The European Union (EU)-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have boosted foreign direct investment (FDI) in textile-garment projects in Vietnam, according to the Vietnam Textile and Apparel Association (VITAS). FDI had dipped early last year, when the United States withdrew from the Trans-Pacific Partnership (TPP).
FDI then had shifted to other markets, such as Cambodia, Myanmar and Bangladesh, with a lower-cost workforce and lower import duties, according to a report. The United States is the largest buyer of Vietnam’s textiles and garments followed by the EU. Foreign investments in the sector increased again since the third quarter of last year due to high-quality products and short delivery time.
VITAS general secretary Nguyen Thi Tuyet Mai said import duties of the EU, currently ranging from 10 per cent to 12 per cent, will be cut to zero when the EVFTA comes into force. South Korea would overtake Taiwan to become the largest investor in Vietnam’s textile-garment sector in the near future as this country has clinched a two-way FTA with Vietnam and a cooperation agreement with the European Union, she said.
Domestic Vietnamese enterprises also feel the US-China trade would benefit Vietnam. The target of $34-34.5 bn in apparel export turnover this year, 10 per cent higher than last year’s, is achievable, she added.