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Red tape deprives Vietnamese businesses of $2bn in US military contracts

Red tape deprives Vietnamese businesses of $2bn in US military contracts

Thursday, June 25, 2015, 17:09 GMT+7

A number of Vietnamese garment enterprises last year lost a combined US$2 billion worth of contracts to make clothing, flags, and shoes for the U.S. military due to existing administrative procedures, according to Cong Thuong (Industry and Trade) newspaper under the Ministry of Industry and Trade.

The situation was very hopeful after the firms clinched the deals, but the nightmare came when samples sent from the U.S. for the contracts were stuck at customs for a month, Cong Thuong reported on Saturday last week.

Customs officers detained all of the samples, as under Ministry of Defense regulations, clothing, flags, and shoes of foreign armies are banned from being imported into Vietnam.

The Ministry of Defense’s Decision 80/2006/QD-MOD, dating May 2006, bans the import of military clothing, flags, and shoes from foreign countries, and samples sent in for production locally are considered banned goods.

Though the enterprises finally got through many complex procedures to get the samples more than a month later, all of their efforts did not pay off because it was too late then.

In the same boat

The Vietnam Textile and Garment Association (VITAS) earlier this month received a report from Hoa Binh Garment Joint Stock Company, which won a contract to make Australian Tasmanian Police uniforms, seeking help since the firm faced the same situation.

The foreign customer, Australian Defense Apparel Inc, also sent the VITAS written permission from the Australian state agency authorizing the firm to order several Vietnamese businesses, including Hoa Binh Garment, to produce police uniforms with Tasmania Police labels.

Ho Chi Minh City-based Hoa Binh is not alone in facing such a circumstance, as many Vietnamese enterprises have received similar orders from Australia, Italy and Romania, Cong Thuong said.

For each order, local firms have had to send a document to the Ministry of Industry and Trade to seek permission to manufacture and export such items.

But the ministry has no jurisdiction and only records each case, and then coordinates with the Ministry of Defense for final approval, which often takes over a month.

New regulations needed

Decision 80/2006/QD-MOD of the defense ministry was issued to guide the implementation of Decree 12/2006/ND-CP of the government, dating June 2006.

Decree 12 has expired and been replaced by Decree 187/2013/ND-CP of the government dating November 2013 but the Ministry of Defense has no guidelines for its implementation.

In fact, even the customs authorities are confused by the process of enforcing this regulation.

Previously, the customs branch of Tan Son Nhat International Airport in Ho Chi Minh City blocked a shipment of more than 2,000 pieces of garments, backpacks, bags and hats that would have been exported to Australia.

The suspension came after an examination that found out many items made from fabric with variegated colors like camouflage outfits for armed forces.

The VITAS has suggested that the Ministry of Industry and Trade work with the Ministry of Defense to allow local manufacturers to receive orders to make uniforms for foreign troops.

Shipments of these items, with the licenses from the foreign countries that the foreign partners are working with, will be cleared through customs to be exported as conventional clothing, according to the Ministry of Industry and Trade.

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