Raw material costs harm Vinatex - sportstextiles: Lea SportsTextiles

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Raw material costs harm Vinatex

02/05/2008
According to the chairman of Vietnam Garment and Textile Group (Vinatex), Le Quoc An, is concerned that the company will not reach its targets for 2008 because of rising raw material costs. Higher prices, particularly for coal, oil and petroleum, are taking their toll on the textile and apparel sectors, as are the increases in raw materials prices, for example cotton and other fibres. These have increased by an average of 20 per cent.

A recent Vinatex survey showed that rising fibre prices have lifted production costs by VND40 billion ($2.5 million). Higher cotton prices are costing the firm an additional VND284 billion.

The company is trying to cut back on costs and boost productivity in order to combat rising costs. It will attempt to use more domestically produced materials as well as limiting production losses to between 5% and 10%.

However, it is still planning to continue with investment projects and expand its export market. It is considering investing VND11.39 trillion on expansion this year. The firm recently set up the Vietnam Textile Materials Production and Trading Joint Stock company (VinatexMat) with a charter capital of $12.5 million.

The establishment of VinatexMat, which specialises in producing and trading raw textile materials, is aimed at creating a source of raw materials for the nation’s textile and garment sector. It has also workrf with Binh Thuan Province to create zones for cultivating raw materials. The Vietnamese textile sector reported export turnover of almost $7.8 billion last year and the sector is expected to make $9.5 billion in 2008.

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