Textiles to Promote Investment

Le Quoc An, chairman of the Vietnam Textile and Garment Association, said that in the future, the textile and garment industry would focus its investment in textiles in order to develop Vietnam into one of the ten leading textile and garment exporters in the world.

 

Only by walking in some cloth markets, can consumers have various choices of cloth of high quality at reasonable prices. However, over 90 per cent of the cloths are imported, mainly from Japan, the Republic of Korea and China. Vietnamese consumers have got used using imported cloth, forgetting the trademarks of local manufacturers. However, there are a few trademarked cloth manufacturers in Vietnam, such as Thai Tuan, Long An, Phuoc Thinh, Thanh Cong and Phong Phu.

 

Le Quoc An, chairman of the Vietnam Textile and Garment Association, said that after the implementation of a five-year strategy on accelerating the development of the textile and garment industry, from 2001 to 2005, the spooling capacity of the whole industry had doubled, the production output and the quality of knitted products have improved, but the output of cotton and weaved cloths increased only slowly. Locally-made cotton fabrics have met only between seven and ten per cent of the industry’s demand. Therefore, in the coming years, it is impossible to replace imported fabrics with locally-made ones.

 

Meanwhile, weaved cloths for making exported garments has met between only 13 and 14 per cent. Their output and quality remain poor. Therefore, garments making enterprises have to import cloths.

 

An explained that poor quality and a lack of high-end cloths had made it difficult for Vietnamese-made cloths to find markets. As a result, local garment enterprises have to buy imported cloths or cloths at the request of foreign partners. Apart from investing in new machines and equipment for increasing production capability, local enterprises have to renew their technology to manufacture high quality products for exported garment making.

 

40 per cent of the machines and equipment used by The Vietnam Textile and Garment Group (Vinatex) are outdated and need to be renewed. The result of a survey of textile enterprises shows that the technology of these enterprises is fair. Only the fabric spooling industry has advanced technology but only 20 per cent of the machines and equipment were imported from developed countries and have been used for five years. The dyeing and finishing industries have invested in modern equipment and technology but they failed to fully tap the advantages of the equipment and technology.

 

Under the master plan for Vietnamese textiles and garments throughout 2015, and vision 2020, in 2010, the whole industry will manufacture 1.230 billion square metres of knitted and weaved cloths, exporting around 500 million square metres. Of the figure, Vinatex alone will manufacture 408 million square metres and export 262 million square metres. Weaved cloths will still remain the main products for exported garment making while knitted cloths account just a third in a total volume of manufactured cloths. What measures should be taken to that end?

 

A focus will be given to the building of waste water treatment systems and investment in machines and equipment. An said that China had built textile and garment industrial parks with modern waste filter and treatment systems to attract investment and the effort has helped boost the development of the Chinese textile and garment industry. Incidentally, foreign enterprises want to move their dyeing establishments to Vietnam. This is because the dyeing industry uses many chemicals, not benefiting the environment. To address the environmental issues of the dyeing industry, there should be many steps, which costs a great deal of money. In warnings given to localities when they decide to license projects, the dyeing industry has ranked top.

 

The proportion of locally-made materials of the whole industry has reached only around 30 per cent. Talking about the issue, An said that to promote localisation, support should be given to production materials. The textile and garment industry is facing difficulties due to the fact that it has to import over 70 per cent of cloth for production. The industry has to import up to 90 per cent of cotton with a tax rate of zero. The industry imports almost 100 per cent of its synthetic fabrics and dyeing chemicals and 85 per cent of its machines and equipment. Vietnam is carrying out two projects on manufacturing materials for synthetic fabrics.

 

In its policies and solutions throughout 2010, the Vietnamese textile and garment industry will concentrate on manufacturing cloths and accessories for exported garment making. Accordingly, projects concerning weaving and dyeing cloths should be put onto a list of projects of special priorities within a national promotion programme. VND 9,840 billion will be invested in the textile industry, mainly in Vinatex.

 

According to calculations, with the demand of 3.5 billion square metres per annum in 2010, it is estimated that 65 per cent of the figure will be imported alongside around one billion square metres manufactured locally. As a result, the textile and garment industry needs US$2.3 billion to invest in weaving and dyeing. This is a huge amount, which is expected to be attracted from foreign investors and from investment funds on the stock market with enterprises’ selling stocks. Also, over 60 per cent of the total investment capital for the whole textile and garment industry is expected to come from local and foreign banks and credit organisations.

 

At present, many textile and garment groups have eyed Vietnam as another attractive investment destination, behind China. The International Textile Group of the US, for example, has signed an agreement with Vinatex to promote co-operation in trade and technical assistance with a focus on upgrading the establishments of Vinatex. Pamatex Berhad of Malaysia has invested in some weaving and dyeing factories in the Tam Hiep industrial park within the Chu Lai open economic zone with a total investment of over US$100 million. Daewon of the Republic of Korea has built some dyeing plants in the Nhon Trach industrial parks in Dong Nai province. Fomosa of Taiwan has invested over US$500 million in Vietnam and plans to add US$400 million.

 

The fact shows that over the past few years, some foreign enterprises, including Chung Shing, Tainan Enterprise, Daewon, and Youngone have invested in weaving and dyeing plants in Vietnam. The Ministry of Industry, the Vietnam Textile and Garment Association and Vinatex have organised promotion programmes in Hong Kong and China to call for foreign investment in the industry with a focus on projects of high importance to improve the quality of products and the trust of customers.

 

Textiles and garments have become the second largest export industry in Vietnam, just behind crude oil. Vietnam is now 18^th among leading exporters in the world and in the next five years, Vietnam may be in the top ten countries.