Textile and garment see resurgence of capital flows
After a period of stagnation, capital inflows into the textile and garment industry have started pouring back, continuing to expand existing projects, with a focus on deeper exploitation of existing export markets.
The biggest increase in investment capital in the textile and garment sector in the year so far is the expansion of the plant to manufacture polyester fibre products by Taiwanese Polytex Far Eastern Group in Binh Duong Province.
This investor has been granted a license to increase investment capital by an additional US$485.8 million less than two years after making the first investment in the project, raising the total investment to nearly US$760 million.
Although the investment in Vietnam was admittedly to take advantage of business opportunities from the Trans-Pacific Partnership (TPP) Agreement, Far Eastern affirmed that even if the TPP is suspended, their capital increase plan will remain unchanged.
Earlier in June 2015, this investor was granted an investment certificate for the construction of the plant. The facility covered 99 hectares with the investment value of US$274 million for the first phase.
Vietnam Textile and Apparel Association (VITAS) said that a number of Korean investors are also planning to expand their production in Dong Nai and Binh Duong with the ambition to exploit export markets in the near future.
The decision to increase capital in the context that textile and garment export has just undergone a difficult year shows the confidence of foreign investors in the sector.
Domestic textile and garment enterprises also have not lose sight of the expansion trend. Accordingly, Vietnam National Textile Garment Group (Vinatex) will launch the construction of Phu Cuong Fibre Factory phase II in Phu Cuong commune, Dinh Quan district, Dong Nai Province.
This project’s scale is as same as the first phase, with a designed output of over 5,000 tonnes of yarn per year, and holding a total investment of more than VND460 billion (US$21.85 million).
In addition, the construction of Nam Dinh Fibre Factory phase II is also included in the 2017 investment plans of Vinatex, with the total investment of more than VND300 million (US$14.25 million), serving export products.
According to Cao Huu Hieu, head of the Investment Department at Vinatex, the investment will be made regardless of the TPP’s fate. These projects will produce inputs with an aim to enhance added value for the textile and garment sector and reduce sewing projects.
Vu Duc Giang, chairman of the VITAS, said that in the second half of 2016, the purchase and sales transactions in the Vietnamese textile and garment sector experienced signs of slowdown.
However, the export performance in the first quarter of 2017 encouraged enterprises a great deal.
The export turnover of US$6.7 billion, up 12-13% quarter-on-quarter, showed that foreign importers still praise the capacity of Vietnamese textile and garment exporters.
Than Duc Viet, deputy director general of Garment 10 Joint Stock Company, told VIR the textile and garment industry is the first in Vietnam to join the global supply chain and enterprises in the industry are quite sensitive to market conditions in each period.
“Without the TPP, Vietnamese enterprises still have export markets. The reality is that the more difficulties Garco 10 Corporation – JSC faces, the stronger it will go on the offensive, investing in in expansion and acquisition of machinery, equipment, as well as factories from weaker enterprises,” he said.
According to VITAS, in case the TPP falls through or is started without the United States’ participation, the textile and garment sector also has a complementary host of free trade agreements (FTAs) with other partners, such as Japan, the Republic of Korea, and the European Union, to achieve sound growth.
The industry’s exports account for only three per cent of the total textile and garment imports in the EU and 11% in the United States.
In case Vietnamese companies can take full advantage of these markets, there will be opportunities to achieve breakthrough growth in the 2018-2020 period.