion of workers with tertiary education requiring lower qualifications climbed from 35 per
(9.5 per cent in 2023) compared to garment cent in 2012 to 50 per cent in 2020. Although the
firms (7.7 per cent), but have a lower share of proportion of workers with elementary education
workers with intermediate qualifications (32 in jobs requiring higher qualifications is not acute, it
and 45 per cent for textile versus garment firms, has increased rapidly in recent years, as confirmed
respectively).79 Additionally, consultations with by businesses interviewed for this study.
several textile and garment companies conducted
in quarter 4 of 2023 and quarter 1 of 2024 for
this study revealed differences in workforce
3.3. Quality of work, decent
structures among garment companies, based work characteristics
on production methods. For instance, firms that
produce exclusively using the CMT method have 3.3.1. Informality
nearly 90 per cent of workers without technical
A decline in informal workers is evident which reflects
qualifications/degrees or certificates and 3 per
the quality of work improvement in the sector. Labour
cent each with university and college degrees. In
force survey data shows that more than 880,000
contrast, companies that produce using the FOB
informal workers were employed in the textile and
method have approximately 80 per cent and 7
garment sector in 2023, accounting for a quarter
per cent, respectively. In textile companies, the
(26 per cent) of the sector’s workforce. This is
proportion of workers with college and university
lower than the manufacturing (31 per cent) and
degrees is 8 and 10 per cent, respectively.
the national economy’s (68 per cent) averages. The
Rising educa tional a t tainment among the share of informal textile and garment workers by
industry’s workforce has not been accompanied by 2023 had halved compared to 2013 (52 per cent)
commensurate increases in demand for high-skilled (Figure 3.8).
workers. This is reflected in acute skills mismatches

79
Calculated from data of annual GSO labour and employment surveys.
80
ILO, 2023. The current situation of Viet Nam’s textile and garment industry.
62  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Figure 3.8 Informal workers’ share in employment (2013–23) (%)

Unit: %
90.0
79.5
80.0 76.9 75.5 74.1 7.33 71.4 69.7 69.2 70.4 68.6 67.7
70.0

60.0 56.2
51.8
50.0
47.8 46.4 44.2
41.6
40.0
52.4 38.0 36.8 37.2
47.1 43.8 31.3
39.7 32.1
30.0 38.5 36.9 33.5 33.9
31.6 26.4 26.0
20.0

10.0

-
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

All economy Manufacturing Textile and garment Textile Garment

Source: GSO, Labour force surveys, 2012–23.

3.3.2. Income of employees Despite rapid growth, the industry’s wages remain
slightly lower than the manufacturing and national
Wages in Viet Nam’s textile and garment sector have economy averages. In 2023, the average monthly
risen rapidly. Nominal wages in the industry grew wage of salaried textile and garment workers
at an average annual rate of 6.9 per cent between was VND 7.2 million, 1 and 8 per cent lower
2013 and 2023, slightly higher than the economy’s than the national and manufacturing averages,
average of 6.7 per cent, but dipping below the respec tively. 81 Some tex tile and garment
manufacturing average of 7.1 per cent (Figure enterprises reported increasing recruitment
3.9). Wage growth was higher in textiles (7.4 per challenges due to fierce competition with other
cent) than the garment subsector (6.9 per cent). emerging manufacturing sectors, such as
The growth in real wages in Viet Nam’s textile and electronics, amid rising wages. A recent study
garment industry, taking into account inflation, has showed that garment employee retention was
seen even faster growth over the same period with influenced by four factors, with employee incomes
an average annual rate of 7.2 per cent between outweighing working environment and conditions,
2013 and 2023. workplace relationships and per formance
evaluation.82

81
GSO, Labour force survey 2022.
82
Hoang Thanh Tung, Doan Thi Mai Huong, Nguyen Thi Van Anh, 2022. Factors that affect employee’s attachment to garment
enterprises in Hanoi. Accessed 6 March 2024. http://ulsa.edu.vn/uploads/file/Nam2022/TapChi_NguonNLvaASXH/So%20
13%2012-2022%20-%20Tap%20chi%20NNL%20va%20ASXH_compressed.pdf#page=40.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 63

X Figure 3.9 Average nominal wages in textile and garment industry, 2013 and 2023

Unit: thousand VND

10,000

7 612 7 784 7 854

8,000 7 142 7 189

6,000
3 906 4 093
3 724 3 695 3 699
4,000

2,000

-
Textile Garment Textile and garment All manufacturing Overall economy

2013 2023

Source: GSO, Labour force surveys 2013 and 2023

X Figure 3.10 Nominal and real average wage growth in textile and garment industry, 2013–23

8 000 25.0
7 189
7 000 20.0
6 962
6 000
14.3 15.0
5 000
10.0
4 000 8.2
3 699 5.0
3 470 1.8
3 000
0.0
2 000

1 000 -.8 -5.0

- 6.1
- -10.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Real wage (thous. VND) - left axis Nominal wage (thous. VND) - left axis
Real wage growth (%) - right axi Nominal wage growth (%) - right axis
Change in CPI (%) - right axis

GSO, Labour force surveys and Statistical yearbooks, 2013–23.

Nominal and real wages experienced a significant 2023, the average monthly income of employees
drop in 2021, due to the pandemic. On a year-to-year in textile enterprises was VND10.8 million,
basis, nominal and real wage growth for sector compared to VND9.1 million for garment peers,
employees was positive during the past decade, and a manufacturing average of VND10.6 million.83
with the exception of 2017 and 2021, the latter year In general, average monthly incomes of sector
due to the health crisis that battered the economy. employees increased every year during 2015–22,
The industry’s average nominal wage declined by possibly reflecting the fact that these registered
6.1 per cent compared to 2020 (Figure 3.10). businesses were less severely affected during
downturns or times of crisis, such as the pandemic.
Average textile wages outperform those in the
garment subsector (Figure 3.9 and Table 3.4). In

83
Differences between these figures and average wages calculated from the Labour force surveys may be explained by
the latter figures referring to employees of active businesses having business outcomes for the year in question, but also
because these refer to total compensation of employees, which may include other components such as in-kind benefits.
64  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Table 3.4 Average monthly textile and garment incomes compared to manufacturing
enterprises (thousand VND)

2015 2016 2017 2018 2019 2020 2021 2022

Textile 6 365 6 839 7 369 8 206 8 618 9 176 9 895 10 830

Garment 5 585 6 119 6 636 7 184 7 437 7 633 8 320 9 141

Manufacturing 6 346 7 091 7 724 8 226 8 569 9 020 9 575 10 586

Source: GSO, Statistical yearbooks, 2015–22.

X Figure 3.11 Average nominal wages and annual growth rates (AAGR) of wages by textile and
garment occupational group, 2013 and 2023

Unit: thousand VND and %

25 000 23 355 12.0

10.0
20 000
16 991
8.0
15 000
10 755 6.0
9 725 9 900
10 000 8 548 8 652 8 529 8 095
6 673 7 155
6 747 6 785 6 120 5 605 6 340 4.0

5 000
2.0

- 0.0
1 - Managers 2- 3 - Technicians 4 - Clerical 5 - Service and 7 - Craft and 8 - Plant and 9 - Elementary
Professionals and associate support sales workers related trades machine occupations
professionals workers workers operators and
assemblers

Textile average wage (2023) Garment average wage (2023)

Textile AAGR 2013-2023 - right axis Garments AAGR 2013-2023 - right axis

Source: GSO, Labour force survey 2013 and 2023

Average textile and garment wage growth over 3.3.3. Temporary employment
the past decade is partly due to a structural shift in
employment from small- to larger-scale production, The rise in wage and salaried employment share,
reflected in changes in occupational distribution. along with declining informality, were accompanied
Specifically, the shift from the crafts and related by increased temporary employment.84 The share
trades workers group towards the plant and of temporary employees climbing from 64.4 per
machinery operators and assemblers where wages cent in 2013 to 76.6 per cent in 2023 surpassed the
are relatively higher, has boosted average sectoral overall manufacturing sector average (Figure 3.12).
wages. At the same time, the steep increase in The increase in temporary employment was most
average wages within the crafts and related trades pronounced in the wearing apparel (garment)
category – which had the highest nominal wage subsector, a trend partly driven by supply chain
growth in textile and garment subsectors (Figure pressures (as described in Chapter 2, Section 2.2).
3.11) – reflects the shedding of lower productivity
jobs in this occupational category.

84
Temporary employment, whereby workers are engaged only for a specific period of time, includes fixed-term, project- or
task-based contracts, as well as seasonal or casual work, including day labour (ILO).
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 65

X Figure 3.12 Share of temporary employees, 2013 and 2023

Unit: %

Manufacturing sector 75.2

68.2

Textile and ggarment 76.6

64.4

14 - Manufacture of wearing apparel 77.4

63.8

13 - Manufacture of textile 69.4

67.8

- 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

2023 2013

Source: GSO, Labour force surveys 2012 and 2023

3.3.4. Working hours 3.3.5. Working conditions and

Despite recent progress, overtime work remains a
occupational safety and health
key textile and garment industry characteristic in The nature of work at textile and garment factories
the context of global supply chain dynamics and poses potential health risks and occupational hazards
outsourcing (see Chapter 2, section 2.2). In 2023, to workers, especially women. Working conditions
40 per cent of textile and garment workers in are often characterized by hot, noisy and dusty
Viet Nam worked more than 49 hours per week, environments, while sewing requires sitting
down from 46 per cent in 2013,85 while the share for long periods with little change in posture.
for manufacturing peers declined from 41 per Additionally, overtime regimes that extend high
cent in 2013 to 37 per cent in 2023. According to intensity work hours can cause acute or chronic
the 2023 annual report by Better Work Viet Nam86, physiological disorders in workers. Major worked-
up to 75 per cent of factories participating in the related health issues faced by industrial sewing
programme’s evaluation did not comply with operators include allergic dermatitis, frequent
overtime limits in 2022 as stipulated by Vietnamese headaches, fatigue, blurred vision, muscle
labour laws (66 per cent of factories did not comply soreness, neck pain, numbness and soreness in
with daily overtime limits, 75 per cent violated fingers and arms, stomach pain, needle sticks, and
monthly overtime limits, and 76 per cent were in cutting injuries.87 A research by Hoang Thi Giang
non-compliance with annual overtime limits). Key and Pham Minh88 also showed that the highest
reasons were fluctuations in the global supply proportion of diseases were in the nose and throat
chain and meeting urgent orders. The high rate (15.3 per cent), followed by bronchopulmonary
of non-compliance with overtime regulations is (11.6 per cent) and eye diseases (11.3 per cent).
also due to economic conditions and the choices Other disease groups include cardiovascular and
of employers and employees. Employers save hypertension (10.3 per cent), gynaecological (8.6
on recruitment costs for new workers, while per cent), musculoskeletal (6.7 per cent), dental and
employees seek overtime to earn more money. facial (5.2 per cent), skin (4.3 per cent), digestive
Continuous overtime work, especially for women, (3.6 per cent), and neurological (1.5 per cent).
can also limit opportunities for learning and skills
development at the workplace.

85
Calculated from GSO, Labour force surveys 2013 and 2023.
86
The Better Work Programme is a collaborative initiative between the ILO and International Finance Corporation (IFC), a
member of the World Bank Group. It aims to improve working conditions and boost the competitiveness of the global
apparel and footwear industries.
87
Dang Thi Van Quy, 2022. How do Working Conditions affect the Health of Workers in the Garment Industry?
88
Hoang Thi Giang, Pham Minh Khue, 2021. The Current Situation of Working Conditions and Health of Garment Workers at
Havina Co. Nghe An in 2020.
66  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

With the exception of some FDI and large enterprises, workers affirmed the collective agreement was
many factories still fail to ensure safe and healthy redundant and not renegotiated regularly.92
workplaces. The most common occupational
safety and health (OSH) violations found in Better 3.3.7. International labour
Work factories include not maintaining effective standards and labour laws
fire alarm systems, not ensuring that emergency
exits and exit doors are not locked or obstructed Several factors linked to GVC dynamics increase the
during work hours, and factories not adequately risk of substandard practices and non-compliance
protecting women workers from safety and health with labour laws among factories and their
risks during pregnancy and breastfeeding. Most subcontractors. Specifically, global supply chain
factories conduct annual health check-ups for instability and fluctuating orders pose significant
workers, but do not meet legal requirements of challenges for factories, which sometimes illegally
a check-up every six months for workers doing hire temporary workers, subcontractors, or
heavy, dangerous, and hazardous jobs.89 mobilize labour.

Workers’ knowledge and awareness of OSH issues Export enterprises generally comply with labour
remains low. In this context, strengthening training regulations more than domestic enterprises due to
to improve awareness, knowledge, and skills more monitoring and investment by buyers (Oxfam,
for workers regarding OSH and fire prevention 2022). The Better Work Viet Nam Programme
is critical. Thus, improving OSH outcomes and evaluations did not find many violations of national
ensuring safe work conditions for textile and labour laws and international labour standards at
garment workers must be given more attention participating textile and garment factories. The
and investment. non-compliance rate regarding discrimination is
low, mainly cases involving women workers during
3.3.6. Social dialogue and pregnancy.93 This included pregnant workers and
collective bargaining nursing mothers allowed to work overtime in
violation of the law.94
Despite encouraging social dialogue and collective
Due to the COVID-19 pandemic, factories faced
bargaining steps in recent years,90 challenges remain.
challenges complying with national laws and
The textile and garment industry was the first in
regulations regarding wage payment, working hours,
Viet Nam to implement the signing of a collective
OSH and labour contracts compared to previous
labour agreement in 2010, signed between VITAS
years.95 A decline in demand for textile and garment
and the textile and garment union. Currently, 80
products from Viet Nam’s major export markets –
textile and garment enterprises participate in
such as the EU, Japan, Republic of Korea and the
the agreement with 120,000 workers, accounting
United States - led to many factories reducing
for 3.8 per cent of the industry’s workforce, as
workers’ hours or even laying them off. Challenges
reported by VITAS. In Oxfam’s 2022 report, all its
in production and business, such as the size and
surveyed businesses had signed a collective labour
securing orders, also affected factory compliance
agreement. However, 14 per cent of factories did
in terms of labour contracts, wage payments, and
not obtain employees’ approval before signing the
working hours. According to Better Work Viet Nam,
agreement.91 Additionally, 28.8 and 32.3 per cent
the non-compliance rate related to labour leasing
of surveyed workers did not know if their company
and labour contracts (especially seasonal workers)
had a collective agreement or if it was regularly
was 8 per cent in 2022 (compared to 1–4 per cent
renegotiated respectively, while 15 per cent of
in the previous reporting period).

