Increasing the regional minimum wages, coupled with the high prices of social insurance and ocean shipping fares, has raised concerns about the development of Vietnam's textile and garment industry.
|Vitas would have delayed raises to after 2020 to ensure the viability of the tetile and garment sector
The Vietnam Textile and Apparel Association (Vitas) has proposed the prime minister to stop increasing the regional minimum wage in 2018 and adjust the premium rate and ocean shipping fare, aiming to help textile and garment enterprises to enhance their competitiveness and to expand their operations.
According to Vitas’ statistics, in the first six months of 2017, the export turnover of the textile and garment industry reached $14.1 billion, up 10 per cent on-year. Notably, the export turnover towards the US was $5.79 billion, $1.69 billion towards the European Union, $1.4 billion towards Japan, and $1.02 billion towards South Korea.
Despite the increasing export turnover, the textile and garment industry’s development is hampered by numerous difficulties, thus the industry seeks policy adjustments by the prime minister and the authorities.
Notably, Vitas asked the Ministry of Finance to exempt enterprises using domestic fabric sources to manufacture exported products from the value added tax (VAT). This proposal aims to stimulate enterprises to use domestic fabric sources.
Besides, Vitas proposed the prime minister not to increase the regional minimum wage in 2018 and consider the adjustment of the premium rate.
Furthermore, Vitas asked the prime minister to urge the Haiphong City People’s Committee to implement the Official Correspondence No.5036 asking the city to review and re-calculate ocean shipping fares to match enterprises’ wallets.
It is not the first time that Vitas proposed the prime minister to adjust wage, tax, and insurance policies.
Responding for the prime minister’s decision to increase regional minimum wages by 7.3 per cent in 2017, Vitas claimed the raise would increase the total production expenditure of textile and garment enterprises by 2.9 per cent. Vitas wanted to delay regional minimum wage increases until 2020 or 2022.
Simultaneously, Vitas asked to stop using the minimum wage as the initial basis to build the payroll as well as the basis for contributing premium rates.
In the 2007-2017 period, Vietnam saw regional minimum wages increase at an average rate of 21.8 per cent for domestic enterprises and 15 per cent for foreign direct investment (FDI) enterprises.
At the final meeting organised on August 7 to discuss regional minimum wage increases in 2018, relevant authorities reached a compromise of 6.5 per cent to submit to the prime minister for approval. If approved, the increase will come into effect on January 1, 2018.