Vietnam bats for bonded warehouse for US cotton

The Vietnam Textile and Apparel Association (Vinatas) has asked US cotton producers to come up with a plan to set up a cotton bonded warehouse in Vietnam.

Vinatas made the demand at the working session with the US Cotton Association, according to a Vietnamese media report.

If the US producers set up a cotton bonded warehouse in Vietnam, this would benefit the Vietnamese textile industry as it would help cut transport and protection costs.

US cotton is favoured by Vietnamese textile enterprises and used in a large scale.

Truong Van Cam, Deputy Chair and Secretary General of Vinatas, said the cotton price always fluctuates, while Vietnamese spinning enterprises have to import cotton from many different sources, including those that cannot provide high-quality products.

“Therefore, if the US partners agree to set up a bonded warehouse in Vietnam, Vietnamese enterprises would take initiative in arranging materials for their production, while cotton prices would be stable, which helps textile manufacturers control production costs,” he said.

Cam also said Vietnamese enterprises prefer using American cotton not only because the cotton has high quality, but also because the US is a member of TPP.

If Vietnam uses cotton from the US, it will be able to satisfy the requirements to enjoy preferential tariffs offered to TPP members.

Vinatas believes the bonded warehouse will also be beneficial to the US. If the US can ensure the stable supply of cotton, it will be able to sell more products to Vietnamese businesses thanks to the warehouse which will benefit cotton traders as well as American cotton growers.

Vietnamese enterprises have been importing materials for domestic textile and garment production from China because of geographical proximity and cheap prices.

But other TPP countries can only provide cotton in limited quantity.

According to Vu Duc Giang, Chairman of Vinatas, bonded warehouses would be built in two large areas in Vietnam, including one in the north, possibly at the Hai Phong Port or Hanoi, and the other at Cat Lai Port in HCMC or in Ba Ria- Vung Tau City.

Giang said if bonded warehouses are set up, the major problems of the Vietnamese textile and garment industry would be eliminated.