89
Fair Wear Foundation, 2021. Viet Nam Country Study.
90
https://hanoitimes.vn/vietnam-promotes-social-dialogue-in-textile-garment-industry-3600.html
91
Better Work Viet Nam, 2023. Annual Report 2023.
92
Oxfam, 2022. Textile, Garment and Footwear Industry recovering after Covid-19: Change or Repeat?
93
Better Work Viet Nam, 2023. Annual Report 2023.
94
Fair Wear Foundation, 2021. Viet Nam Country Study.
95
Better Work Viet Nam, 2023. Annual Report 2023.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 67

3.4. Women in Viet Nam’s between 2013–2023, largely at the expense of the
textile and garment industry crafts and related trade workers group (Table 3.5).
Women dominate industry employment across most
The textile and garment industry remains an important occupational groups. In 2023, women accounted
employer of women in Viet Nam. The sector created for the more than 80 per cent of employment in
more than a million additional jobs for women over the crafts and related trades workers category,
the past decade, as the number of these workers with approximately three-quarters in the plant
grew from 1.4 million in 2013 to 2.5 million in and machiner y operators and assemblers’
2023.96 This employment growth consisted almost category, and more than two-thirds of the sector’s
entirely of wage and salaried work. The number professionals, technicians, clerical service and
of women own-account and contributing family elementary workers (Table 3.5).
workers and even employers declined during
this period. The shifting distribution of women The share of women professionals increased
across employment statuses and occupational significantly in the garment industry over the past
groups reflects the structural change process decade but declined in textile. Despite progress,
from small-scale production in home settings or the share of women in management positions
small workshops towards larger scale production remained low at 30 per cent in 2023, but higher
in larger factories. Between 2013–2023, plant and in textile (40 per cent) than garment (27 per cent).
machinery operators and assemblers – primarily Consultations with enterprises revealed that most
sewing machine operators – increased its share senior management positions in factories were
of women’s employment by 22 percentage points held by male workers.

X Table 3.5 Women’s share of employment by and in occupational group, 2013–23

Textile Garment Textile and garment

Change Change Change

2023 (%) 2013–23 2023 (%) 2013–23 2023 (%) 2013–23
(p.p.) (p.p.) (p.p.)

Women’s employment by occupational group

1 - Managers 0.2 0.2 0.1 0.0 0.1 0.0

2 - Professionals 2.6 0.7 1.6 0.3 1.7 0.3

3 - Technicians and associate professionals 1.5 -1.1 0.9 -0.5 1.0 -0.6

4 - Clerical support workers 3.4 1.7 1.5 -0.3 1.6 -0.1

5 - Service and sales workers 0.6 -0.2 0.6 0.1 0.6 0.0

7 - Craft and related trades workers 26.0 -28.0 30.7 -22.2 30.4 -22.7

8 - Plant and machine operators, and assemblers 54.9 20.1 61.3 21.6 60.8 21.8

9 - Elementary occupations 10.5 6.7 3.4 1.1 3.9 1.4

Women’s share in occupational group employment

1 - Managers 40 28.2 27 -6.6 30 2.0

2 - Professionals 49 -18.9 72 7.3 69 3.1

3 - Technicians and associate professionals 50 -13.7 68 0.8 66 -1.0

4 - Clerical support workers 65 2.4 68 -0.4 67 -0.1

5 - Service and sales workers 18 -15.0 33 1.6 31 -0.7

7 - Craft and related trades workers 69 -8.2 82 -1.9 81 -1.9

8 - Plant and machine operators, and assemblers 52 -5.7 76 -4.3 74 -2.8

9 - Elementary occupations 67 3.7 70 2.9 69 3.1

Source: Calculated from GSO, Labour force surveys 2013 and 2023

96
Calculated from GSO, Labour force surveys 2013 and 2023.
68  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

The gender wage gap narrowed in the decade to prenatal check-ups) and family responsibilities
2023 (from 17.2 to 9.3 per cent), as salaries converged (childcare). Overall, the textile and garment gender
across all occupational groups (Figure 3.13). Among wage gap is smaller and has narrowed faster than
managers, the gap was even reversed, with women the manufacturing sector average which was 13.8
managers earning on average higher wages per cent in 2023, down from 16.9 per cent in 2013.98
than male counterparts by 2023 in the garment
There is significant scope for improvement in
subsector, but not in textiles. Oxfam survey
women-related OSH issues and non-compliance
results confirmed that female and male textile and
with labour laws to protect women, particularly in
garment workers are paid equally for the same
pregnancy. Another issue also linked to supply
work, indicating no wage discrimination.97 The
chain dynamics is a high reliance on temporary
remaining income disparity is attributed to female
contracts, associated with greater employment
workers often performing lower-skilled tasks such
and income insecurity. The share of female
as operating sewing, and weaving machines, while
employees on temporary contracts increased
males handle higher-skilled tasks such as technical
from 2013 (65 per cent) to 2023 (77.5 per cent).99
roles, operating cutting machines, ironing,
In the textile subsector, the increase in temporary
installation, repair, and maintenance of machinery.
share of workers was primarily among women
Additionally, females may have lower incomes
from 69 per cent in 2013 to 73 per cent in 2023,
because they tend to work less overtime due to
while the temporary share among male employees
gender-related responsibilities (maternity leave,
remained constant (65.2 to 64.5 per cent).

X Figure 3.13 Gender wage gap by occupational group in Viet Nam’s textile and garment industry
2013 2023 Unit: %

-30.0 -20.0 -10.0 0.0 10.0 20.0 30.0

All occupations 17.2

9.3
1 - Managers 2.8
- 8.6
2 - Professionals 13.3
6.4
3 - Technicians and associate professionals 24.5
10.4
4 - Clerical support workers 6.8
6.1
5 - Service and sales workers - 25.0
- 17.0
7 - Craft and related trades workers 22.0
13.5
8 - Plant and machine operators, and assemblers 11.6
7.4
9 - Elementary occupations 15.1
14.9

Textile Garment
-100.0 -50.0 0.0 50.0
-60.0 -40.0 -20.0 0.0 20.0 40.0
All 24.3
16.3 All 15.5
Group 1 - 34.6 7.7
28.5 23.3
Group 1 - 39.1
Group 2 - 3.5
15.3 Group 2 15.7
6.4
Group 3 42.6 15.0
0.4 Group 3
13.6
Group 4 - 51.1 13.3
6.3 Group 4
6.1
- 12.4 Group 5 - 28.1
Group 5 - 12.2 - 17.5
31.6 Group 7 20.7
Group 7 32.3 11.7
10.1 Group 8 10.0
Group 8 7.6
6.1
14.5
20.0 Group 9 9.9
Group 9 33.6

Source: Calculated from GSO, Labour force surveys 2013 and 2023

97
Oxfam, 2022. Textile, Garment and Footwear Industry Recovering after Covid-19: Change or Repeat?
98
Calculated from GSO, Labour force surveys 2013 and 2023.
99
Ibid.
 Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 69

4
Chapter
Skills development in
Viet Nam's textile
and garment industry
70  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

4. Skills development in
Viet Nam’s textile and
garment industry
4.1 Drivers of change adapt and enhance market competitiveness.
and impacts on the Recent studies suggest that up to 85 per cent of
consumers have changed purchasing behaviour,
industry and skills even small changes, towards greener options in
the past five years.101 Additionally, 63 per cent
4.1.1 Climate change, green have made modest to significant changes towards
production, standards and more sustainable practices, and 34 per cent are
willing to pay more for sustainable products or
consumer preferences services. According to a 2022 survey by the World
The textile and garment industry has significant Economic Forum, consumers across generations
environmental impacts at the global level, with in the United States are willing to pay more for
growth and sustainability highly dependent on environmentally friendly products. Nearly 30 per
effective resource management. Its production cent stated they would stop purchasing from
consumes a significant amount of water and brands that do not ensure ethical and sustainable
chemicals, with the industry using 93 billion cubic practices, a significant increase from a similar
metres of water annually, accounting for 4 per survey in 2020.102 In the fashion industry, many
cent of global freshwater extraction due to cotton global brands such as Adidas, H&M, Levi’s, Nike
cultivation and water used in printing, dyeing, and and Zara have taken collective actions towards
finishing. The textile industry also contributes green production. Nike has committed to 100
to severe water pollution by discharging large per cent renewable energy in its factories by
amounts of untreated wastewater containing 2025, H&M aims to use only recycled materials
toxic substances into rivers and water bodies. for its products by 2030 and Zara has pledged
It is estimated that 20 per cent of industrial to use only organic or recycled cotton, linen, and
water pollution globally is caused by dyeing polyester for clothing by 2025.103
and processing textile and garment products. The EU has tightened standards for imported
Additionally, the sector’s carbon emissions are goods to address urgent global climate issues.
substantial, accounting for 6–8 per cent of total These include the European Green Deal, Carbon
global emissions (Niinimaki et al. 2020).100 Border Adjustment Mechanism, and Supply
Consumers and brands are increasingly focusing Chain Due Diligence Act. European countries
on sustainability and circular fashion practices. have clear regulations on product recycling
Green fashion and sustainable consumption rates. Environmental and ecological standards
have become global trends gaining significant and labels for products in the supply chain,
at tention, especially af ter the pandemic. materials (cotton, yarn), production processes,
Consumers are prioritizing environmentally and products are increasingly being adopted by
friendly and recycled products, presenting a developed countries.
new challenge for Vietnamese enterprises to

100
Sharpe, Sharpe, Samantha; Retamal, Monique; Martinez-Fernandez, M. Cristina, 2022: Assessing the impact: Environmental
Impact Assessment in the Textile and Garment sector in Bangladesh, Cambodia, Indonesia and Viet Nam, ILO Working Paper,
No. 51, ISBN 978-92-2-035320-2, ILO, Geneva, https://doi.org/10.54394/YCEP9777
101
Simon-Kucher, 2021. Global Sustainability Study 2021.
102
http://tbtagi.angiang.gov.vn/nganh-det-may-buoc-phai-thay-doi-de-thich-ung-voi-thoi-cuoc-112065.html. Accessed 18
February 2024.
103
https://vneconomy.vn/zara-hm-nike-dong-loat-cam-ket-ve-thoi-trang-ben-vung.htm. Accessed 18 February 2024.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 71

Viet Nam’s vulnerability to climate change and drastically improving recyclability through design
natural disasters poses important challenges for changes, recovery and remanufacturing, and
achievement of environmental-focused Sustainable moving towards use of renewable materials.
Development Goals and the textile and garment
However, the greening process poses challenges
industry’s green transition. In response to urgent
in terms of resources, finance, technology and
environmental protection and climate change
skills supply, especially for SMEs in the sector.
adaptation needs, with Viet Nam also a large
Currently, green solutions are mainly driven by
emitter of CO2 per capita,104 the government has
FDI enterprises and large domestic enterprises,
taken policy action and developed key strategies,
while most SMEs have paid little attention or
including for the textile and garment industry.
have insufficient resources to invest. Commonly
This includes the National Strategy for Green
implemented green solutions include renovating
Growth during 2021–30, with a vision to 2050105
and building new factories, energy and production
and made strong commitments to achieving net-
input savings, using clean and renewable energy
zero carbon emissions by 2050, reducing methane
sources such as solar power, saving water, energy,
emissions by 30 per cent by 2030, and advocating
eco-friendly chemicals, reducing waste, treating
for climate justice.106 The Development Strategy
chemicals, building wastewater treatment systems,
for the textile and garment industry and leather
and establishing environmental warning systems.
and footwear industries until 2030, with a vision
As the industry moves to meet green standards,
to 2035, also focuses on sustainable development
enterprises will need a workforce with relevant
and environmental protection. It aims for a green
skills encompassing green designs, sustainable
transition in the textile and garment industry,
development , env ironment al protec tion,
including adopting a green supply chain that uses
renewable energy use, waste treatment, recycling,
resources efficiently and sustainably, reducing
and circular production.
production costs alongside resource extraction
costs for materials, water, energy, and chemicals, In addition to engaging new and skilled workers,
and minimizing hazardous emissions into the enterprises will need to reskill and upskill their workers
environment. It also involves applying circular as they implement green production. Climate change
economy principles and cleaner production and environmental concerns were highlighted
methods, reducing waste, and promoting industrial by a quarter of textile and garment enterprises
symbiosis towards a circular textile economy to surveyed in the context of a rapid skills needs
eliminate concerning substances and microfibre assessment conducted by NIVT in 2023,108 with a
emissions. According to WWF Viet Nam,107 greening higher share among FDI enterprises. More than 40
the textile and garment industry means operating per cent of FDI enterprises highlighted the need
in a way that uses resources efficiently and to make production process greener and more
reduces waste, eliminates concerning substances, sustainable, with more than half spotlighting the
and prevents microfibre pollution. It involves need to retrain and reskill their workforce, with a
transforming how clothes are designed, sold, higher share among FDI enterprises.109
and used to minimize environmental impacts,

104
UNDP’s Human Development Report from 2019 ranked Viet Nam third lowest among countries in terms of carbon
emissions per capita.
105
Decision No.1658/QD-TTg (1 October 2021) of the Prime Minister approving the National Strategy on Green Growth for
2021–30, vision 2050.
106
https://www.qdnd.vn/chinh-tri/tin-tuc/viet-nam-khang-dinh-cam-ket-giam-phat-thai-khi-carbon-dat-muc-bang-0-
vao-nam-2050-676088
107
https://www.vietnamplus.vn/xanh-hoa-nganh-det-may-doanh-nghiep-viet-phai-co-dinh-huong-chien-luoc-ro-rang-
post910026.vnp
108
ILO, GIZ, NIVT, VCCI, 2023. Rapid assessment of upskilling and reskilling needs in Viet Nam’s textile and garment and automotive
sectors.
109
Ibid.
72  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

4.1.2. Technological advancement process. The dyeing industr y is moving

towards waterless dyeing technologies, nano
The Industry 4.0 has introduced several technologies dyeing, UV dyeing, meeting green production
with potential to revolutionize textile and garment requirements, minimizing environmental
production, with important implications for jobs and impacts and reducing resource usage.
skills along the supply chain. Textile and garment
• In industrial sewing, for basic products
technology has evolved from crude and manual
like T-shirts, basic shirts, dress pants and
techniques to mechanization, electrification,
jeans the production process is replaced
and automation. Industrial Revolution 4.0
by robots to improve quality and increase
technologies involving the use of Radio-Frequency
labour productivity, reducing product costs.
Identification, sensors, 3D body scanning, joining
For fashion products made from bondable
techniques, network interactive software and big
materials like plastic or polyester fibres, the
data are being embedded and expected to lead to
product manufacturing process is carried
innovations and boost creativity in the garment
out on 3D printers, which not only yield high
manufacturing, including in organization of
productivity but also reduce product costs.
production in the sewing line.
Industry 4.0 technology is also applied to
Advanced technologies along the textile and design and build smart garment factories
garment supply chain include: to produce clothing according to customer
• In the textile sector, the application of requirements.
advanced technology devices and processes, The level of technological advancement in Viet
such as the automatic transfer of raw fibre Nam’s textile and garment industry varies across
tubes to the yarn machine, the automatic value chain stages and enterprises of different sizes
transport of yarn tubes to the yarn winding and ownership types. The overall technological
machine, and the automatic filling of fibre level of this industry is average or slightly above
bobbins on yarn winding machines has compared to other countries in the region (Box
significantly reduced the number of workers 4.1). The pace of technological adoption is slow,
operating machines and improved the quality with the industry still primarily relying on labour-
of yarn. Technological advancements have intensive technologies, except for the knitting
driven the invention and production of new sector. Technological innovation across the
auxiliary materials to replace or supplement industry is incremental, occurring in specific
natural, traditional materials such as cotton stages such as cutting, product inspection, and
and flax to produce higher quality fibres and use of product design software. However, FDI
fabrics at lower costs. enterprises and large domestic companies have
• In dyeing and weaving, businesses providing commonly adopted new technologies such as 3D
equipment and solutions are mainly focused design, automatic cutting machines, robotic arms,
on smart fabric design software, smart dyeing standing sewing lines, hanging conveyor systems,
and weaving factory management software, and digitized management software to enhance
automatically controlling the entire production efficiency, productivity, reduce costs and labour.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 73

