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Vietnamese garment sector's dependence on imports to continue
28
Oct '11
Vietnamese garment and textiles sector will have to continue its dependence on imports of raw materials owing to the ongoing financial crunch.

The garment and textiles industry in Vietnam has temporarily stopped investing in most of its raw material production projects, according to Vu Duc Giang, Chairman of Vietnam Textile & Apparel Association.

As a result of stoppage of several large scale projects in dyeing and fabric making, the country may miss many of the goals set in the 2011-2015 five-year development plan, that has a vision until 2020.

The five-year plan envisages setting up of 20 plants with a combined capacity to produce 7,000 tons of fabric annually by 2015. Under the plan, 96 garment factories with an annual capacity to produce three million pieces and 14 dyeing units with an annual capacity of 22 million sq. m. are also planned to be set up during the five-year period.

For all the new projects, a total capital investment of about US$ 202 million was estimated to be required, but most of these projects are likely to be suspended owing to the current capital shortage, Mr. Giang said.

In present circumstances, the garment and textiles sector has proposed to call for linkages and joint ventures with overseas manufacturers for setting up some of the projects. However, given the current economic scenario, even that looks difficult, Mr. Giang added.

In addition to the large amount of capital required for construction of the dyeing projects, a lot of capital is also required for purchase and installation of machinery and waste treatment systems in the dyeing plants, according to Nguyen Son, Chairman of the Vietnam Cotton and Spinning Association.

Moreover, dyeing units also have a greater risk of incurring loss owing to high production costs, which make it difficult to compete with countries like China, Taiwan and South Korea. Hence, both domestic and overseas investors are hesitant to invest in projects to set up dyeing units, Mr. Son added.

During January-September of current year, Vietnamese garment and textile sector registered an export turnover of US$ 10.5 billion, but more than US$ 9 billion were spent on raw material imports, which included US$ 5.024 billion on fabric, US$ 1.160 billion on yarn, and US$ 805 million on cotton.

Fibre2fashion News Desk - India

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