Vietnam has been considered an attractive destination for investors who are keen on the garment and textile sector, thanks to benefits brought about by the bilateral and multilateral free trade agreements (FTAs) that the country has signed and is about to sign.
Looking back more than one year ago, many domestic garment firms were facing significant hardships as orders were being shifted to countries with low labour costs and tariffs, such as Cambodia, Myanmar, and Bangladesh. However, in just a short period of time, after investing in technology and adjusting costs and inappropriate policies, Vietnam regained investors’ confidence, with a lot of large orders now returning to the country.
The Vietnam Textile and Apparel Association (VITAS) explained that Vietnam is well-known for its high quality of garment and textile products and quick delivery turnaround for sophisticated products. Therefore, partners have returned to Vietnam after discovering that product quality and delivery times were not always ensured in other countries.
Recently, Japan’s Itochu Group spent 5 bn JPY ($47 mn) buying an additional 10 per cent of shares in the Vietnam National Textile and Garment Group (VINATEX). The purchase raised Itochu’s stake in Vinatex to 15 per cent, making it the second largest stakeholder behind the Ministry of Industry and Trade. In March, the Southern province of Binh Duong granted an investment license to a garment and textile project by Taiwan’s Apparel Far Eastern Co., worth $25 mn.
Singapore’s Herberton Ltd., also recently carried out the Nam Dinh Ramatex Textile and Garment Factory project worth $80 mn in the northern province of Nam Dinh. The factory is expected to become operational next year with a capacity of 25,000 tonnes of fabric of various kinds and 15 mn clothing items a year, creating jobs for around 3,000 labourers.
According to Chief Representative of VITAS in Ho Chi Minh City Nguyen Thi Tuyet Mai, together with efforts to regain investors’ confidence, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and other free trade agreements (FTAs) have attracted investors to Vietnam. Currently, Vietnam is involved in 16 bilateral and multilateral FTAs, including two next-generation ones, namely the CPTPP and the EU-Vietnam Free Trade Agreement (EVFTA). Once they become effective, more opportunities will be created for the garment and textile sector, Mai added.
Vietnam is among the world’s five biggest garment-textile exporters and producers. The country’s garment-textile export turnover hit $16.5 bn in the first six months of 2018, up 16.49 per cent year-on-year. Last year, the sector raked in $31.2 bn from exports, a year-on-year rise of 10.23 per cent.