X Box 4.1 Technological advancement along the value chain of Viet Nam’s textile and
garment industry

The Development Strategy of Viet Nam’s Textile, Garment and Footwear Industries until 2030,110 with a
vision to 2035, evaluates the technological level of Viet Nam’s textile industry as quite advanced, capable
of competing with some countries in the region. Advanced technology accounts for 20 per cent, while
medium to moderately advanced technology makes up 70 per cent. In some production stages, up to
40 per cent of machinery is high-quality and involves automation, including automatic thread-cutting
machines, automatic pattern assembly, fabric spreading, cutting machines, sewing equipment, 3D
design software, and virtual sample sewing. Adoption of new production technologies and machinery
necessitates training workers to operate it.
The woven textile subsector has been slower to embrace technological innovation, achieving only a
medium to fairly advanced level. The knitting subsector has invested in new equipment and technology,
with most equipment manufactured after 2000, ensuring good quality and high productivity. Several
FDI enterprises have invested in large-scale knitting fabric production plants, such as Global Dyeing
(Republic of Korea), Panko Vina (Republic of Korea), and Huge Bamboo (Taiwan, China), primarily
supplying fabric directly to garment factories producing export goods for the EU and U.S. markets.
The technological level in dyeing, printing, and finishing is assessed as medium to fairly advanced. The
spinning equipment of Vietnamese textile enterprises is considered fairly advanced technologically.
However, the technological level of Viet Nam’s textile dyeing subsector lags other countries in the
region by 15–20 years, with technological innovation between the textile and garment sectors is not
synchronized, leading to a lack of mutual support and promotion in production development.

The Vietnamese Government has prioritized only 1.8 per cent of businesses were developing
capitalizing on the opportunities of the Industry 4.0,111 strategies and 4.6 per cent were implementing
but capacity challenges remain. The Development Industry 4.0 strategies,113 with only 6 per cent
Strategy for Viet Nam’s Textile, Garment and conducting R&D activities.114
Footwear Industries up to 2030, with a vision
Vietnamese textile and garment enterprises
to 2035, identifies industry development in
are not fully ready for systematic investment in
conjunction with international integration and the
line with Industry 4.0 trends. The is particularly
Industrial Revolution 4.0. However, the government
acute with SMEs due to the large capital and high
also assesses the capacity and contribution of
investment costs required. A survey of 300 textile
science technology and innovation to the economy
and garment enterprises conducted by the Textile
as limited, with economic growth not driven by
and Garment Group115 on Industry 4.0’s impact
knowledge, science and technology, as evidenced
on textile and garment development shows the
by a Knowledge Economy Index rating lower than
industry’s readiness and technological levels to
the world average.112 Even businesses have paid
take this step forward only score 2.59 out of 5.116
little attention to technological innovation. By 2020,

110
Prime Minister, 2022. Development Strategy of Viet Nam’s Textile and Footwear Industries until 2030, with a vision to 2035.
111
Decision No.2289/QD-TTg (31 December 2020) on the National Strategy on Industrial Revolution 4.0 until 2030, Decision
No.411/QD-TTg (31 March 2022) on the National Strategy for developing the digital economy and digital society to 2025,
with a vision to 2030, Decision No.879/QD-TTg (9 June 2014) on Viet Nam’s Industrial Development Strategy to 2025, vision
to 2035.
112
National Strategy on Industrial Revolution 4.0 until 2030.
113
Calculated from 2020 Enterprise Survey data.
114
GSO, 2021, Statistical analysis and forecast reports for 2020.
115
Nguyen Van Nghi, 2022. Current status of Viet Nam’s textile and garment industry and challenges ahead the 4.0 Industrial
Revolution.
116
Specifically, in terms of automation, enterprises are currently only at a low level of equipment automation. The yarn sector
scores the highest (3.3/5), followed by dyeing (2.9/5), garment (2.7), and the lowest is weaving (2.2). Regarding readiness,
the yarn sector is the highest (3.02), garment (2.85), dyeing (2.3), and the lowest is weaving (2.2). In terms of management
systems, the garment sector scores the highest with 3.11 points, followed by dyeing (2.83), yarn (2.61), and weaving at the
bottom (2.46).
74  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

The biggest “bottleneck” for Vietnamese textile of online shoppers in Viet Nam has nearly doubled
and garment enterprises is the low level of R&D from 33.6 million in 2017 to nearly 60 million in
investment, almost non-existent, due to low- 2022. Among them, customers aged 18–25 years
profit margins and small-scale accumulation.117 account for 35 per cent, and those aged 26–35 (28
Additionally, many enterprises continue to rely on per cent).120 According to the Viet Nam E-commerce
“cheap labour” instead of technological innovation. Association, in 2022, 17 per cent of businesses used
Therefore, in the short term, enterprises only e-commerce websites/applications for import-
focusing on investing in machinery, automation export purposes, 69 per cent prioritized recruiting
equipment, and localized productivity solutions, personnel with skills or training in information
mainly to compensate for labour shortages. In technology and e-commerce, rising to 83 per cent
the long term, as competition among exporting among large enterprises.121 E-commerce opens up
countries becomes increasingly fierce and labour numerous market penetration opportunities, but
recruitment becomes difficult, enterprises must most Vietnamese enterprises are just starting to
invest in management towards digitization, deploy sales or provide services online. In general,
automation and improving workers’ skills to reduce transactions are still slow, not secure and mobile
labour headcounts. device applications are difficult for customers to
access.122
The rapid rise of e-commerce also presents the
industr y with oppor tunities and challenges. 4.1.3. Globalization and
Driven by the internet’s evolution in coverage,
international connectivity, access speeds and international trade
stabilized connections, the rise of social networks,
For Viet Nam, globalization has been a key driver
digital transformation, and application of new
of rapid economic growth and sustainable poverty
technologies such as artificial intelligence (AI) and
reduction over the past three decades. Globalization
virtual reality (VR) to enhance customer experience
has enabled Vietnamese enterprises to access
and ensure network security, e-commerce offers
and participate in global production chains and
rich potential. Cross-border e-commerce is
rapidly increase international trade. Specifically
especially attractive, enabling startups and both
for the textile industry, international integration
large and small enterprises to operate on a large
has unlocked opportunities to participate in
scale and reach customers worldwide. While
manufacturing for globally renowned brands to
digital commerce is growing rapidly in developed
help elevate the Vietnamese textile and garment
countries, the WTO reported it can open new
industry in terms of production technology,
opportunities for developing countries as well.118
product quality, management, and compliance
Currently, the omnichannel retail model is a with international standards.
trend pursued by many fashion retail brands, as
it connects online and offline sales channels into a Today, the Vietnamese textile and garment industry
seamless chain. still has growth opportunities in the international
and regional integration environment, especially
E-commerce 119 has rapidly evolved in Viet Nam, driven by FTAs (see Box 4.2.). To take advantage
along with demand for workers with relevant skills, of these opportunities, the industry must adjust
particularly among large enterprises. To underline its supply chain to comply with the rules of
its growth, the MOIT estimates that the number

117
Nguyen Van Nghi, 2022. Current status of Viet Nam’s textile and garment industry and challenges ahead the 4.0 Industrial
Revolution.
118
WTO, 2023. Digital Trade for Development.
119
E-commerce is conducted on company websites, social networks, e-commerce platforms, and mobile platforms, with
transactions facilitated by management software, use of electronic signatures, electronic contracts and invoices, and
receiving orders through online tools.
120
MOIT, Viet Nam e-commerce report 2022.
121
VECOM, 2023. Viet Nam e-commerce index report. https://httttmdt.tmu.edu.vn/upload/pagefile/bao-cao-ebi-2023-
vnpdf-1684224865.pdf. Accessed 7 June 2024.
122
https://tapchicongthuong.vn/ung-dung-thuong-mai-dien-tu-trong-chuoi-cung-ung-nganh-det-may-viet-nam-thuc-trang-
va-huong-phat-trien-29075.htm. Accessed 11 June 2024.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 75

origin,123 by attracting domestic and international As such, it is necessary to ramp-up investment in

investment to develop the fibre and dyeing machinery, equipment, and technology to increase
industry to meet export needs. Viet Nam must productivity and improve product quality to meet
also adhere to social, labour, environmental international market and ESG (environmental,
protection requirements, transparency principles, social, governance) standards and norms. In this
remove technical barriers to trade and commit to direction, the industry needs to enhance skilled
special safeguard measures, which are significant labour for the spinning, weaving, and dyeing
challenges. Additionally, due to geopolitical sectors. It requires a workforce proficient in
factors such as conflicts and health crises, operating modern machinery and equipment.
multinational corporations have been adjusting Additionally, there is a need to strengthen the
investment strategies towards closer markets workforce in upstream and downstream segments
(nearshoring), friendly countries (friendshoring), of the value chain, such as design, branding,
and adjusting supply chains to safer regions marketing, distribution channel development,
(for example, the China + 1 strategy), while the and sales. Furthermore, it is essential to equip
Vietnamese Government is actively adjusting workers with pertinent skills to meet international
policies to take advantage of these opportunities. markets’ increasingly stringent labour and ESG
requirements.
Viet Nam’s ability to benefit from opportunities is also
dependent on workforce skills along the value chain.

X Box 4.2 FTAs and Viet Nam’s textile and garment industry

Viet Nam and the United States, on 25 April 2003, signed a bilateral trade agreement, setting quotas
for 38 types of garment products imported from Viet Nam. Both parties agreed to cooperate in its
implementation, including information sharing and facilitating factory visits, investigations, and penalty
enforcement. The Viet Nam-US Textile Agreement was effective from 1 May 2003 to 31 December 2004
and was then extended twice in 2004 and 2005. It expired when Viet Nam joined the WTO in January 2007.
To date, Viet Nam has signed 16 multilateral and bilateral FTAs and is negotiating three new agreements.
Among them, new generation FTAs such as the Comprehensive and Progressive Agreement for Trans-
Pacific Partnership (CPTPP), EU-Viet Nam Free Trade Agreement (EVFTA), United Kingdom-Viet Nam
Free Trade Agreement (UKVFTA), and Regional Comprehensive Economic Partnership (RCEP) have the
greatest impact on the textile and garment industry.124
The CPTPP includes Viet Nam and 10 partners, taking effect for Viet Nam from 14 January 2019.
Import taxes will gradually decrease for 95 per cent of goods, however, each country has different
commitments on the level and roadmap of tax reduction.
For Viet Nam, the EVFTA agreement took effect on 8 June 2020. Accordingly, and subject to labour and
environmental conditions specified in the agreement, all of Viet Nam’s textile and garment products will
have their import taxes reduced to 0 per cent after a maximum of seven years from the effective date
of agreement. Specifically, for textiles and garments, the EU will eliminate tariffs on 77.3 per cent of Viet
Nam’s export turnover after five years, and the remaining 22.7 per cent will be eliminated after seven
years. This is considered a golden opportunity for Viet Nam’s garment industry to enter the markets of
27 EU member countries. The UKVFTA agreement between Viet Nam and the United Kingdom is similar
to the EVFTA.
The RCEP agreement, effective from 1 January 2022, includes 15 members with a total market size of
2.2 billion people and GDP of US$26,200 billion to create the largest free trade area in the world. The
RCEP aims to reduce or eliminate tariffs that member countries apply to 92 per cent of goods originating
within 20 years. With its large scale, RCEP has a positive impact on Vietnamese textile imports and
exports. In particular, the agreement is an opportunity for textile businesses to increase exports
to Chinese and Japanese markets. Thanks to RCEP, in 2021 there were a series of fabric production
investment projects, especially knitted fabric, from the bloc into the Vietnamese market.125

123
For instance, in the CPTPP: Chapter IV (Textiles and Apparel) it stipulates the rule of origin as “yarn-forward” or also known
as the three-stage rule: (1) spinning, weaving and dyeing, (2) cutting and (3) sewing must be performed within the bloc
of this agreement. Additionally, this chapter specifies some exceptions such as: minimum percentage, the list of short
supply, some items are subject to the one-stage rule. In EVFTA: The rule of origin is stipulated as “from fabric onwards”.
Accordingly, to enjoy the preferential import tariff rates, Vietnamese textile products sold to the EU must meet the re-
quirement: the fabric must be woven in Viet Nam or the EU and cut and sewn in Viet Nam.
124
MOIT, 2023. Viet Nam import and export report 2022.
125
VITAS: http://www.vietnamtextile.org.vn/nganh-det-may-viet-nam-nhieu-co-hoi-mo-ra-tu-hiep-dinh-rcep_p1_1-1_2-1_3-
597_4-6279_9-2_11-10_12-23_13-322.html. Accessed 10 June 2024
76  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

