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Foreign investors gung-ho on Vietnamese low-cost garment output
12
Apr '11
A rise in the production costs of the other nations is likely to bring advantage to Vietnam, as the country would turn to be a cheaper production destination for the foreign textile and garment trade.

As revealed by the Thai Garment Manufacturers Association (TGMA), increasing costs of domestic production have compelled five leading garment producers in Thailand to shift to Vietnam, signifying a collective transfer of investment worth $50 million.

The five firms include Hi-Tech Apparel Company, Liberty Garment Co, Hong Seng Knitting Co, Nice Apparel Company and Golden Thai Industry Company. Units of these firms are likely to start their operations in Vietnam this year itself, with around 24,000 workers.

Also, there are expectations that, owing to the weakening tendency of Thai labour, other garment firms from Thailand too may shift to countries with cheap labour like Vietnam, Cambodia, Bangladesh, Indonesia and probably Myanmar.

TGMA President, Sukij Kongpiyacharn said that, as the Thai government is mulling over raising the minimum wages by 25 percent over the next two years, this certainly would lay adverse effect on the competitiveness of the Thai garment industry.

Kenny Wong, Financial Controller of Smart Elegant International, a garment firm based in Hong Kong, while speaking in Vietnam said that, the labour cost in Vietnam still remain to be lower than that of the other countries, while the expertise of these labour is quite similar to that of the workers in China.

He said that, many of their foreign buyers are also looking at Vietnam as an imperative and consistent destination for production, and this is one vital reason which is persuading the garment manufacturers in Thailand to invest in Vietnam.

He stated that, his firm is to establish a new factory in Ho Chi Minh City, and would shift all the manufacturing work from China to this factory, in case if it fails to manage and stand against the rapidly-rising costs of production in China. This new factory would employ a workforce of around 1,800 people, he added.

Nevertheless, he stated that, as a higher numbers of garment and textile producers from foreign countries are establishing their production base in Vietnam, this would raise the pressure of labour supply.

In view of this, they would be required to provide more incentives and allowances to the workers, in order to retain them in their companies, he added.

Fibre2fashion News Desk - India

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