To capitalise on the new regulation, which gives developing countries unilateral tariff preferences for the 2014-16 period, the Ministry of Industry and Trade has directed local footwear producers to design long-term investment policies that will help boost domestic sources of materials and develop ancillary industries.

This will potentially raise the industry’s competitiveness and reduce outsourcing for foreign footwear giants, it said.

Although footwear is the leather industry’s key product, the ministry has also asked local producers to pay attention to diversifying production to include high-quality handbags and wallets as these are also among the industry’s most profitable lines.

The footwear industry’s export turnover was US$10.3 billion in the past year, up 18% against the previous year.

The EU is Vietnam’s largest footwear importer, and Vietnam is the second-largest footwear exporter to the EU after China, with an export turnover of US$3.4 billion in 2013, accounting for 33% of Vietnam’s total footwear export turnover.

Chairman of the Vietnam Footwear Association Nguyen Duc Thuan said the GSP will present a good opportunity for Vietnam’s footwear exports to compete against the same products by EU producers.

In addition to the GSP regulations, Thuan noted that the footwear industry is also expecting some concessions and incentives from the EU-Vietnam Free Trade Agreement and the Trans-Pacific Partnership agreement as footwear is likely to be one of the major beneficiaries of these agreements. Under the EU-Vietnam FTA negotiation, at least 90% of Vietnamese goods exported to the EU will enjoy a tax exemption.

The footwear industry is expected to gain at least US$12 billion from exports this year, Thuan said.