4.1.4. Demographic changes in cognitive skills as workers age.131 The current

increasing average age of textile and garment
Global demographic trends are expected to drive the workers indicates that businesses are adjusting
consumer market for garments, with some geographic to the changing demographic situation. Some
shifts. According to the United Nations,126 the companies have raised the initial hiring age
world’s population of eight billion people in 2022 and attempt to retain employees. Given the
is expected to increase by 1.7 billion people by labour recruitment challenges, technological
2050. Viet Nam’s population also continues to innovation is essential to enhance productivity
grow and is expected to reach 104 million people and competitiveness. Additionally, strategies for
by 2030. According to the ILO, economic growth attracting and retaining talent, as well as reskilling
will lead to hundreds of millions of people joining and upskilling the workforce, should be prioritized
the middle class, significantly increasing the to maintain production capacity.
demand for textiles and garments,127 presenting
an opportunity for the industry to accelerate
development. It is estimated that the global textile 4.2. Skills demand in the
market will exceed US$2 trillion by 2025, with the textile and garment industry
main consumer markets shifting from the United
States and EU to China and India. China is expected 4.2.1. Emerging and high-
to reduce its share in exports of world textile goods
demand occupations,
from 39.2 per cent in 2019 to 30 per cent in 2025
to focus on the domestic market,128 which opens recruitment challenges
export opportunities for other countries including
The ongoing evolution of the textile and garment
Viet Nam.
industry is changing the nature of roles and reducing
A rapidly aging population in Viet Nam will translate demand for some occupations. According to a NIVT
into slower labour force growth, emphasizing the rapid assessment of training and retraining needs
need for improved labour productivity. With the life in 2023, half of surveyed enterprises believed that
expectancy of the world’s population increasing technological changes and digitization, along with
over time, population aging is one of the prominent other major trends, will alter job-specific roles.132
trends of the 21st century taking place in varying These trends are already affecting the sector’s key
degrees in each country and region. According occupational groups, with more than half of crafts
to UNFPA, Viet Nam has one of the fastest and related trades workers now applying new
aging populations in the world. With a declining production processes. The most affected roles
working-age population stunting labour force include cutters, designers, embroiderers, sewing
growth, increased labour productivity is required machine operators and tailors. In addition, some
to stabilize per capita income growth, especially in jobs become less relevant or disappear, primarily
a context of Viet Nam’s low labour productivity.129 in clerical occupations (stock and data entry clerks),
while others may see a decline in demand (cutters,
National and industry level policies are necessary
tailors) due to labour-substituting technology.
to mitigate adverse population aging impacts on
economic growth and living standards. A possible Occupations in high demand span those emergent
solution is to increase the employment rate of due to technological innovation, production method
older workers.130 Participation in adult education advancements, digital transformation, and green
and training programmes, with a repurposing initiatives. These new or emerging roles include
of skills application, can help slow the decline R&D director, food safety manager, greening

126
UN, 2022. World Population Prospects 2022: Summary of Results. UN DESA/POP/2022/TR/No. 3.
127
ILO, 2019. The Future of Work in Textiles, Clothing, Leather and Footwear. Working Paper 326.
128
Outlook for China’s Textile and Apparel Industry (2021-25).

https://shenglufashion.com/2021/06/25/outlook-for-chinas-textile-and-apparel-industry-2021-2025/ Accessed: 10 June 2024
129
United Nations, 2017. World Economic Outlook in 2018 (New York).
130
https://hoilhpn.org.vn/tin-chi-tiet/-/chi-tiet/9-giai-phap-huong-%C4%91en-034-gia-hoa-tich-cuc-034-o-viet-nam-50752-7.html
131
John P. Martin, 2018. Skills for the 21st Century: Findings and Policy Lessons from the OECD Survey of Adult Skills. IZA Policy
Paper No. 138.
132
ILO, GIZ, NIVT, VCCI, 2023. Rapid assessment of upskilling and reskilling needs in Viet Nam’s textile and garment and automotive
sectors.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 77

sector specialist, supply chain manager, digital reported difficulties recruiting dyeing and weaving
fashion designer, automation expert, digital/ technology, fabric design and chemical engineers
online marketing specialist, online business and technicians. Table 4.1 lists occupations with the
strategy development, 3D printing, design- highest recruitment demand, based on study team
related and IT specialists. Some textile enterprises consultations with industry experts and businesses.

X Table 4.1 Occupations in high demand at textile and garment enterprises

Occupational groups High-demand occupations

Director of R&D (new)

Management of greening transition Product quality management

Leaders and managers
(new) Supply chain management (new).
Production management.

Product and fashion designer

Digital fashion designer (new) Automation specialist, AI (new)

R&D (new) High-tech specialist (new)

Professionals Yarn, textile, dyeing specialist Online marketing (new)

Fabric supply technician (new) Communication and branding (new).

Environmental protection (new)

Electronic and mechanical engineering.

Fabric supply technician (new) Supply chain officer (new)

Purchasing staff/buyers Green energy technician
Environmental and sustainability staff Multiplication develop samples, sews
Technicians and associate samples
Associate staff
professionals
Compliance administrator Team leader/line leader

Internal administration staff Quality control staff

IT staff/web technician. M&E staff.

Human resources/organization officer

Clerical support workers
Compliance officer.

Sewing machine mechanic and Cutter, tailor, packer

Craft and related trades workers
repairperson. Laser fabric cutting (new).

IT staff
Plant and machine operators, and Operators of all kinds of machines in M&E staff.
assembles the enterprise, especially operators of
sewing machines.

Source: Consolidation based on consultation with experts and enterprises in the textile and garment industry, in the
first quarter of 2024
78  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Limited training is available for high-demand also reflects new industry development trends,
occupations causing recruitment challenges. such as greening, technological innovation, and
Table 4.2 summarizes textile and garment digital transformation in design, marketing, and
occupations in-demand by employers, based production. Most hard-to-recruit occupations are
on the study team’s consultations with experts, new and just evolving as subjects at domestic
businesses and the NIVT report.133 This table training institutions.

X Table 4.2 Jobs facing skills shortages and recruitment challenges

Occupational groups Occupation name New occupation

Director of R&D (new) X

Leaders and managers Management of greening (new) X

Supply chain management (new) X

Digital fashion designer (new) X

Research and development (new) X

Environmental protection (new) X

Professionals Automation specialist, AI (new) X

High-tech specialist (new) X

Expert in textile, yarn, dyeing

Communication and branding (new) X

Sustainability staff

Supply chain manager (new) X

Green energy technician

Technicians and associate
professionals Sample development and sewing of
samples

Quality inspection staff

Team leader/school transfer

Skilled garment workers

Plant and machine operators, and
assembles Sewing machine mechanic and
repairperson

Source: Compilation from results of consultations with enterprises and technical meetings

133
ILO, GIZ, NIVT, VCCI, 2023. Rapid assessment of upskilling and reskilling needs in Viet Nam’s textile and garment and automotive
sectors.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 79

4.2.2. Skill demands: current The industry’s demand for skills will continue to evolve
and evolving needs in step with Industry 4.0 technologies and across the
supply chain. A 2019 survey,137 encompassing 100
Current labour supply shortcomings primarily stem textile and garment enterprises, revealed that skills
from training gaps caused by limited coordination associated with Industry 4.0 technology—such
and partnerships between the education and training as 3D design, computer usage, and smart device
system and textile and garment enterprises. For operation—were deemed inadequate within the
instance: garment industry. The need for new skills will
continue to grow across the entire supply chain,
u Enterprises consulted for this report expressed
extending beyond new manufacturing processes
a common concern regarding a shortage of line
to other domains such as design, product
leaders, partly because graduates of university
development, logistics, finance, marketing, sales,
level training programmes lacked hands-on
and customer service.138
experience required for this key textile and
garment industry role.134 To address this skills The following summary of consultation results
gap, firms typically resort to selecting highly with businesses, experts and seminars within the
skilled and experienced technical workers framework of this study spotlights workers’ skills
who then receive additional in-house training most needed by businesses:
focused on leadership, management, and
1) Technical skills related to specific occupations,
other essential soft skills, before becoming a
relevant in a context of rapid change: ESG,
line leader.
greening, health planning, and safety-related
u Raw material sourcing is a fundamental skills, data analysis, machinery operation, and
process for textile and garment enterprises, use of digital tools to control devices.
hence related skills development is paramount.
2) Soft skills adapted to each specific occupation or
Professionals require a comprehensive
job position: Communication and cooperation,
understanding of fabrics, including
foreign language, calculation, problem-
characteristics, applications, and suppliers.
solving and teamwork skills. Additionally, it is
They must also be adept at negotiation and
necessary to develop appropriate skill sets for
establishing partnerships with suppliers to
each occupational group. For example:
secure the best prices and services. Despite
the critical nature of these skills, few garment u For managers: Along with in-depth and
enterprises have staff who possess them. advanced professional skills, managers
Additionally, no training programmes currently require coaching and mentoring, as well as
focus on developing these specific skills in Viet soft skills to realize self-learning, planning,
Nam. de cision - mak ing, pre s ent at ion and
consensus-building, working with leaders,
u Within the textile and dyeing industr y,
change management, critical thinking,
Vietnamese businesses face a shortage of
conflict resolution, and creativity.
technical experts, with insufficient capacity
evident in technical management skills and u For production workers: In addition to
new product development.135 professional skills such as operating modern
machinery and equipment, employees
u A study conducted in 2022,136 which involved
need soft skills such as self-learning, time
in-depth interviews with experts, revealed
management, teamwork, and public
that the design capabilities of Vietnamese
speaking.
designers were underdeveloped.

134
Several universities provide training for this position under the major “Textile and garment production management”.
However, new graduates often find it challenging to secure line leader positions due to their lack of hands-on experience
at production lines. In response to this, the Sonadezi College of Technology and Management (in Dong Nai province) has
organized a series of line leader training courses, specifically tailored to meet the needs of businesses.
135
MOIT, 2022. Report on the strategy for developing the textile, garment and footwear industries to 2030 and vision to 2035.
136
Tran Thi Van AnhTran Thi Van Anh, Tran Minh Tuan and Nguyen Xuan Tung, 2022. Human Resource Development in Viet Nam’s
Textile and Garment Industry in the Context of Digital Transformation.
137
Ta Van Canh, 2019. Challenges for Viet Nam’s Textile and Garment Human Resources in the Context of the Industrial Revolution 4.0.
138
ILO, 2019. The Future of Work in Textiles, Clothing, Leather and Footwear. Working Paper No. 326
80  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

In this context, upskilling and reskilling activities Workers in semi-skilled occupational categories who
can enhance the productivity of businesses. This constitute ‘skilled labour’ in the industry are supplied
will ensure that workers’ skills remain relevant or from various sources. These roles – such as crafts
enable reassignment from roles that may become and related trades workers, machine operators
redundant to others in demand. Although more and assemblers who account for 90 per cent of
than half of employers surveyed by the NIVT study the industry’s workforce – are educated at or
in 2023 believed their workers were generally well- came from universities, vocational education
prepared, two-thirds thought they would benefit and training institutions, which encompass
from upskilling and reskilling.139 This includes colleges, intermediate schools and VET centres.
improving transition, soft and job-specific technical Additionally, NGOs and research institutes, like the
skills. This finding aligns with this study’s in-depth Textile Research Institute, play a significant role in
consultations with textile and garment enterprises, providing skilled labour. Government programmes
which indicated a need for additional training of that incorporate human resource training
workers to operate new machinery and equipment. components also contribute to the skilled labour
Technological upgrades help reduce workloads pool. Examples of these programmes include the
(an automatic cutting machine can carry out work National Target Programme on Poverty Reduction
previously undertaken by up to seven workers), but and the National Target Programme on New Rural
few workers lose their jobs as they are retrained for Development. A substantial portion of the skilled
other roles due to the high labour demand within workforce is also self-trained, outside formal
enterprises. training institutions.

4.3.1. Vocational education and

4.3. Current skills training institutions
supply for the textile and
garment industry In 2022, the country boasted 577 vocational education
and training (VET) institutions that offered training in
Consultations with experts and businesses highlight textile and garment-related programmes, at three
that industry professionals and senior staff are different levels (college, intermediate, elementary).
typically educated at or came from universities. These institutions comprised 113 colleges, which
However, companies often take the initiative to represented 19.6 per cent of these institutions,
train newly recruited employees who lack prior and 107 intermediate schools (18.5 per cent). The
training and provide supplementary training for largest segment was made up of 357 vocational
experienced factory workers for various roles. training centres, which constituted 61.9 per
Positions such as production managers, frontline cent of VET institutions with relevant training
super visors, quality assurance and control programmes. Private institutions accounted
personnel, and marketing staff are often filled for 16 per cent of colleges providing textile and
through recruitment from the broader labour garment related-training programmes, 27 per
market. Highly skilled occupations (managers, cent at intermediate level, and 8 per cent among
professionals and technicians) requiring vocational training centres (Figure 4.1).
undergraduate degrees or higher, represent To
double check of the textile and garment industry
workforce.

139
ILO, GIZ, NIVT, VCCI, 2023. Rapid assessment of upskilling and reskilling needs in Viet Nam’s textile and garment and
automotive sectors.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 81

X Figure 4.1 Number of textile and garment vocational training institutions, by training level
and ownership in 2022
400

350
28
300

250

200

150
329

100 18
29
50 95 78
0
College level Intermediate level Vocational training centre

Public Private
Source: DVET

The most sought-after textile and garment-focussed at 12 schools), sewing and fashion technology
courses and programmes offered by VET institutions (1,600 students at 12 institutions), fashion design
correspond to some roles in high demand in the (1,000 students at 18 schools), industrial sewing
industry (Table 4.3). In 2020, according to DVET, (2,700 students at 31 institutions), yarn and textile
major programmes in terms of enrolment included: technology (180 students at Vinatex College of
fashion sewing (7,000 students trained at 54 VET Economics and Technology Ho Chi Minh City).
institutions), sewing technology (1,500 students

X Table 4.3 Textile and garment training programmes at college, intermediate and elementary
levels

Fashion design

Cutting and sewing women's costumes

Textile technology

Sewing technology

Sewing & fashion technology

Veston sewing technology

Name of training
Yarn and textile technology
programme
Brocade weaving

Industrial sewing

Civil garments

Conical hat sewing

Fashing sewing

Repair sewing equipment

Source: DVET
82  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

In 2021, the VET system’s enrolment scale for training at intermediate and elementary levels. Similarly,
was 83,359 students in textile and garment-related vocational intermediate schools extended their
programmes across three levels. This included 3,935 offerings to include elementary courses. Vocational
students at college level, 15,300 at intermediate training centres catered to students at elementary
level, and a substantial 64,124 students at level and those seeking short-term courses of less
elementary level (Table 4.4). The data also revealed than three months.
that colleges also provided training for students

X Table 4.4 Enrolment size for textile and garment vocational training in VET institutions, 2021
(trainees)

Intermediate
College level Elementary level Sub-Total
level

Colleges 3 935 7 365 8 310 19 610

Vocational Intermediate schools 7 935 12 070 20 005

Vocational training centres 43 744 43 744

Total 3 935 15 300 64 124 83 359

Source: Calculation from data of DVET

4.3.2. Universities it was not possible for the purpose of this report
to gather comprehensive statistics on the annual
In addition to VET institutions, 38 universities offer number of enrolments and graduates, segmented
textile and garment-related majors, with programmes by specific programmes. However, consultations
spanning many specializations ( Table 4.5). with experts revealed that universities and schools
Universities, in addition to offering undergraduate have recently encountered challenges in recruiting
programmes, also have the capacity to provide students into textile and garment programmes.
training at lower levels. Due to various constraints,
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 83

X Table 4.5 Textile and garment training programmes at undergraduate level at Viet Nam’s
universities

