Foreign investors seem to ignore Vietnam’s textile industry while they are very keen on the garment sector, with up to 80 per cent of the total number of projects having been poured in the garment sector.
A textile official explained that in addition to requiring huge capital, investing in dyeing-textile factories requires good infrastructure, especially sewage treatment system, and this is a weak point for Vietnam.
Vietnam licensed many projects to invest in the textile and garment sector in 2005-2006. However, most of them were for the garment sector.
Malaysia’s Pamatex Berhad got license to invest over $100 million in a garment factory in the Chu Lai Economic Zone in central Quang Nam province, South Korea’s Daewon was allowed to build an $8 million garment plant for exports in the Hoa Khanh Industrial Park in central Danang city after investing in a garment factory in Ho Chi Minh City’s Industrial Park and a textile factory in southern Dong Nai province’s Nhon Trach 1 Industrial Park.
In addition, Taiwan’s Formosa Group injected more than $500 million in a garment factory in the Nhon Trach IP and is planning to pour an additional $400 million into expanding its production capacity.
Notably, among these new projects only one, of the Daewoo Company, is to invest in the textile industry.
The official said China’s textile and garment sector develops well as it has planned dyeing industrial parks and built sewage treatment plants onsite in order to create favorable conditions for investors.
He further said in recent time many foreign investors have intended to inject their money in Vietnam’s textile industry but when they know they themselves will have to build sewage treatment factories they have abandoned their intentions and shift their investment in Indonesia, Thailand and other countries in the region.
Despite being Vietnam’s second largest forex earner after crude oil, the apparel industry is facing huge challenges: excessive import of cloth and an underdeveloped textile sector versus a rapidly-developed garment sector. Statistics show that Vietnam now imports almost all the textile and garment materials and accessories, with 90 per cent of cotton, 100 per cent of polyester, 70 per cent of fabric, 100 per cent of dye, equipment and machines, with the highest import rate from the US.
Under WTO commitments, Vietnam will remove subsidies for the apparel industry, causing many difficulties for the textile sector. Thus, planning and investing in infrastructure for dyeing-textile industrial parks to attract foreign investors in the textile industry like China would be a valuable goal for Vietnam.
Textile and garment exports brought Vietnam over $5.8 billion in 2006, up 19.9 per cent on-year. The figure is expected to reach $7 billion in 2007.
(Investment)
Vietnamese
