With the official coming into force of the UK-Vietnam free trade agreement (UKVFTA) on May 1, 2021, Vietnam’s apparel exports to the UK are expected to improve significantly. The UKVFTA, signed on December 29 last year and temporarily applied since January 1, removes almost all customs duties between the two countries when fully implemented.
Vietnam’s apparel exports to the UK were valued at $734.83 million in 2019 with monthly average of $61.24 million. It considerably dropped in 2020 by 31.01 per cent to $506.96 million due to the restrictions and lockdown imposed following the spread of COVID-19 pandemic. The monthly average apparel exports declined to $42.25 million in 2020.
In January 2021, Vietnam’s apparel exports to the UK stood at $27.37 million, and are optimistically forecast to grow to $66.12 million in June 2021, a growth of 141.57 per cent in five months, according to Fibre2Fashion’s market intelligence tool TexPro.
Among the Southeast Asian exporters, Vietnam was the second largest exporter to the UK, next only to Thailand. The bilateral trade of the Vietnam and the UK was $6.7 billion in 2019.
Vietnam has several advantages over its strong competitor Bangladesh, when it comes to apparel exports. The production costs are lower in Vietnam compared to Bangladesh. Secondly, Vietnam is at the 70th position in the list of 190 countries based on Ease of Doing Business Index with better compliance, human rights regulations, and environmental protection practices. Thirdly, Vietnam has an advantage of proximity to China, a big raw material supplier for the textiles and apparels industry. Finally, Vietnam has maintained lower lead time as compared to the Bangladesh (approximately the 1/3rd of the time required for Bangladesh).
Source: https://www.wtin.com/