Deluge of capital flows into garment projects

(VEN) – Domestic garment enterprises are accelerating investment expansion to take advantage of the Foreign Direct Investment (FDI) inflows in weaving, dyeing phases and grasp good opportunities when the Trans-Pacific Partnership (TPP) negotiation ends.

Domestic textile and garment enterprises have been investing a lot of capital in garment projects

Domestic textile and garment enterprises have been investing a lot of capital in garment projects

Statistics from the Ministry of Trade and Industry showed that in the first eight months of this year, textile industry continued to maintain a high growth with production of dresses up by 11.7 percent and that of ready-made garments increasing by 45.8 percent year on year. Secretary General of Vietnam Textile and Apparel Association Dang Phuong Dung said, apart from the increased number of orders, operations of a series of textile plant projects from early this year is an important factor that created a new momentum for the industry.

Dang Phuong Dung also said to take advantage of FDI flows into weaving, dyeing and fiber, and also a preparation step for benefits when the TPP is signed, the domestic garment and textile enterprises have been investing a lot in the textile projects.

In July 2013, the Vietnam National Textile and Garment Group (Vinatex) launched Vinatex Huong Tra Garment Factory project in Tu Ha Industrial Zone, (IZ) Huong Tra Town, Thua Thien Hue Province with total investment capital of VND157.8 billion, 34 sewing lines and more than 3,000 employees. Plant construction is scheduled for completion in November 2013.

In this October, Vinatex will also launch Vinatex Bong Son Garment Factory project in Bong Son IZ, Hoai Nhon District, Binh Dinh Province with total investment capital of VND205 billion, 50 sewing lines. The project is completing procedures with commitments to the environmental protection and water, electricity supplies. As planned, the project is expected to complete in February 2014 and create 3,200 local jobs.

According to Vinatex’s permanent Deputy Director Le Tien Truong, the two above projects are only one part of the group’s package. Earlier in March 2013, it already launched the project Vinatex Tu Nghia Garment Factory at La Ha IZ, Tu Nghia Commune in Quang Ngai Province with total investment capital of VND139.2 billion.

In addition, a large source of FDI will flow in the garment industry as Hong Kong Crystal Group will soon invest US$120 million, equivalent to VND2.340 trillion in Tinh Loi Garment Project, Hai Duong Province. TAL – Hong Kong’s Textile Group is also preparing to expand investment in Vietnam with the project on yarn production, weaving, dyeing and garments with total investment of phase 1 of approximately US$ 200 million.

Earlier, Unisoll Vina Company of Hansol Textile Ltd, the Republic of Korea was licensed to build a factory producing garments and leather products with a capacity of 90 million units per year. The project has a total investment capital of US$50 million.

There are also concerns about the superiority of FDI enterprises over domestic textile enterprises thanks to their closed-end investment, from producing materials to garment products.

Dang Phuong Dung said Vietnam’s textile industry remains much dependent on the imported materials and it’s very difficult for Vietnamese companies to benefit from TPP without investment in raw materials. However, since early this year, domestic firms have invested no less in scale than the FDI projects. For example in the first half, Vinatex launched three fiber production projects, including Phu Bai Fiber Factory 2, Vinatex Hong Linh and Dong Van fiber factories. In addition, a series of material production projects are also progressing like PVTEX Nam Dinh and Phu Hung Fiber Factory in Thua Thien Hue Province./.

By Viet Nga