"Garment industry rebounds, but challenges loom", 9 November 2025

The textile and garment industry has shown clear signs of recovery in 2025...

However, businesses in the sector continue to face mounting challenges, from high capital and logistics costs to growing pressure to green their operations and navigate shifting trade policies...

Vietnam has now climbed to third place globally in textile and garment exports, a major leap from its earlier role as a low-cost processing hub...

One of the biggest hurdles is production costs, which are about 40-45% higher in Vietnam compared to Indonesia, Malaysia and Myanmar – despite Vietnamese labour being around 40% more productive.

According to Dang Thi Minh Phuong, Chairwoman of the Ho Chi Minh City Logistics Association, shipping and warehousing costs have surged...

Besides that, the shift from traditional processing models to FOB (Free on Board) and DDP (Delivered Duty Paid) purchasing methods has changed the financial landscape...

Trade policy is also a pressing concern. The US imposed a 20% reciprocal tax on Vietnamese textile and garment products (down from an initially proposed 40%), significantly impacting export dynamics.

While the first nine months of 2025 saw steady demand as customers rushed to place orders ahead of the tax implementation, new orders from the US have since dropped sharply.

With buyers now demanding that Vietnamese producers absorb part of the tariff cost, profit margins are shrinking.

Furthermore, US authorities have signalled potential tax hikes on products lacking clear origin documentation, in a bid to prevent transit-based origin evasion – a warning to Vietnamese firms re-exporting goods from China....

Additionally, Vietnam currently imports 100% of its cotton and up to 95% of its synthetic fibres. Chemicals and dyes are also almost entirely imported. This lack of domestic input production remains a major weakness, especially under tightening origin rules and shifting trade policies.

To mitigate risks, industry leaders are calling for increased localisation of raw materials, ensuring traceability and reducing exposure to foreign supply shocks.

Despite the industry's export success, brand development remains a longstanding weakness...