Name of academic programme Specializations

Fiber technology
Textile Technology
Textile materials and technology
Textile engineering Industrial template design
Technological design
Quality management
Production management

Textile and garment production management

Textile and garment technology Smart textile and sewing technology
Sewing technology

Visual design
Fashion design
Engineering design

Fiber technology
Yarn and textile technology Woven technology
Knitting technology

Machine design and manufacture

Management and maintenance of textile and sewing
equipment
Mechanical engineering technology
Mechanical engineering technology
Design and manufacture of textile and garment jigs

Mechatronics in textile and sewing equipment

Electrical and electronic engineering technology
Electrical and electronic engineering technology

Textile industry management

Textile and apparel order management
Industrial management Human resource management
Quality management and improvement
Production management

Sewing product technology

Sewing technology Fashion design
Fashion business administration

Sewing technology and fashion Fashion sewing specialization

Source: Compilations based on the consultation results with universities offering textile and garment training
programmes.
84  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Initiatives to address human resource challenges workers, the economically disadvantaged, ethnic
in Viet Nam’s textile and garment industry face minorities, and people with disabilities. These
challenges. As part of the textile and garment include government programmes such as the
Development Strategy implemented until 2015, National Target Programme on Poverty Reduction
the MOIT issued Decision No. 2038/QD-BCT (27 and the National Target Programme on New Rural
April 27, 2010), which recognized five schools140 Construction, which incorporate a human resource
as eligible to participate in the human resource training component. Various NGOs also run
training programme for the industry. The aim vocational training projects aimed at assisting the
was to build a cadre of quality managers and disadvantaged and provide short-term vocational
administrators to meet requirements linked to training courses, typically less than three months,
economic integration/GVCs and ensure that 70 in partnership with local VET institutions. Training
per cent of the textile and garment workforce focuses on imparting basic skills in tailoring
received formal training. Among trained workers, and sewing. Beneficiaries of these programmes
20 per cent of technical ones were expected to be are often self-employed workers or individuals
qualified in specialized areas, possessing proficient employed in households, private sector or MSMEs.
vocational skills to meet enterprise labour needs. Additionally, initiatives like the Better Work Viet
However, programme outcomes during 2010–2017 Nam Programme, along with various brands,
fell short of their targets. Specifically: frequently organize training for employees in areas
such as compliance, payroll, soft skills, OSH, and
(i) The long-term training target was set at
supply chain management.
approximately 600,000 students. However, the
actual number of graduates was 49,557 (8.2 per There remains a significant quantitative gap between
cent of the target). the supply of trained workers and industry’s demand.
Based on data gathered from VET institutions and
(ii) The initial training intake target was 314,000
universities that offer textile and garment training
individuals. In reality, the institutions only
courses, it is estimated that Viet Nam trains 93,000
managed to train 44,296 short-term trainees
individuals annually across various training levels.
(14.1 per cent of the target). These trainees were
This includes 44,000 students at elementary level,
primarily technical workers, line managers, and
20,000 students at intermediate level, 20,000
production leaders of enterprises.
students at college level in VET institutions, and
The textile, garment, and footwear development 9,000 students at university level. However, the
strategy report141 identified several reasons for textile and garment industry has seen an average
this situation. It noted that enrolment in textile and annual increase of more than 200,000 workers over
garment majors and programmes faced challenges the past five years. Thus, even when considering
due to competition with other programmes that the number of individuals trained through other
garnered more societal attention. Furthermore, government programmes and NGOs, the total
given the demand for low- and medium-skilled number of trained workers only fulfils 40 per cent
workers, enterprises tended to recruit untrained of the total workforce required by the textile and
workers and then organize in-house training to garment industry.
better meet specific requirements, rather than
recruiting trained workers. 4.3.4. Training at enterprises
4.3.3. Other training providers Enterprise-based training is common practice
among businesses in Viet Nam, particularly in
In addition to training by universities and VET the textile and garment industry to address skills
institutions, other providers offer short-term training. shortages. Companies and experts interviewed by
This is often to targeted groups such as rural

140
These schools included Hanoi College of Textile and Garment Industry (now Hanoi University of Textile and Garment
Industry), Vinatex College of Economics and Technology in Ho Chi Minh City, Vinatex College of Economics and Technology
(now Nam Dinh College of Textile and Garment Industry), Long Bien Vocational College, and Nguyen Tat Thanh College
(now Nguyen Tat Thanh University).
141
MOIT, 2022. Report on the strategy for development of the textile, garment, and footwear industries in Viet Nam to 2030 and a
vision to 2035.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 85

this study cited challenges in finding adequately training at enterprises, while only 16.8 per cent
trained candidates as the key reason for this were trained at VET institutions. Additionally, 15.1
practice. While candidates received theoretical per cent were sent for training at other enterprises
training, practical application was lacking with (Table 4.6). Similarly, the majority of training
knowledge lacking depth, specialization and out of for employees seeking to improve their skills or
step with the latest technological and equipment transfer jobs was conducted at enterprises (84.2
changes in factories. Enterprise-based training per cent), compared to 17.6 per cent who were
typically covers two main areas: (i) training for sent to VET institutions and 12.5 per cent were
newly recruited employees, which includes those sent to other enterprises. The primary reason cited
trained at VET institutions, untrained workers, by nearly 70 per cent of respondents for seeking
or those without prior work experience and (ii) training was to “improve professional capacity,”
training or upskilling existing employees. A study while more than 35 per cent sought training due
conducted by NIVT in 2020142 revealed that 74.2 to “technological change/update” motivations.
per cent of newly recruited workers received

X Table 4.6 Training places for new recruits and employees working at textile and garment
enterprises (%)

Training location Newly hired employees Employees working at the enterprise

At the enterprise 74.2 84.2

Other businesses 15.1 12.5

VET institutions 16.8 17.6

Source: NIVT, 2020

Most enterprise-based training involves short duration employees receive training for less than one month
courses. For new recruits, 73 per cent undergo (Table 4.7). These figures align closely with this
training for less than one month or training for one- report’s consultations with experts and businesses.
three months, while nearly 65 per cent of current

X Table 4.7 Training time for new recruits and existing employees at textile and garment
enterprises (%)

Duration of training Newly hired employees Employees working at the enterprise

Less than 1 month 35.5 64.8

1 to 3 months 37.6 18.5

3 to 6 months 10.2 11.4

6 to 12 months 9.5 2.6

More than 12 months 4.3 3.7

Source: NIVT, 2020

142
NIVT, 2020. Assessment Report on Vocational Education Training needs linked to employment and labour market demand.
86  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

The prevalence of enterprise-based training in weak system-level governance. The administration

technical skills transfers infers the textile and of training institutions, including universities and
garment industry considers it effective to meet vocational education centres, requires coordination
job requirements. New employees, trained by among various entities such as ministries, local
highly skilled and experienced colleagues at authorities, and businesses. For instance, in the
the workplace, were reported by this study’s vocational education system, colleges fall under
respondents to often find it an easier and management of either the MOLISA or specialized
faster way to learn compared to training at VET ministries and local bodies. Continuing education
institutions. Additionally, it allows employees centres, on the other hand, are primarily overseen
to practice on the company’s technology line, by local authorities.
often more modern than equipment at VET
Regarding policy, institutions face challenges in
institutions. Even when hiring workers trained at
implementing the 2014 Law on Vocational Education
VET institutions, companies often reportedly still
and Training. The law delineates the rights and
needed retraining before assignment to their jobs.
responsibilities of enterprises in VET activities
However, for highly skilled workers and experts,
and mandates that universities obtain a license to
the main recruitment sources remain training
offer VET programmes (as per Decision No. 391/
institutions, such as universities and colleges.
QD-LDTBXH issued by MOLISA in 2019). However,
Occupations in high-demand or facing recruitment implementation is of ten time- consuming.
challenges were often the focus of in-house enterprise Ins titutions also grapple with autonomy
training. As revealed during consultations with challenges, particularly financial ones, given the
experts and enterprises, these roles included constraints of limited resources from the State
production managers, line supervisors, quality budget. Even in priority subsectors like dyeing
assurance and control staff and operators of and weaving, any increase in tuition fees squeezes
bleaching, cleaning, dyeing, embroidery, knitting, students due to prevailing low-income levels.
sewing, spinning and weaving machines. Additionally, complex administrative procedures
diminish the appeal of in-company training and

4.4. Limitations in skills hinders effective coordination between businesses

and training institutions.
development for the textile Despite efforts to enhance coordination and
and garment industry collaboration between educational institutions and
businesses, a persistent gap means graduates do not
4.4.1. Training quality not fully meet enterprise requirements. The necessity of
meeting labour market needs coordination between training institutions and
enterprises was emphasized in Resolution No.
There are evident gaps between the requirements 19-NQ/TW, issued during the Sixth Conference of
enterprises – especially leading ones, and the capacity the XII Central Executive Committee (25 October
of training institutions. Training programmes were 2017), in alignment with provisions outlined in the
reported by respondents to be outdated and 2014 Law on Vocational Education and Training.
slow to keep pace with industry technological Additionally, documents guiding implementation
advancements, while instructors lack practical of this law, along with strategies such as the textile,
experience and familiarity with fresh trends. garment and footwear industry development
Additionally, teaching equipment at training strategy, reinforce the importance of effective
institutions is outdated compared to technology collaboration between educational institutions
used at enterprises. Consequently, training and businesses. Consultations with experts and
institutions fail to develop curricula that address businesses revealed that current cooperation was
the urgent skill needs of businesses. generally viewed as “moderate”, as opposed to
“non-cooperation” and “strong cooperation”.
4.4.2. Institutional and policy issues
A fragmented management structure across the skills
supply system results in limited coordination and
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 87

Several barriers to effective collaboration were and businesses. Fewer students are enrolling in
identified: textile-related majors at universities and colleges,
while enterprises struggle with labour recruitment.
(1) L ack of ins titutionalized coordination
Primary reasons for these trends include salaries
mechanisms: Disparities exis t in the
not competitive with some other sectors, job
understanding and knowledge of skill-
instability with the industry susceptible to external
related issues between training institutions
factors, long working hours that deter potential
and enterprises. Additionally, no effective
candidates and unattractive work environments.
mechanisms encourage active participation
Moreover, external communication about the
and investment by enterprises in collaboration
industry—such as its prospects, development
with training institutions. As a result, the scale of
trends, and policies—is not effective. This lack of
cooperation remains limited and lacks depth.
awareness has even perpetuated social biases,
(2) Challenges for training institutions: Training associating textile and garment work with notions
programmes often fail to align with the of low pay and gender stereotypes.
specific requirements of enterprises and do
Career guidance activities for students often lack depth
not reflect the actual production environment.
and tend to be overly formal, failing to assist students
The level of active participation from teachers
in identifying careers aligned with their strengths. In
and trainers is suboptimal, lacking proactivity.
several instances, students enrol in sewing classes
Some training institutions struggle with
out of necessity rather than genuine interest, only
administrative procedures, particularly the
to seek alternative employment immediately after
requirement to register under the VET Law,
completing training courses.
and insufficient funds hinder collaboration and
cooperation activities. 4.4.4. Underdeveloped labour
(3) Challenges for businesses: Time constraints market information systems
hinder employees’ ability to attend courses due
to operational demands. Cost and production Insufficient quality and availability of labour market
concerns arise, as some enterprises worry that information hinders training institutions from
employee training might disrupt production effectively planning programmes and providing
schedules. Trainees face pressure to meet career guidance to students. Moreover, this impairs
work requirements and labour norms while enterprises’ recruitment efforts. Currently, there
simultaneously learning, leading to dropouts. is a lack of mandatory regulations governing
Additionally, enterprise experts without a education and training statistics, at system
teaching certificate may be unable to provide level and within individual training institutions.
training at VET schools due to requirements. Information related to training is fragmented
and lacks systematic management. Training
4.4.3. Decreased attractiveness institutions have not adequately prioritized the
of the industry collection and monitoring of data on students
and graduates. Additionally, enterprises’ labour
Attracting students to study textile and garment declarations do not consistently align with Labour
occupations has become increasingly challenging Law requirements. The forecasting of training
across all education levels. This was revealed needs remains vague and outdated.
during consultations with training institutions
88  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 89

5
Chapter
Strategies and considerations
for development of Viet Nam's
textile and garment industry
90  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

5. Strategies and considerations

for development of
Viet Nam’s textile and
garment industry

5.1 Governance and policies production value chain, effectively participate in

for development of Viet Nam’s GVCs and establish several regional and global
brands. Human resource development is a key
textile and garment industry component of this strategy. In addition to central
government policies and development strategies,
5.1.1. Development plans and many localities have issued plans for local textile
strategies and legislative framework and garment sector development to implement
the national strategy to 2030 with a vision to
Developing the textile and garment industry into a 2035, as well as to leverage local advantages.
key export sector, in line with Viet Nam’s strategic Additionally, the prime minister approved the
industrial development, is a consistent government National Programme for Supporting Industry
goal. This is reflected in three consecutive Development 2016–25 (Decision No.68/QD-TTg),
development strategies in 2001, 2008, and which sets specific industry goals. Other policies
2022. In 2014, the government approved the supporting the textile industry cover investment,
Development Plan for the textile and garment finance and credit, environmental protection,
industry until 2020, with a vision to 2030, while supporting industries and human resources
the most recent one until 2030, with a vision (see Box 5.1). To meet textile and garment
to 2035, aims to transform the sector into a development goals, in addition to macro policies,
producer of high-quality, competitive products for State support, financial resources, technology,
the international market while meeting domestic and enhanced R&D, it is essential to invest and
demand. By 2035, the industry is to develop coordinate policies that improve the quality of
efficiently and sustainably following a circular human resources and workers’ skills.
economy model, realize an effective domestic
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 91

X Box 5.1 Policies that impact development of Viet Nam’s textile and garment industry

