Europe's circular economy plan with high environmental and social responsibility requirements is considered a big challenge for textile and garment enterprises.
New challenges come from green standards
Europe is an important export market for the Vietnamese textile and garment industry. Since the Vietnam-EU Free Trade Agreement took effect, Vietnam's textile and garment exports to this market have grown well. Particularly for Hung Yen Garment Corporation, garment export turnover increased from 5% to 10%. Although the absolute value is not large, from 20 million USD to 40 million USD, this figure shows that Hung Yen Garment has the potential to increase its turnover to Europe.
Data from the Vietnam Textile and Apparel Association also shows that after a difficult year in 2023, this year, Vietnam's textile and garment exports to Europe recovered to a turnover of about 4.3 billion USD, an increase of 7.66% compared to 2023.
The export growth is partly due to domestic enterprises gradually meeting the rules of origin and being proactive and flexible in sourcing raw materials. However, domestic textile and garment enterprises are facing new challenges from the European Green Deal in general and the European Circular Economy Plan (CEAP) in particular.
CEAP is part of the European Green Deal to tackle pressing global challenges such as climate change, biodiversity loss, waste and pollution. With CEAP, Europe aims to end the technology and fashion business model with “short-lifecycle” products and the ‘waste-generating’ economy in Europe.
This plan clearly states the need to approach the implementation of a circular economy according to 4 stages/phases of the product life cycle including: Production, with special attention paid to the design stage; consumption; waste management; turning waste back into resources.
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| Hung Yen Garment Corporation actively implements green transformation in production. Photo: Hung Yen Newspaper |
According to experts, to meet these regulations, businesses will have to invest in modern technology, change production processes, and management processes; increased investment costs can also increase product prices, affecting competitiveness.
Proactive response, still need support
Although CEAP is a challenge, Mr. Nguyen Xuan Duong - Chairman of the Board of Directors of Hung Yen Garment Corporation also sees this as an opportunity for Hung Yen Garment in particular and textile and garment enterprises in general.
First of all, in terms of the market, Europe is vigorously implementing regulations and standards related to green factors and environmental protection. If they do not meet these standards, they will not be able to bring goods to the market, forcing businesses to transform.
For Hung Yen Garment, to meet the regulations, the company is converting all coal-fired boilers to electric boilers. “ Even though electricity costs increase, labor costs decrease ,” said Mr. Duong.
In addition, the company is also installing a rooftop power system. In addition to being able to proactively source electricity for production, especially during peak summer when there may be rotating power outages, the company also has revenue from renting out the roof.
Like May Hung Yen, May 10 is also in the process of rapid and strong energy transition when switching from coal-fired boilers to pellet-fired boilers to reduce carbon emissions; coordinating with French investors to install rooftop solar power systems to ensure power supply, green production and reduce greenhouse gas emissions.
In addition, May 10 is investing heavily in the green building and factory rating standard - the US LEED standard. The cost of consulting and achieving this certification is quite large.
It can be seen that textile and garment enterprises have been quite proactive in responding to CEAP as well as other European green regulations. However, only large enterprises with good financial capacity have made investments, the rest is still a challenge for small and medium enterprises. Not to mention, CEAP in particular, the European Green Deal has a very wide scope, high technology, so understanding it correctly is still difficult, let alone implementing it.
It is known that, in order to support textile and garment enterprises in particular and enterprises exporting goods to the EU market in general, first of all, to understand correctly to comply with CEAP as well as other green regulations, the Ministry of Industry and Trade has conducted dialogues with European authorities to have specific analysis of green standards; review standards within the scope of commitments in the Vietnam - EU Free Trade Agreement to convey to enterprises.
In terms of policy, the Ministry of Industry and Trade has also reported and submitted to the Government for approval the National Action Program on Sustainable Production and Consumption for the period 2021 - 2030, which includes very specific goals and directions on sustainable production and consumption; issued a circular regulating technical regulations for measuring, reporting, assessing greenhouse gas emission reduction and greenhouse gas inventory in the industry and trade sector...
In terms of propaganda, the Ministry of Industry and Trade also regularly organizes international seminars and forums to guide and answer questions from businesses related to CEAP or the European Green Deal...
Affirming that the support of the Ministry of Industry and Trade has actively assisted in meeting the criteria of CEAP, however, Mr. Duong still believes that the cost of investment to meet green criteria is still a significant pressure for businesses. Therefore, he suggested that the Government have a fund or green financial source to support businesses in making green transformation.
Mr. Duong also proposed to reduce the rate of social insurance and union fees for employees, because with the current continuous increase in basic salary, the cost of these items for enterprises is very large, while in reality, the salary that employees receive in many textile enterprises is higher than the basic salary.
Source: https://congthuong.vn/doanh-nghiep-det-may-chu-dong-dap-ung-ke-hoach-kinh-te-tuan-hoan-362264.html
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