Thu. May 19th, 2022

Foreign investment in the textile and garment sector is increasing
rapidly as international firms seek to take advantage of the benefits
Vietnam will potentially derive when the Trans-Pacific Partnership
Agreement comes into being.

Several companies from mainland
China, Hong Kong, Taiwan, Japan, the US and the Republic of Korea (RoK)
have made large investments in the sector, according to Thoi Bao Tai
Chinh (Finance Times) newspaper.

The textile and garment industry in the TPP member countries is expected to benefit the most from the trade deal.

For
instance, products made from domestically sourced materials or imported
from other TPP member countries will enjoy zero tariff when exported to
signatory countries.

According to Le Tien Truong, Vice Chairman
of the Vietnam Textile and Apparel Association, up to 60 percent of the
country’s textile and garment exports go to member countries.

Analysts
estimate that once Vietnam becomes a TPP member the average tax on
Vietnamese garments will come down from the current 17-18 percent to
zero.

In that scenario, exports to the US market could increase three-fold from 8.6 billion USD last year to 20 billion USD in 2020.

It
is with an eye on such opportunities that foreign firms are scrambling
to invest in the Vietnamese textile and garment industry.

In June RoK’s Dong-IL Corporation began building a 52 million USD yarn factory in Dong Nai province’s Long Thanh district.

The plant will have an annual capacity of 9,000 tonnes of fibre when it opens in mid-2015.

In
Ho Chi Minh City, Forever Glorious, a subsidiary of Taiwan’s Sheico
Group, announced it would set up a 50 million USD weaving-dyeing-garment
production chain for premium sports garments.

In March city
authorities had issued a licence to China’s Gain Lucky Limited, a
subsidiary of Shenzhou International, for building a 140 million USD
centre for fashion design and garment manufacture. The company produces
garments for brands like Nike, Adidas, and Puma.

Also in March Hong Kong-based Esqual Group opened a 25 million USD garment plant in the northern province of Hoa Binh.

Not
long ago the northern province of Nam Dinh issued an investment licence
to China’s Jiangsu Yulun Textile Group for a 68 million USD textile,
dyeing, and yarn plant at the Bao Minh Industrial Zone.

Besides the new investments, many existing foreign garment firms have increased their investments to expand their activities.

Speaking
about the strong foreign investment flow into the sector, Dang Phuong
Dung, Deputy Secretary of the Vietnam Textile and Apparel Association,
said the chronic bottlenecks in the weaving and dyeing sectors in terms
of intensive investment, experience, technology, and workforce have been
addressed.

According to analysts, the fact that more and more
foreign firms are investing in the textile and garment industry would
encourage Vietnam to quickly wrap up final negotiations for the
agreement.

Becoming a TPP member would offer not only the
textile and garment industry more opportunities to develop but also its
support industries and even the economy as a whole, they said, pointing
also to other obvious benefits like employment generation.-VNA

By vivian