This box provides an overview of major policy categories that impact development of Viet Nam’s textile
and garment industry through reviewing legal documents, policies, strategies as well as national, sectoral
and local programmes currently in effect (see Appendix 1). The main policy groupings include:
1. Investment: The Investment Law (2020) and its subordinate documents have regulations on policies
for development of supporting industries, large investment projects exceeding VND6,000 billion,
attracting more than 3,000 workers, supporting development of SMEs and investment in rural areas,
including foreign investment in Viet Nam through policies on corporate income, import and land use
taxes, reduction of land use fees and rents.
2. Development of industrial zones and economic zones: The government issued Decree No. 35/2022/
ND-CP (28 May 2022), regulating the management and development of these zones nationwide.
Textile enterprises, especially large ones, commonly operate within these zones prioritized for
planning and investment incentives. The State has policies to support and incentivize development of
environmentally friendly industrial zones and enterprises.
3. Development of domestic value chains: The Law on Support for SMEs, Law No. 04/2017/QH14 and
Decree No. 111/2015/ND-CP on development of supporting industries are key documents related to
developing domestic textile value chains. Support policies cover finance, credit, land access, science
and technology, raw materials and market development.
4. Finance and credit: In addition to general textile and garment policies, which has a large number of
SMEs, the Small and Medium Enterprises Development Fund offers loans with preferential interest
rates according to Resolution No. 105/NQ-CP (15 July 2023), which will help alleviate difficulties in
production and business. Decree No. 68/2023/ND-CP (7 September 2023) and Decree No. 115/2022/
ND-CP (30 December 2022), on Viet Nam’s preferential export tax schedule, special preferential import
tax to implement CPTPP agreement during 2022–27, facilitate businesses in implementation.
5. Labour, employment and human resource training: The Labour Code (2019), Vocational Education
Law (2014), and documents guiding implementation of the Employment Law 2013 (and upcoming
revision) and the Investment Law create a complete legal framework and policies to support labour
supply, recruitment, employment, labour rights, human resource training and stable labour relations
in enterprises. The government issued the Vocational Education Development Strategy for 2021–30
and vision to 2045 under Decision No. 2239/QD-TTg (30 December 2021) with the goal of rapidly
developing vocational education to meet diverse labour market needs in terms of quantity, structure,
quality of skilled labour for national development. By 2030 there will be 90 high-quality schools. The
government is also developing an education development strategy until 2030 and a vision for 2045. In
addition, national target programmes and trainings for specific groups will contribute significantly to
textile and garment industry training.
6. Environmental protection: To implement the Law on Energy Saving No. 50/2010/QH12, Environmental
Protection Law No. 72/2020/QH14 (17 November 2020), Water Resources Law No. 28/2023/QH15,
the government has issued a series of regulations on environmental protection, which require
factories to comply from project development to the operational phase. In the project development
phase, depending on the scale and type of project, businesses must apply for a business license
after submitting an environmental impact assessment report. In the operational phase, factories
must comply with environmental protection commitments through a system of monitoring reports
according to Decree No. 18/2015/ND-CP on strategic environmental impact assessment and protection
plans and Decree No. 98/2019/ND-CP (27 December 2019) on supplementing some articles of decrees
in technical infrastructure, effective from 15 February 2020. Businesses that do not comply with
environmental protection regulations will be penalized according to Decree No. 55/2021/ND-CP
amending and supplementing articles of Decree 155/2016/ND-CP. To implement the Environmental
Protection Law, MONRE issued Circular No. 13/2015/TT-BTNMT guiding standards for industrial
wastewater in dyeing and Circular No. 47/2011/TT-BTNMT (28 December 2011), on the national
technical regulation QCVN 40:2011/BTNMT.
7. Crisis-response policies: Additionally, in response to force majeure events such as the COVID-19
pandemic, the government has proactively issued response policies to enhance the resilience of
businesses, including credit support packages, extensions of tax submission deadlines, deferrals of
tax payments and support for workers’ incomes. Enterprises, including textile and garment ones, were
supported to quickly adapt to COVID-19 context and sustainably recover.
92  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Overall, the legal framework and policies for Viet industries, industrial and economic zones, training
Nam’s textile and garment industry development are institutions, research institutes for textile materials
comprehensive, but implementation gaps remain. and fashion design, tripartite organizations (VCCI
Consultations with businesses and experts and VGCL), development partners like Better Work,
by this study spotlighted key shortcomings, brands, suppliers and NGOs. Particularly, the
including opaque and impractical regulations (fire industry is under State management of multiple
prevention, environmental protection, land and central ministries and local authorities (Figure
credit access) and cumbersome policies on training 5.1). Among them, the MOIT performs State
and administrative procedures that overlap and management of the industry, leads implementation
are time-consuming for businesses. There is also a of strategy and planning for industry development,
lack of specific policies to support small businesses, manages standards and norms for textile and
subcontractors to participate in supply chains, garment goods, while the MOLISA manages
limited mechanisms to connect domestic and FDI labour, employment and vocational training, OSH,
enterprises to promote technology transfers and social insurance, deployment of VET strategy and
help domestic enterprises participate more deeply institutions nationwide. The Ministry of Education
in GVCs. Credit guarantee funds, incentives for and Training manages education and training
medium and long-term loans and green credit were at university and postgraduate levels, oversees
viewed as ineffective, while few large industrial strategy for education, training and higher
zones with centralized wastewater treatment education development and regulates training
systems. All these shortcomings have affected the programmes. The MONRE manages standards and
sustainable development of enterprises, labour norms for environmental protection and impacts.
use planning, and skills training for the workforce. Local authorities lead implementation of laws
and policies in accordance with local conditions
5.1.2. Governance and actors and perform State management of businesses
operating in the respective area.
Garment and textile industry development depends
on numerous actors. They include supporting

X Figure 5.1 Key actors in Viet Nam’s textile and garment industry

Ministry of Other ministries,

Industry Planning and Investment,
Textile Research Finance, Labour,
Institute, and Trade
Invalids and Social Affairs,
Institute of Ministry of Home Affairs,
Fashion Design Natural Resources
and Environment

Training institutions Textile and VCCI, VGCL, Development

(University, Vocational garment partners (Better Work, suppliers,
Education and Training). enterprises, buyers, NGOs)
VITAS

Industrial parks Supporting

and economic zones Industry
Local
government

Source: Consolidation from consultations with relevant stakeholders.

Note: From March 2025, some Ministries, such as MOLISA, MPI, MONRE and among others are merged with other ministries
under the Government’s restructuring plan.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 93

5.2. Determinants of ability of an economy, industry, or business to

comparative advantage produce a product or service more efficiently
than its competitors. This section of the report
in Viet Nam’s textile and analyzes Viet Nam’s comparative advantage in
garment industry the textile and garment industry in relation to its
main competitors, based on determinants of this
Comparative advantage is a fundamental concept advantage (see Box 5.2).
in international trade, describing the relative

X Box 5.2 Determinants of national comparative advantage

Why does a country succeed in international competition? The answer lies in four major attributes or
factors that shape the competitive environment for domestic businesses, either promoting or
hindering the creation of competitive advantage. These four factors are illustrated in Box Figure 5.2:
1. Production conditions: This refers to the country’s position in terms of production inputs, which is
crucial for competition within a specific industry.
2. Demand-related conditions: These encompass the characteristics of both domestic and international
demand for products or services within that industry.
3. Auxiliary and related industries: The presence or scarcity of internationally competitive supporting and
related industries in the country significantly impacts overall competitiveness.
4. Corporate strategy, structure, and domestic competition: These factors pertain to the establishment,
organization, and management of businesses, as well as the competitive landscape within the country.

X Box figure 5.2. Determinants of national competitive advantage

Strategy, business
structure and
business environment

Factor
Demand
conditions of
conditions
production

Supporting
and related
industries

Source: Do Khac Dung, 2021, Competitiveness of the Textile Industry in Viet Nam: An analysis to the Period of a Decade
(Moon et al. (1998)
94  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

5.2.1. Production factors vocational training and skill enhancement, has

the potential to boost labour productivity and
Viet Nam’s geographical position, physical assets competitiveness. However, improving labour
and infrastructure provide it with an important productivity also depends on factors such as
advantage for international trade. With its workforce and production management, and the
system of ports and airports, industrial parks, adoption of higher-efficiency technologies.
economic zones, and position as an international
transhipment centre on the Asia-Pacific trade axis, Viet Nam’s labour cost advantage is gradually
Viet Nam is well-positioned to expand trade with diminishing, but other factors collectively contribute
countries regionally and globally. According to the to manufacturers’ ability to manage and reduce
World Economic Forum’s Global Competitiveness production costs. While still lower than China,
Report, Viet Nam’s infrastructure score has Viet Nam’s labour cost is 1.8 times higher than
improved in recent years,143 reflecting strong Bangladesh’s and 23–28 per cent higher than
India144 (Table 5.1). However, Viet Nam benefits
grow th suppor ted by increased FDI flows.
While lower than China’s and India’s ranking, it from relatively low energy costs—approximately
surpasses that of Bangladesh. 50 per cent of China’s costs and significantly
lower than those of India and Bangladesh. In
In terms of human resources, Viet Nam’s textile and addition, the lending rate in Viet Nam is lower
garment industry benefits from a demographic than Bangladesh and India, while is a bit lower
dividend. This means it has a large and still than China. Lending rates affects the cost of
relatively young population which, with improved production and hence its competitiveness.

X Table 5.1 Cost of manufacturing garment components in some Asian countries

Unit Bangladesh China India Viet Nam

Labour costs US$/month 100 500–550 140–160 180

Energy costs US cent/kw 9–12 15–16 10–12 8

Lending rate Local currency 13% 5–6% 12–13% 6–7%

Source: Wazir Advisors, 2016. Existing and prospective FTAs and their impact on Indian Textiles export: Final report

143
Its rank in terms of quality of overall infrastructure improved from 123rd in 2010 to 89 th in 2017. Source: WEF Global
Competitiveness Index Historical Dataset: https://prosperitydata360.worldbank.org/en/dataset/WEF+GCIH. Accessed
10 October 2024.
144
Wazir Advisors, 2016. Existing and prospective FTAs and their impact on Indian Textiles exports. Final report.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 95

5.2.2. Demand-related conditions Bangladesh, Viet Nam, and India the leading
countries. In 2022, China contributed 36 per cent
Over the past decade, global trade in textiles and of the total global textile export value and 32
garment has exhibited steady growth, while Viet Nam per cent of apparel exports. Additionally, China
has consolidated its position among top exporters. accounts for one-third of global export value in
From 2011 to 2022, the industry’s total value the garment sector. India maintains a consistent
increased from US$758 billion to US$958 billion. proportion of 4 per cent, while Bangladesh has
This growth spans the entire value chain, from experienced rapid growth, increasing its share
raw fibres to final consumer products.145 During from 4 to 9 per cent from 2011 to 2022. Viet Nam
this period, the average annual growth rate for follows suit, with its proportion rising from 3 per
worldwide textile and garment exports was 2.3 cent in 2011 to 7 per cent in 2022 (see Figure 5.2).
per cent. Notably, the growth rate for garments Other countries in the ASEAN region – such as
outpaced that of textiles (3.2 per cent). Today, Cambodia, Indonesia and Thailand – also have
textile and garment production and exports strengths in textile production and exports.
are mainly from the Asian region, with China,

X Figure 5.2 Global apparel market share (2011–22)

Unit: %

100

80
53 51 50 55 48 49 50 51 52 47 50 49

60
4 4 3 4 4
4 4 4 4 4 4 6
3 4 4 5 5 7
3 5 5 6 5
40 4 4 4 6 5 7 7
7 7 8 9
8

20 46 37 38 38 38 35 35 32 31 37 33 32

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

China Bangladesh Viet Nam India Others

Source: Calculation based on ITC statistics

145
Specifically, within the product codes HS50 to HS63, the textile segment grew from US$295 billion to US$314 billion, while
the garment segment expanded from US$464 billion to US$645 billion.
96  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

The textile and garment market is projected to variety. These deficiencies hinder the industry’s
continue its robust growth in the coming decades, ability to meet exporters’ requirements.
accompanied by a significant shift from west to east,
with Viet Nam poised to benefit from these trends. By 5.2.4. Business strategies,
2025, China is expected to emerge as the world’s structures and competitive
largest textile and garment player, accounting for
more than 40 per cent of the global industry. India
environment
will follow as the second largest at approximately The rise in global competition within value chains,
18 per cent.146 Viet Nam, strategically positioned coupled with rapid automation, renders trade
near China and India, holds a strong position competitiveness based on low labour costs as
in the global garment manufacturing industry. unsustainable. This evolving trend emphasizes
However, while previously enjoying labour cost the importance of shifting towards higher value-
advantages, Viet Nam now faces stiff competition added activities. Consequently, GVCs are shifting
from neighbouring countries such as Bangladesh, toward knowledge-intensive activities, and value
Cambodia, Myanmar, Pakistan, and Sri Lanka.147 creation in many industries now centres on
Viet Nam is an open, outward-oriented economy, upstream functions like R&D and design, as well
maintaining trade relations with 104 countries and as downstream activities such as distribution,
actively participating in numerous FTAs. As global marketing, and after-sales service. Over time,
brands seek to diversify supply sources away from the “smile curve” has steepened,150 indicating
China, Viet Nam stands to benefit significantly. In a reduced proportion of added value during
addition to its substantial established overseas straightforward processing stages.
market, Viet Nam’s textile and garment industry
also has a domestic market with high potential. Regulations and policies set by purchasing countries
and multilateral organizations play a pivotal role
5.2.3. Supporting industries in shaping the “rules of the game” and significantly
influence institutions in supplier countries.
Despite ef for ts to prioritize development of Meanwhile, enterprises within supplying or
the textiles and garment supporting industry, producing countries pursue their comparative
several shortcomings persist. In the supply chain advantage within the value creation process, often
development ecosystem, supporting industry leading to a “race to the bottom” in production
enterprises have a key important role to play.148 costs and associated labour conditions. Moreover,
However, the supporting industry has grown sustainability and climate change concerns are now
slower than the rate of textile and garment at the forefront, impacting regulations, standards,
enterprises and consists mainly of SMEs with low technologies, production and consumption
investment capital, outdated and asynchronous processes nationally and globally. As a result, the
machinery and equipment level.149 Notably, the global textile value chain is rapidly evolving in
production and supply of garment industry raw response to these shifts.
materials remains limited in quantity, quality and

146
MOIT, 2022. Report on the strategy on development of textile, garment and footwear industries to 2030 and vision to 2035.
147
Wazir Advisor, 2020. Annual Report on Indian Textile and Apparel Industry.
148
Supporting industry (CNHT) textile and garment industry is the production of raw materials, materials (cotton, yarn, tex-
tile, dyeing to produce fabrics), auxiliary materials (production of needles, threads, buttons, zippers, mousse cushions,
lace), accessories (production of keychains, needles, beads, needles) and production of machinery and equipment for the
industry (washing, embroidery, book extractor, boundary rolling, punching and cork machines).
149
Financial policies to promote development of supporting industries for Viet Nam’s textile and garment industry as part
of world economic integration. Accessed at https://mof.gov.vn/webcenter/portal/vclvcstc/pages_r/l/chi-tiet-tin?dDoc-
Name=MOFUCM153189 on 13 March 2024.
150
Cosbey, A. (2017). Climate Policies, Economic Diversification and Trade for UNCTAD Ad Hoc Expert Group Meeting.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 97

