DECISION

APPROVING THE MASTER PLAN ON THE DEVELOPMENT OF THE LEATHER AND FOOTWEAR INDUSTRY UP TO 2010

THE MINISTER OF INDUSTRY

Pursuant to the Governments Decree No. 55/2003/ND-CP of May 28, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Industry;
Pursuant to the Governments Decree No. 92/2006/ND-CP of September 7, 2006, on elaboration, approval and management of socio-economic development planning;
At the proposal of the director of the Food and Consumer Goods Industry Department,

DECIDES:

Article 1. To approve the master plan on the development of the leather and footwear industry to 2010 with the following principal contents:

1. Development objectives

1.1. General objectives

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To ensure sustainable development for leather and footwear enterprises by application of modern technologies and ISO 9000-standard quality control and ISO 14 000-standard environment management systems.

1.2. Specific targets

Targets for production and export of footwear, leather and leather products to 2010:

Major products

Unit of calculation

Year 2000

Year 2005

Year 2010

1. Export value

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1,468

3,039

6,200

2. Job generation

1,000 laborers

400

540

820

3. Major products

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- Shoes and slippers of all kinds

1,000 pairs

302,800

499,000

720,000

- Briefcases and bags of all kinds

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31,000

51,700

80,700

- Tanned leather of all kinds

1,000 square feet

15,100

47,000

80,000

2. Product development planning and regional planning

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a/ To encourage all sectors to invest in the production of leather and footwear materials and accessories. To prioritize the development of tanning establishments having advanced technologies and modern equipment, arrange and modernize existing tanning establishments to raise the output and quality of tanned leather, and make full exploitation of domestic leather material sources;

b/ To combine the leather processing industry with the encouragement of industrial breeding development and slaughtering to raise the quality and output of raw leather. To coordinate with textile, plastics and engineering industries in developing raw materials and accessories to meet the industry’s requirements;

c/ To encourage all economic sectors to invest in the production of footwear and leather products for domestic consumption and export. To build industrial parks meeting requirements on infrastructure and environmental treatment to attract domestic and overseas investors.

2.2. Regional planning

The leather and footwear industry’s production and investment activities are arranged in three regions in the country (see the Appendix enclosed). To create balanced territorial and regional development to make full use of each regions advantages of labor and raw material sources while conforming with each regions economic development strategies in each period.

3. Investment capital demand of the leather and footwear industry

The total investment capital for the 2006-2010 period is estimated at VND 9,153.5 billion, of which total capital for intensive investment is VND 1,844.2 billion, total capital for investment in tanning development is VND 604 billion. In addition, to expectedly attract VND 5,598.94 billion in foreign investment (equivalent to USD 347.76 million).

Leather and footwear enterprises shall mobilize capital from domestic and overseas economic sectors in the forms of joint venture, association, establishment of joint stock companies, and issuance of stocks and bonds on the securities market.

4. Solutions and policies for the master plan implementation

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a/ To elaborate a portfolio of investment projects to proactively call for domestic and overseas investment, encouraging all domestic and overseas economic sectors to invest in the leather and footwear industry with priority given to the development of the industry’s raw material sources and accessories;

b/ To invest in new leather processing mills with modern and advanced technologies, to make intensive investment in modernizing existing tanning factories to raise the quality of tanned leather for footwear production enterprises; to associate or set up joint ventures with other enterprises to produce imitation leather materials and accessories for the industry, gradually reducing foreign imports;

c/ To encourage all economic sectors to invest in the production of footwear and bag products to meet domestic and export demands. To relocate enterprises producing these products to localities so as to ease labor pressure while creating conditions for localities to generate jobs and restructure their labor,

d/ To build leather and footwear industrial parks that fully meet requirements on infrastructure, technique and environmental treatment to call for and facilitate leather and footwear investment.

4.2. Solutions on raw material and accessory supply

a/ To concentrate investment in the development of satellite industries to raise the supply of domestic raw materials, semi-products and input accessories for production, boosting interactive support between industries, increasing the capacity of self-supply of input materials to reduce external impacts, cutting production costs and increasing the added value of export products;

b/ Together with the construction of raw material and accessory factories, it is necessary to build raw material and accessory supply centers to increase the supply of raw materials and accessories for enterprises and meet the increasing demand of export footwear production;

4.3. Solutions on management organization and human resource development

a/ To intensify the coordination and division of production activities within the entire industry in a professional and cooperative manner;

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c/ To conduct regular training in professional knowledge and skills; to recruit legal staff conversant with Vietnamese and international laws to ensure the lawfulness of production and business activities;

d/ To prioritize training of footwear designers and sales staff good at marketing and import-export operations to help enterprises adopt appropriate production modes and develop sustainably. To attach importance to developing a sufficient number of skilled workers who are creative, dynamic and capable of learning new technologies;

dd/ To continue improving the quality of footwear industry training courses of technical high-school and college levels. To adopt mechanisms for training and re-training trainers to meet the industry’s training demand;

e/ To arrange university or higher-level training at domestic and overseas universities.

4.4. Market solutions

a/ To intensify trade promotion and export marketing activities to develop and expand export markets;

b/ To research and develop new products, and apply modern technologies to production of raw materials, accessories, products and fashion designs for proactive and firm integration into the world economy.

4.5. Financial solutions

a/ To encourage and create conditions for all economic sectors to invest in the development of the leather and footwear industry. To raise capital through joint venture, partnership, capital contribution to joint stock company establishment, and issuance of stocks and bonds on the securities market;

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Article 2. Organization of implementation

1. The Ministry of Industry shall coordinate with concerned ministries and branches and provincial/ municipal Peoples Committees in directing the leather and footwear industry’s development in accordance with the approved master plan.

2. The Ministries of Planning and Investment; Finance; Agriculture and Rural Development; Trade; Science and Technology; and Natural Resources and Environment; the State Bank of Vietnam and the Vietnam Development Bank shall, according to their functions, coordinate with the Ministry of Industry in supporting enterprises and localities to implement the approved master plan.

3. Provincial/municipal Peoples Committees shall materialize the master plan on the development of the leather and footwear industry in their provinces/cities; join ministries and branches in inspecting and supervising the approved master plans implementation to ensure its conformity and consistency with their local socio-economic development planning.

4. The Vietnam Leather and Footwear Association shall coordinate with the Ministry of Industry in implementing the master plan by supplying information and guidance on the master plan for leather and footwear enterprises nationwide to orient and plan their production and business development in conformity with the master plan.

To study and propose to state management agencies amendments to policies and mechanisms to develop the leather and footwear industry according to the master plan.

Article 3. This Decision takes effect 15 days after its publication in CONG BAO.

Article 4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial/municipal Peoples Committees, and concerned agencies shall implement this Decision.

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APPENDIX

REGIONAL PLANNING
(Attached to the Industry Ministers Decision No. 36/2007/QD-BCN of August 6, 2007)

Major products

Proportion of each regions production capacity

Region 1

Region 2

Region 3

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25-33%

60-68%

7-10%

2. Production of raw materials, shoe soles and caps (not made from tanned leather)

20-30%

60-70%

5-10%

3. Tanned leather of all kinds

20-25%

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5-7%

Region 1: The Red River delta region with Hanoi as its center

Region 2: The Mekong delta region with Ho Chi Minh City as its center

Region 3: The central region from Thua Thien Hue province to Khanh Hoa province with Da Nang city as its center.