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Vietnam Business » Vietnam Business News » High raw material costs hit industries

High raw material costs hit industries

The textile and garment industry is particularly hard hit because it must import 80 per cent of its materials. Nguyen Duc Khiem, CEO of Viet Thang Garment and Textile Company, said the cost of viscose fibre increased last year from US$2.2 per kilo to the current price of $2.7.

Rising costs are making life increasingly difficult for domestic textile, wood and plastic-making enterprises. The Ministry of Industry and Trade said the price of input materials increased sharply in 2010. It said the cost of cotton rose 25 per cent; fibre, 34 per cent; wood, 30 per cent; and plastic, 43.7 per cent due to rising world demand. Meanwhile, producers said their prices had increased just 5 to 10 per cent.

Meanwhile, the cost of cotton had risen from $1.3 to 1.6 per kilo over the same period.

In addition, delivery delays and Indias ban on exports of cotton fibre to protect its own textile and garment industry since the middle of April had created shortages domestically.

Exports of wood products have also been hit by rising import costs. Since the beginning of the year, the price of wood materials has risen by 30 per cent to 40 per cent.

Tran Phuc Hong, director of the Kim Son Wood Processing Company, said his firm had signed a contract to export outdoor furniture to Germany three months ago but was just about breaking even, despite making cut-backs.

"The contract will be completed in September. If material prices continue to rise in the coming months, we will go under," Hong said.

Meanwhile, plastic-making firms are also struggling.

In the first quarter of the year, Viet Nam imported nearly 100,000 tonnes of plastic raw materials worth $153 million, an increase of 12.4 per cent in volume and 73 per cent in value over the same period last year.

The Sam Phu Plastic Joint Stock Company planned to expand production this year and it imported about 1,000 tonnes of plastic powder annually, said Do Nguyen Thanh, the companys deputy general director.

To make ends meet, domestic producers were having to slash production costs and share materials, Khiem said.

Local enterprises have called on the Government to raise investment in supporting industries.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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