FDI flow continues to pour into textile-garment industry

In the past 10 months, nearly 20 foreign firms invested hundreds of millions of US dollars in Vietnam's garment industry, the English language news portal VietNamNet Bridge reported.

In early October, Hong Kong’s TAL Group was licensed to invest US$ 600 million to build a fibre production, knitting and fabric dyeing factory at the Dai An Industrial Zone in Hai Duong province.

TAL has invested in the garment industry in Vietnam since 2004 with a plant in Thai Binh province. Its products have been exported to the US.

TAL Apparel Limited of Singapore on November 4 received an investment certificate from local authorities of the northern province of Vinh Phuc, paving the way for the Singaporean giant to construct a US$ 50 million textile plant.

Local officials approved for the plant to be constructed at Ba Thien 2 Industrial Park in Binh Xuyen commune.

It is the largest foreign invested project that has received approval to date in the province and, once completed, it is expected to generate 3,500 new jobs and contribute VND 40 billion to the national budget annually.

Construction is expected to be completed by next September.

Previously, Nam Dinh licensed a US$ 68 million fibre-weaving-dyeing project in the Bao Minh Industrial Zone. The project, invested by Chinese Yulun Jiangsu Textile Group, is expected to go into operation in mid-2016.

In the south, many corporations of Taiwan and Hong Kong have also strengthened their investments in the textile-garment industry.

In early October, Haputex Development Limited (Hong Kong) and Viet Huong Investment and Development JSC of Vietnam formed a US$ 120 million joint venture named Nam Phuong Textile Limited in Binh Duong province, specialised in weaving.

This project will be put into operation in early 2016, employing about 3,000 workers. Each year, this factory aims to supply 96 million metres of fabric, 15,000 tonnes of fibres and 10 million of garment products to the US and European markets.

In the Southeast Cu Chi District Industrial Zone, Ho Chi Minh City, two projects with a total investment of nearly US$ 200 million of two foreign companies are being implemented.

Worldon Vietnam Co. has invested in a luxury garment factory, which can produce 80 million of products per year, with US$ 140 million of investment capital. The factory is expected to put into operation next June.

Sheico Vietnam Co., Ltd. is building a fabric weaving and garment project with a total investment of US$ 50 million. The project is expected to be completed this month.

Apart from building factories, many foreign corporations have bought shares or cooperated with Vietnamese partners.

According to Nikkei Asian Review, trading firm Itochu will invest in the Vietnam National Textile and Garment Group (Vinatex).

Itochu will soon acquire about five percent of Vinatex's stock for more than JPY 1 billion (US$ 9.25 million), making it Japan's first leading non-financial company to buy into a Vietnamese State-owned firm.

This information was confirmed by Chairman of Vinatex's Executive Board Tran Quang Nghi in an interaction with Tuoi Tre (Youth) Newspaper.

He added that Itochu had purchased some Vinatex shares through a normal transaction, not as a strategic shareholder of Vinatex.

As Vietnam's largest state-owned textile company, Vinatex operates about 200 factories around the country, of which about 30 are involved in sewing garments for Itochu under a contract.

Itochu currently does business with about 100 Vietnamese textile companies, ranging from the procurement of raw materials, sewing, to supplies suits, shirts and other products to Japan, the United States and Europe. It is the largest Japanese firm in the country's textile industry.

Phong Phu Corporation - one of the biggest enterprises in the Vietnamese industry - has been also eyed by many foreign investors. In late April, Phong Phu Corporation and Japan’s Hirose Shokai Company Ltd signed an agreement to establish a joint venture firm called Linen Supply Services Company Ltd (LSS).

The new company will produce textile products such as cotton towels, pillows, blankets and curtains, and offer high-quality laundry services for five-star hotels and high-class apartments in Ho Chi Minh City and its surrounding areas.

It will be located in the Giang Dien Industrial Zone in the southern province of Dong Nai and will have a total investment of over US$ 3 million in the first phase. Its factory covers an area of 3,168 square metres and is equipped with modern equipment from Japan.

It has a laundry capacity of handling 18 tonnes of material every day. In the second phase, the project will increase its capacity to 50 tonnes of material per day, mainly serving Ho Chi Minh City and its nearby provinces. It will focus on producing table cloth, uniforms and items for hospitals.

Keitaro Hirose, Chairman of the Management Board of Hirose Shokai Company Ltd, said that cooperation with Phong Phu in its investment project in Vietnam meant that they would work with the Vietnamese company and the textile industry in Vietnam for a long-term period.

Hirose also hoped to spread LSS’s presence in many cities in Vietnam in the future by implementing investment studies in Hanoi, Da Nang and Nha Trang.

According to the Ministry of Planning and Investment, the number of foreign-invested enterprises (FDI) pouring capital into the textile industry is growing quickly.

So far this year, nearly 20 new projects of FDI firms have been approved by local governments.

However, the Vietnam Textile and Apparel Association (Vitas) has warned of the expanding gap between FDI and domestic firms in the textile-garment sector.

A Vitas representative said the number of FDI textile-garment firms is small, but their scale is very large. Vietnam’s annual textile-garment export revenue was more than US$ 20 billion and FDI enterprises contributed to US$ 12 billion.

Currently, investment in China is facing difficulty and Vietnam has become a good place for investment. But this also can create major concern for Vietnamese enterprises.

Pham Xuan Hong, Vitas Vice President, sees it as a chance for Vietnamese enterprises to develop their technology and buy materials at low prices.

Source: VNA

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