Since Vietnam joined the WTO, its textile and garment sector has enjoyed opportunities to expand markets but also faced difficulties resulting from possible US protectionism and limited competitiveness of local firms.

“Firms’ biggest problem now is the US’ supervision of textiles and garments imported from Vietnam and the possibility of an antidumping investigation,” chairman of the Vietnam Textile and Apparel Association, Le Quoc An, said at a conference held in Hanoi Thursday to assess the WTO impact on the sector.

Worrying about the problems that could arise from the supervision, some American importers like Macy and Hagel have withdrawn orders from Vietnam and given them to other countries.

The pressure has also seen some local and foreign firms defer investments in Vietnam, he said.

The US, Vietnam’s biggest garment market, providing about 55 percent of its total textile and garment export revenues, may extend the special supervision mechanism by at least one year, he said.

Originally, the mechanism was to apply to trousers, shirts, underwear, swimwear and sweaters in 2007-2008.

Nguyen Thi Hong Tin, head of marketing for the Vietnam Textile and Garment Group, said Vietnamese garments would find it hard to enter the US market from next February when it starts applying stricter new regulations on safety of imported products.

In other problems, the financial turmoil and economic recession have weakened US purchasing power while a labor shortage has hit Vietnamese textile and garment makers.

“Increasing foreign investment (in other fields) in industrial parks, mainly in Ho Chi Minh City, has caused a shortage especially of skilled labor in the garment sector,” An said, adding that the number of workers in some textile and garment firms in the city often falls by 25-30 percent after the Lunar New Year festival, usually in January or February.

Many strikes have broken out in large cities because of disputes over wages, allowances and working hours, upsetting many firms’ production and delivery schedules. “This is the biggest risk facing the sector now,” he said.

A major factor is that the competitiveness of local firms, most of them small- and medium-sized ones, remains limited due to their poor capability in terms of capital, technologies, marketing, trademarks and management, he said.

Garment firms import up to 70 percent of the raw materials needed for production, leading to low value adding, and inflexibility in meeting customers’ requirements, the chairman noted.

Meanwhile, the Vietnamese government has cut the import tax on garments to 20 percent from 50 percent and on cloth to 12 percent from 40 percent last November under its WTO commitments. The reduction has brought textile and garment firms into fierce competition with big exporters like China, India and Bangladesh.

Delegates at the one-day conference also mentioned other problems facing textile and garment producers like slow administrative reform, poor infrastructure and high transport costs.

To address these problems, the country should invite foreign investors to enter fields which local producers are still weak and inexperienced in, expand production of high added-value items, promote trademarks, and develop human resources.

The government targets textile and garment exports of US$10-12 billion in 2010 and $20-22 billion in 2020, according to the association.

The country, home to more than 2,000 textile and garment firms and two million workers, is expected to earn around $9.2-9.3 billion this year.

This represents a 17.9-19.2 percent increase over last year, and has taken the country into the list of top 10 garment exporters, An said.