At national and sectoral levels, policies and strategies and global companies.152 A report evaluates the
to drive textile and garment industry growth have competitive advantages of the world’s four largest
faced implementation challenges that impact textile and garment-producing and exporting
the sustainable development of enterprises. The countries across eight criteria (Table 5.2):
government has issued a comprehensive strategy
1) Expertise: All four countries exhibit significant
for industry growth, prioritizing improvements
advantages in terms of expertise within the
in the production and business environment, as
industry.
well as enhancing competitiveness. However, the
relationship between the textile and garment 2) Product diversification: China leads in product
sectors and coordination across different stages diversification, followed by India. Viet Nam
of the domestic textile and garment value chain and Bangladesh have fewer advantages at
has not been fully harmonized nor effectively comparable levels.
promoted.
3) S c a l e: C hina ma in t a in s t h e gr e a t e s t
Efforts to upgrade the value chain and foster domestic advantages in terms of scale, followed by Viet
textile and garment linkages in Viet Nam have not Nam and Bangladesh (with equal advantages),
seen significant progress. In the short term, sewing while India lags.
skills remain a crucial advantage for the industry,
4) Chain linkages: China and India jointly hold the
as machines have not yet replaced humans in
most advantageous position in chain linkages,
complex sewing tasks that require human dexterity
followed by Viet Nam. Bangladesh ranks least
and high skill levels.151 However, looking ahead,
favourably in this aspect.
Viet Nam must prioritize enhancement of labour
skills to enhance productivity and technological 5) FTA advantages: Bangladesh enjoys the most
innovation. In particular, investing in skills that significant advantage in FTAs, whereas the
facilitate the industry’s value chain upgrade is vital other three countries have comparatively
for sustained growth. Failure to do so could lead to lower advantages.
significant challenges in international competition. 6) Production advantages: China excels in
production advantages, while Viet Nam
5.3. Assessments of Viet and Bangladesh demons trate average
Nam’s comparative advantage advantages. India has the least advantageous
position.
Viet Nam’s comparative advantages in the textile 7) FDI: Viet Nam and China lead in FDI advantages
and garment industry relative to competitors followed by Bangladesh, with India having the
varies depending on criteria and indicators used least advantage.
in assessments. According to one report (Wazir
Advisors, 2016), Viet Nam’s competitive advantage 8) Polic y environment: Viet Nam’s polic y
lags that of Bangladesh and India and significantly advantage is average compared to the
trails China. Bangladesh’s textile and apparel stronger policy advantages of the other three
manufacturing market is highly competitive, countries.
featuring a substantial presence of regional

151
MOIT, 2022. Report on the development strategy of the textile and footwear industries to 2030 and vision to 2035.
151
https://www.mordorintelligence.com/vi/industry-reports/bangladesh-textile-manufacturing-industry-study-market.
98  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Table 5.2 Competitive advantages of some textile and garment exporting countries

Viet Nam Bangladesh India China

Professional knowledge

Product diversification

Large scale

Chain linkages

FTA advantages

Production advantages

FDI

Policy

Note: Most advantage; Least advantage

Source: Wazir Advisor-2019, from DM strategy report

In another study 153 conducted in 2021, which Finally, another assessment by brands and
analyzed 27 comparative evaluation indicators, retailers of competitiveness of Vietnamese and
Viet Nam surpassed China in only four. The most other textile and garment suppliers, based on
significant gap between Viet Nam and China lies 12 criteria, reveals additional insights into Viet
in supporting industries. Additionally, factors such Nam’s position (Table 5.3). Notably, Viet Nam
as labour productivity, limited R&D spending, and outperforms other countries including China
notably lower FDI and outward investment by Viet in product quality, delivery time, and political
Nam’s manufacturing sector contribute to this stability. However, there are areas where Viet
disparity. Furthermore, China’s larger share of the Nam’s performance is rated as “medium” or”
global market and robust domestic competition low,” including tariffs, financial stability, and
further highlight substantial differences between compliance/sustainability.
the two countries in terms of international
competitiveness.

153
Do Khac Dung. 2021. The Competitiveness of the Textile Industry in Viet Nam: An analysis to the Period of a Decade.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 99

X Table 5.3 Surveyed brands and retailers’ assessment of competitiveness by selected suppliers

Criteria/Country Bangladesh Cambodia Lao PDR Nepal China Viet Nam

Production quality 3.5 3.5 3.5 2 4.5 4.5

Ability to create value-added

3 3 2.5 2 4.5 4
products

Vertical integration/ability to
2 2 2.5 3 5 3
source raw materials

Innovation and ability to develop

3 2 2.5 2.5 4.5 4
products with buyers

Efficiency 3 3 2 3 4.5 4

Lead time 3.5 3 2 2 5 4.5

Price 4.5 4.5 3 3 3 4

Tariff advantage 3.5 2 3 3 2 3

Flexibility of order quantity 3 2.5 2.5 2.5 4 4

Financial stability 2 1.5 2 2 3 3

Political stability 2.5 3.2 3 3 2.5 4.5

Compliance/sustainability 2 2.5 2 2 2 3.5

Note: The results were based on respondents’ average rating for each country on a scale of 1 (much lower performance than
the average) to 5 (much higher performance than the average).

Viet Nam’s garment industry has established

5.4. SWOT analysis of the u
strong relationships with major customers and
textile and garment industry global buyers, ensuring stable output conditions.

Summarizing insights from the earlier comparative u The fashion industry is gradually forming and
advantage discussion and other parts of this integrating with domestic textile and garment
report, this section presents a SWOT analysis of enterprises. A few large Vietnamese companies
Viet Nam’s textile and garment industry. have built brands and formed domestic value
chains.
Strengths (S)
u Those working age still constitute a large
u Viet Nam consistently ranks among the top
proportion of Viet Nam’s population, providing
three largest exporters in the world. Its textile
a relatively abundant labour supply for the
and garment products have been accepted
textile and garment industry at least until 2035.
in high-demand markets such as the EU,
The educational attainment level of workers
Japan, and the United States, with a high level
within the economy is increasing.
of penetration. This facilitates Vietnamese
garment manufacturers in consolidating their u Viet Nam’s socio-political and macroeconomic
position and expanding consumer access. environment is stable, providing a foundation
The Vietnamese textile and garment industry for attracting foreign and domestic investment.
has relatively diverse and flexible production u The Vietnamese Government continues to
capabilities, able to meet customized orders and identify the textile and garment industry as a
unique products as per customer requirements. key sector, prioritizing investment attraction
u Viet Nam is strategically located for global and development.
trade, facilitating the import of production Weaknesses (W)
inputs and exports of garments to various
markets. u Viet Nam’s textile and garment value-added
chain faces several structural challenges:
100  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

o The garment industry has limited direct garment sector and design teams capable of
access to retailers and must go through unlocking the global market.
global buyers. Meanwhile, the industry is
u Limited up-to-date information on market
still weak in marketing, distribution, and
trends and potential customers is apparent.
branding.
Opportunities (O)
o Exported garments are mainly produced
through the CMT method, with u The global demand for garments is large and
underdeveloped design stages and a low continuously growing.
proportion of FOB orders.
u Viet Nam’s participation in signing a series of
o The supporting industries, especially the bilateral and multilateral FTAs unlocks better
textile dyeing sector, have not developed market access opportunities for textile and
in line with the garment industry resulting garment products, especially with two major
in low localization rates and domestic value FTAs (CPTPP and EVFTA).
creation.
u China and India’s shift from being exporters to
o The heav y dependence on the supply importers of garments offers significant market
of impor ted raw materials has made opportunities for Vietnamese exporters.
Viet Nam’s textile and garment industry
u The domestic market, with a population of
vulnerable to external shocks in exchange
nearly 100 million and an improving standard
rates, transportation costs, supply chain
of living, presents opportunities for textile and
disruptions due to geopolitical factors or
garment enterprises.
health crises.
u FDI investment in the industry continues
o Heavy reliance on imported fabrics makes
to increase, especially in light of the CPTPP
it difficult for garment enterprises to form
and EVFTA. As the US-China trade conflict
domestic production chains, manage
continues and production costs in China rise,
production plans proactively, and meet
buyers and manufacturers are looking to
the rules of origin requirements of new-
diversify their supply bases, with Viet Nam
generation FTAs.
an anticipated choice due to its geographical
u Most tex tile and garment enterprises proximity and connection to China, a major
are SMEs (88.6 per cent), with low capital supplier of raw and auxiliary materials and a
mobilization capacity, labour productivity, key market. Recently, some foreign investors
limited technology and equipment as well as have increased investments in Viet Nam’s yarn
innovation and management capacity. spinning and dyeing industry.

u Labour productivity in Viet Nam’s garment u New technologies from Industry 4.0 including
industry is low, while labour costs are relatively robotics in manufacturing will help the industry
higher compared to most competitors. As a develop more robustly, enhancing productivity,
result, Vietnamese garment manufacturers efficiency and product quality, and reducing
struggle to compete on price with some rivals. costs while decreasing dependence on
unskilled labour. Digitalization and big data
u For many years, domestic enterprises and
open opportunities for better design and
most FDI companies have not prioritized R&D
product development, allowing better access
to develop raw materials, build brands, create
to markets at lower costs. Particularly, the rapid
fashion as well as source, invent and own core
development of e-commerce has created many
technologies.
opportunities for businesses, including SMEs,
u Vietnamese garment products lack diversity, to access global markets and customers to
while consumer demand is becoming more introduce, promote, and sell products.
sophisticated with increasingly stringent
u E-commerce opens many opportunities to
requirements.
penetrate the market, but most Vietnamese
u There is a lack of strategy for training high- enterprises are yet to take advantage of its
quality human resources in the textile and potential.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 101

Threats/Challenges (T) Nam are SMEs for which cheap labour still
represents a primary competitive advantage.
u FTAs impose rules of origin requirements from
yarn and fabric, creating significant pressure u Entry barriers to export markets remain high
for textile and garment enterprises to rebuild for many SMEs, due to difficulties meeting
their value chains and domestic raw material requirements and compliance conditions.
supply.
u The domestic garment market risks being
u With the enforcement of FTAs, there is a risk controlled by foreign entities in terms of
of trade fraud and exploitation of Viet Nam’s investment capital, imported raw materials
certificates of origin to benefit from tax and machinery from countries such as China
incentives. and Thailand and the penetration of famous
global brands.
u Global garment trade remains distorted by
preferential trade frameworks. Not only does u FDI enterprises exert significant competitive
Viet Nam benefit from these frameworks, so pressure on domestic enterprises regarding
do other competitors from various preferential orders, input materials, labour and land.
trade agreements. Industry 4.0 further widens the technology
and labour productivity gap between FDI
u Major markets employ trade barriers related
and domestic enterprises due to their
to technical standards, safety and health,
stronger financial, technological, and market
environment and social responsibility to
capabilities.
protect domestic production and consumers,
but equally to avoid dumping, exploitation of u Some enterprises report increasing difficulties
workers in exporting countries, increasing in recruiting labour due to fierce competition
compliance costs for exporters. with other emerging manufacturing sectors,
such as electronics, while wages are rising
u Competition in the global garment market is
rapidly.
increasingly fierce. Other countries commonly
choose textiles and garments as a starting u Despite government encouragement to
industry for industrialization, competing for invest in supporting industries, localities tend
investment with lower labour costs than Viet to avoid textile dyeing investments due to
Nam, such as countries in Asia (Bangladesh, environmental concerns.
Cambodia, Myanmar) and Africa.
u A s t he ent ire suppl y chain b e come s
u Labour costs in Viet Nam are becoming less increasingly focused on responsive and
competitive compared than other garment- cus tomer- dr i ven e x per iences , limi ted
producing countries, especiall y when direct interactions between Vietnamese
considering labour productivity. Therefore, manufacturers and end consumers becomes
Viet Nam may risk foreign investors shifting a greater challenge.
to other countries with lower labour costs.
u Workforce skill levels have yet to meet value
u Global buyers can easily switch from one chain upgrade requirements. To participate
supplier to another, so risks due to political, more deeply in the textile and garment value
social, business environment instability and chain, the industry is in dire need of expertise
natural disasters can quickly cause garment and skilled managers to handle tasks at the
enterprises to lose customers. start and end of the chain, as well as in the
production of input materials for the garment
u The trend of global buyers streamlining
sector. The industry also urgently requires
their supply chains disadvantages small,
a workforce proficient in technical skills to
less capable suppliers. Low labour costs and
operate modern machiner y, automated
preferential market access conditions will no
systems, and green technologies.
longer be the main competitive factors in the
garment industry, while most suppliers in Viet
102  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam
 Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 103

6
Chapter

Conclusions and
recommendation
104  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

6. Conclusions and
recommendations
Viet Nam’s textile and garment industry has made and department specific as businesses often
significant strides in the past few decades. It has overlook the critical role of innovation and human
attracted substantial investment, including factors. Despite growth, labour productivity
foreign capital, expanded produc tion and remains low and the pace of improvement
witnessed a surge in expor ts resulting in sluggish, hindering the sector’s ability to add
significant job creation. As a result, Viet Nam substantial value. Compared to regional peers,
ranks among the top textile and garment Viet Nam’s textile industry lags in terms of
exporting countries globally. Looking forward, the productivity and value creation.
industry’s ambitious development strategy aims
While production methods and technological
to consolidate and grow as a key export sector,
innovation evolve gradually, a mismatch persists
fostering renowned brands, ensuring sustainable
between workforce qualifications and demands
growth, producing high-quality goods, and
of employers. Additionally, a gap exists in terms
enhancing international competitiveness.
of skills needed for the sector’s transformation
However, to achieve these goals, the industry
and upgrading. Businesses face challenges
requires a step change in its growth model,
recruiting highly skilled workers, especially those
shif ting focus to sustainable development
with specialized expertise in emerging fields.
and green growth, prioritizing innovation and
Meanwhile, VET institutions have limited capacity
technological advancement, and emphasizing
and linkages with businesses. Addressing
the importance of human and skills development.
these issues is crucial to meeting the industry’s
Key tools for enhancing the industry’s competitiveness development needs and realizing its potential,
have not gained traction. This means efforts to particularly as more companies adopt effective
improve productivity, product quality, upgrade FOB and ODM production methods, alongside
the value chain, integrate fashion, increase modern machinery and management practices.
localization rates, enhance labour quality and
skills have not realized their potential. Viet Nam’s
textile industry has witnessed rapid growth,
6.1. Recommendations to
primarily in terms of scale—new businesses, enhance the competitiveness
increased investment capital and expanded of the textile and
production facilities. However, this growth has
been largely horizontal, emphasizing quantity
garment industry
over quality. The industry’s reliance on the CMT It is critical that Viet Nam’s textile and garment
processing method-driven by cost advantages industry shifts its growth model towards sustainable
and policy priorities, especially for FDI enterprises, development, green practices, and innovation.
has shaped its trajectory. Currently, the industry’s Achieving this requires addressing structural
competitiveness is primarily recognized in the challenges along the value chain. Accelerating
garment processing segment, with its value- technological advancements, ref ining the
added chain facing several structural challenges. domestic supply chain, and upgrading the value
Technological innovation predominantly occurs chain are essential steps. In addition to State
within FDI enterprises and large domestic support policies and industry-specific strategies154
corporations, which invest in modern machinery, for each enterprise, onus must be placed on the
automation, and digitalization. However, across importance of workers’ skills.
the industry innovation remains slow, fragmented

