Foreign and local investors have poured over US$2 billion into the textile and garment industry over the past five years, Saigon Times Weekly reports.
Among investment projects in the sector, Taiwan’s Formosa Group is now the biggest manufacturer of cloth and fiber, with a project capitalized at more than US$450 million in southern Dong Nai province.
Although there have been many investments, they still can not meet market demand, leading to greater imports of cloth and accessories.
Vietnam imported nearly US$5 billion of cloth, fiber, cotton and accessories last year, double the amount five years ago. While the import of accessories is falling, thanks to more domestic manufacturing, the import of cloth is increasing, to 3.5 times the import level in 2001, General Department of Statistics figures showed.
The development of garment sector, and that of textile and spinning, is unbalanced and there is almost 100 per cent dependence on foreign suppliers of cotton, fiber, chemicals and equipment. This makes Vietnam a big consumer of materials, machines and equipment. This problem is also an opportunity for foreign investors that want to invest in Vietnam.
Last year, Vietnam’s textile sector produced 600 million square meters of cloth, but total demand in the local market and in manufacturing garment products for export was 2.3 billion square meters. To narrow the gap, the Ministry of Industry is working on readjusting the national plan looking for new measures, including capital mobilization, to boost investments in the textile sector.
The ministry forecasts that investment demand for the garment and textile industry over the next four years is about US$3 billion, of which, textiles, fibers and dyeing account for 76 per cent.
The Vietnam Textile and Garment Group (Vinatex) will carry out 15 big projects with total investment capital of VND16 trillion (US$1 billion), aiming to reach the target of manufacturing 1 billion square meters of cloth by 2010, of which half will be for export. To help the development plans, Vinatex will boost equitization to mobilize more capital through the stock market as well as attract more foreign investors.
In the past five years, the capacity of manufacturing cloth and materials rose 10 per cent a year. With the current plan for investment worth US$3 billion for 2007-2010, the Ministry of Industry expects to lift production capacity only 12-14 per cent a year, whereas the garment industry has growth of more than 30 per cent a year. This means the gap between demand and supply will widen. (Saigon Times Weekly)
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