154
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  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 105

While specific recommendations for a strategy supply, while downstream stages encompass
to develop the sector’s workforce in line with its distribution and marketing and are critical for
aspirations are provided in the report “Towards creating high-added value.
a sector skills strategy for Viet Nam’s textile and
3) Tackle the technology gap through investment
garment industry: Priority skills needs, actions,
and technology transfer promotion measures.
and recommendation for education and training
To address this gap, acute between domestic
system”, the following broad directions are based
and FDI companies, there is a need to invest in
on findings of this background research aimed
innovation, adopt advanced technologies and
at improving competitiveness from a systemic
promote collaboration for technology transfers
angle:
across firms, including through targeted
1) Strengthen the domestic value chain through measures to support MSMEs.
better linkages between the textile and garment
4) Enhance direct interactions between textile and
subsectors and by promoting development of
garment enterprises and final retailers. This
supporting industries. Linkages between textile
involves meeting demand requirements,
production and garment manufacturing
remaining up-to-date with new fashion trends
remain loose and supporting industries are
and having strategies to quickly respond to
insufficiently developed. This imbalance
buyers’ changing needs. To achieve this, the
affects the overall industry efficiency and
industry must strongly develop brand research
competitiveness. New-generation FTAs (such
and fashion models, as well as marketing and
as CPTPP or EVFTA) set requirements on rules of
product distribution.
origin, as yarns and fabrics must be produced
and used in Viet Nam or in FTA countries 5) Accelerate the green transition and transfer
to have certified rules of origin and enjoy to the circular economy. Currently, most
preferential tariffs. Therefore, to benefit from Vietnamese enterprises in the textile and
these FTAs and enhance overall performance, garment value chain supplying to major brands
the subsectors must complement each other have been requested to enhance the “green
more effectively. Development of supporting credentials” of production, as well as meet
industries must be promoted, including by E&S responsibilities and cut emissions. New-
attracting FDI in a selective manner. generation FTAs that Viet Nam is a party to
also enforce commitments on environmental
2) Gradually upgrade processes (CMT to FOB),
protection and low emissions. As such,
enhance products (adding product design stages),
enterprises and especially manufacturers
and subsequently find ways to upgrade functions
producing yarn, textile and dyeing must use
(branding) to achieve higher added value in the
technologies that meet greening requirements
value chain, including through domestic market
and reduce fuel and water consumption to
development.155 Upgrading the value chain
ensure supply chains are environmentally
requires appropriate steps. Initially, enterprises
friendly.
need to leverage the relationship between
improving working conditions and increasing 6) Develop and implement a skills strategy for the
labour productivity through investing in sector. To implement these recommendations,
new technologies, modern machinery, and human resources are a key factor. As expertise
semi-automated and automated systems and skilled workers are required during all
for existing production lines. Following this, production stages of an enterprise and value
there should be increased investment in chain, an industry skills strategy is needed to
upstream and downstream stages to boost develop human resources to drive industry
competitiveness. Upstream stages include transformation.
R&D, branding, design, and raw material

155
ASEAN-Japan Centre, 2020. Global Value Chains in ASEAN Textiles and Clothing.
106  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

6.2. Recommendations to and teacher exchanges as well as developing

improve the quality of human a training ordering mechanism to better link
enterprises and training institutions.
resources for the textile
6) Develop training programmes to supplement
and garment industry an d a d dre s s sk ill s misma tc he s w i t h
engagement of enterprises, with competency
To realize sustainable development, innovate growth
maps for each job position as a basis for
models and maintain the industry’s competitiveness
realizing appropriate training programmes,
and position in the international arena, key policy
encompassing sewing techniques for
interventions are essential to improve human
product transformation, application of new
resources quality. Based on the current state of
technologies in production and skills needed
skills supply and demand in Viet Nam, broad policy
to realize the green and digital transitions.
recommendations include:
7) Enhance soft skills training for employees,
Improve the policy environment as well as the
during recruitment and on-site, in partnership
effectiveness of skills and training policies. Address
multiple stakeholders.
implementation challenges and promote lifelong
learning for employees: 8) Improve the qualit y of labour market
information, including labour supply and
1) Boost the effectiveness and implementation
demand forecasting as a basis for career
of training-focused policies, especially those
guidance to inform employment services,
providing skills necessary to upgrade Viet
human resource training and labour
Nam’s textile and garment value chain. Create
recruitment plans.
and promote a lifelong learning environment
for employees. 9) Create an information exchange mechanism
between enterprises and training institutions.
2) Implement measures to improve productivity,
This will enable effective and timely information
wages, working conditions, and career
exchanges on skills supply and demand and
progression pathways in the sector, paramount
better synergize enterprise labour needs and
for attracting and retaining workers.
training institution outputs.
3) Enhance the image and social perceptions of
Implement inclusive and gender-responsive
the industry to attract learners and workers
training policies and practices:
through improved communication on its
potential and role driving the Vietnamese 10) Develop training programmes specifically
economy. targeting women employees and ensure
access to managerial positions.
Enhanced training quality and relevance to
industry demands: 11) Enhance training in OSH skills and awareness
of workers’ rights, particularly for women.
4) Improve the training quality at training
institutions, especially VETs and public and Strengthen quality assurance and certification
private ones, through investment in teaching processes:
equipment, capacity building of teaching staff,
12) Strengthen the quality management system
renovation and updating training programmes.
for training in priority areas, especially a
5) Strengthen linkages between enterprises and vocational assessment and certification
training institutions. This requires sectoral system for trainees and employees as well
participation in development of training boost quality assurance of training providers,
programmes, sharing training funds, providing courses and evaluators.
practice/internship opportunities for students
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 107

Promote industry’s voice and participation in skills Boost financing for sector-specific skills and
development: training:
13) Build upon the recent establishment of a 15) Explore budgetary subsidy models for training
working group to boost skills and sustainability institutions based on output results or a
to fur ther advance multi-s t akeholder combination of inputs and outputs, rather
collaboration in the sector.156 The December than relying solely on the current input-based
2024 establishment of the working group – mechanism. State funding should consider
led by VITAS and including representatives the distinct training costs associated with
from a variety of stakeholders including various specialties, avoiding a one-size-fits-all
enterprises, education and training providers approach.
and a sector trade union – represents a
16) Explore funding mechanisms to address
significant milestone towards institutionalizing
resource constraints that prevent investment
co o r dina t i o n m e c hani sm s f o r mul t i -
in equipment and training, particularly among
stakeholder engagement and collaboration for
smaller enterprises, for instance, establishing
sector skills development.
a Sectoral Skills Development Fund based on
14) Promote establishment of a “Sector Skills contributions from businesses, government
Council” for the textile and garment industry and/or grants and donations.
to mobilize participation of social partners
in consulting and implementing policies on
industry vocational education and training.

156
https://www.ilo.org/resource/article/working-group-launches-boost-skills-and-sustainability-viet-nam%E2%80%99s-tex-
tile
108  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

X Appendix 1: List of policies and

strategies related to the textile
and garment industry

Documents and places of

Field Objectives Main policy contents
issuance

I. Major policies related to the sector

- Investment Law No. 61/2020/ - Development of supporting - Corporate Income Tax
QH14 (17 June 2020) of the industries - Import duties
1. Attracting National Assembly - Large investment projects of - Exemption or reduction of land
investment, - Decree No. 31/2021/ND-CP (26 exceeding VND 6,000 billion, use levy, land rent and land
including March 2021) of the government and 3.000 employees use tax.
foreign guiding implementation of the - Investment in supporting
investment Investment Law. development of SMEs
- Investment in rural areas.

Resolution No. 105/NQ-CP (15 Loans from the Small Preferential lending interest
July 2023) of the government on and Medium Enterprise rate: short-term loan interest
tasks and solutions to remove Development Fund. rate is 1.2 per cent/year,
difficulties for production and medium- and long-term loan
business. interest rates are 4.4 per cent/
year.

Decree No. 68/2023/ND-CP of Import and export duties on Preferential export and import
2. Finance,
the government Decree No. textiles and garments. tax rates.
credit
68/2023/ND-CP (07/9/2023) and
Decree No. 115/2022/ND-CP (30
December 2022) on Viet Nam’s
preferential export tariffs and
special preferential import
duties to implement the CPTPP
Agreement for 2022–27.

Labour Code No. 45/2019/QH14 The Labour Code protects the - Development and allocation of
Employment Law 2013. right to work, interests and sources of input materials
other rights of employees, - Development of the labour
while protecting the legitimate market
rights and interests of
- Building progressive,
employers, creating conditions
harmonious and stable
for harmonious and stable
industrial relations
industrial relations.
- Gender equality and protection
of disadvantaged labour
3. Labour,
groups.
employment
and human
Law on Vocational Education, Regulations on SOE system, - Development of SOE system
resource
Law No. 74/2014/QH13. organization and operation of - Investment in SOE
training
SOEs, rights and obligations of development
organizations and individuals
- Support policy objects
participating in SOE activities.
- Science and technology for
SOE.

Decree No. 31/2021/ND-CP (26 Using disabled workers in Incentives for Corporate Income
March 2021) of the government investment projects. Tax, VAT.
guiding implementation of the
Investment law.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 109

Documents and places of

Field Objectives Main policy contents
issuance
Decree No. 111/2015/ND-CP Support human resource The government shall develop
on supporting industry training for enterprises in training support programmes
development. supporting industries and to improve the qualifications
human resource training of direct workers in the field of
institutions for the supporting supporting industries.
industries.

National target programmes Garment training for some types Training funding support.
on poverty reduction, new rural of workers such as the poor,
development, socio-economic rural workers.
development of ethnic minority
and mountainous areas. Other
national programmes.

Law on Support for Small Small and medium-sized - Access to credit

and Medium Enterprises No. businesses. - Tax and accounting support
04/2017/QH14.
- Production premises
-Technology
- Market expansion

4. Development - Legal advice

of domestic - Development of input
value chains materials.

Decree No. 111/2015/ND-CP Develop domestic value chains, - Corporate Income Tax, VAT,
on supporting industry increase localization rates, Import duties
development. reduce dependence on imports. - Investment credit
- Rent for land and water.

- Law on Economical Use of - Economical use of energy - Taxes and fees on the
Energy No. 50/2010/QH12 - Development of clean and environment
- Law on Environmental renewable energy - Payment for natural ecosystem
Protection No. 72/2020/QH14 - Prioritize treatment of services such as for carbon
promulgated (17 November environmental pollution, sequestration and storage
2020) restore degraded natural purposes
-Law on Water Resources No. ecosystems - Circular economy
28/2023/QH15 - Screening investment projects - Environmentally-friendly
- Decree No. 08/2022/ND-CP according to environmental products and services
guiding implementation of criteria - Green procurement.
the Law on Environmental
5.Environmental
Protection
protection
- Decree No. 98/2019/ND-CP
- Wastewater treatment
of government on amending
and supplementing articles
of decrees in technical
infrastructure
- Decree No. 55/2021/
- Administrative penalties for
ND-CP amending and
violations of environmental
supplementing articles of
protection.
Decree No. 155/2016/ND-CP on
administrative sanctions in the
field of environment.
110  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

Documents and places of

Field Objectives Main policy contents
issuance
Circular No. 13/2015/TT-BTNMT Guidance on ensuring Conditions for enjoying
of MONRE promulgating wastewater safety in the textile incentives as prescribed by law
regulations on textile and dyeing and dyeing industry
industry wastewater

Circular No. 47/2011/TT-BTNMT Regulations on industrial Monitoring discharges of

(28 December 2011) on national wastewater stipulate maximum industrial wastewater into the
technical regulation QCVN permissible values of pollution environment.
40:2011/BTNMT. parameters in industrial
wastewater when discharged to
wastewater receiving sources.

Decree No. 35/2022/ND-CP Develop industrial zones and - Industrial park construction
(28 May 2022) regulating economic zones to attract planning
6. Development management of industrial parks investment and create - Investment incentives
of industrial and economic zones. conditions for enterprises to
parks and - Policies to support, incentivize
produce and develop.
economic zones and cooperate in development
of eco-industrial parks and
ecological enterprises.

II. Industry development strategy and related strategies promulgated by the government

Decision No. 1643/QD-TTg of the - Develop the textile, garment - Market development
Prime Minister. and footwear industries as the - Development of domestic
main export industries value chains
1. Development
Strategy of Viet - Products of high quality and - Development of raw materials
Nam's Textile, competitiveness and auxiliary materials
Garment and - Circular economy development - Improve the quality of human
Footwear - Complete the domestic value resources
Industries to chain, effectively participate in - Science and technology
2030, vision to the global value chain innovation, sustainable
2035
- Develop regional and world development, greening
brands. - Finance, tax and capital.

Decision No. 879/QD-TTg, (9 June - Textile and garment - Renovation of industrial

2014) of the Prime Minister. industry belongs to priority development institutions
development sectors - Improve operational efficiency
2. Viet Nam’s - By 2025, prioritize production of enterprises
Industrial of raw materials and auxiliary - NNL development
Development materials for domestic
Strategy to 2025, - Technological innovation
production and export
vision to 2035 - Attracting investment
- After 2025, prioritize
production of high-end fashion - Market development
clothing products. - CNHT development.

Decision No. 68/QD-TTg (18 - Development of raw materials - Connecting and supporting
January 2017) of the Prime and auxiliary materials for the CNHT enterprises to supply
Minister. textile and footwear industry. products to customers
- By 2020, the domestic supply - Promotion of foreign
rate of the textile and garment investment attraction
industry will reach 65 per cent, - Support enterprises to apply
3. Supporting the footwear industry will management systems to meet
industry reach 75-80 per cent. the requirements of global
development
production chains
programme
from 2016 to - Support training to improve
2025 the quality of agriculture
- Support R&D, application
of technology transfer and
innovation
- Update information about
supporting industries.
  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam 111

III. Local textile and garment industry development policies

• Numerous provinces/cities have issued plans to implement textile and garment industry development strategies in local areas
with specific objectives and policies suitable to local conditions, such as:
• The People’s Committee of Thua Thien-Hue province promulgated Plan No. 177/KH-UBND (24 March 2023) on implementation
of the Textile and Garment Development Strategy in the province until 2030.
• Plan No. 102/KH-UBND (9/5/2023) to implement the Viet Nam Textile and Garment and Footwear Industry Development
Strategy to 2030, with a vision to 2035 in Quang Ngai province.
• Plan No. 308/KH-UBND Implementing the Viet Nam Textile and Footwear Industry Development Strategy to 2030, with a vision
to 2035 in Son La province.
112  Skills for Trade and Economic Diversification: Analysis of the textile and garment industry in Viet Nam

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