Vietnamese textile sector attracts $750 mn FDI in H1

01 Aug '17

3 min read

The Vietnamese textile and apparel industry attracted more than $750 million in foreign direct investment (FDI) in the first six months of 2017, mostly from investment capital increases in existing projects, despite a reduced number of FDI projects in recent years and the US withdrawal from the Trans-Pacific Partnership (TPP) last January.

The years 2014 and 2015 are considered the most successful for FDI in the country's textile industry. But the number of FDI projects in this sector decreased considerably from the beginning of 2016, a state-controlled English-language newspaper in Vietnam reported.

Except for the notable $220 million Chinese investment in a polyester synthetic fibre plant in the southern province of Tay Ninh, capital flows comprise mostly capital expansion investments in existing projects.

According to the Vietnam Textile and Apparel Association (VITAS), the southern provinces of Dong Nai and Binh Duong attracted the two projects with the largest investment capital increase in the textile industry in 2017.

In Binh Duong, Taiwan's Far Eastern Group raised its investment capital by $485.8 million in its polyester and synthetic fibre production project, Far Eastern Polytex (Vietnam) Ltd. The project was initiated in June 2015 with a registered investment capital of $274 million. This capital push makes the project one of the biggest to be certified in 2017 and will push the total registered investment to about $760 million.

In the northern province of Bac Ninh, Samsung Display Vietnam registered a $2.5 billion capital increase in its projects. Taiwan's Tainan Spinning Company Ltd, also increased its investment capital by $50 million in Long Thai Tu Spinning Factory at Long Khanh Industrial Zone in Dong Nai.

Tainan Spinning began constructing the Long Thai Tu Spinning Factory-Phase 2 at Nhon Trach 2 Industrial Zone in Dong Nai before the capital raise. The project, consisting of a main factory, four finished product warehouses, a garage for workers, and other auxiliary structures, began operation in 2016 end. The company plans to build its factories in Vietnam to take advantage of the country's existing export markets.

According to VITAS vice chairman Le Tien Truong, textile projects attracting foreign capital after the United States withdrew from the TPP is a sign of conducive investment environment. The country's textile and apparel industry still benefits from a number of free trade agreement, such as the Vietnam-EU FTA, the Vietnam-South Korea FTA, and the Vietnam-Japan FTA.

The value of garment and textile exports in Vietnam, one of the largest textile exporters in Asia, has increased 3.6 times in the last decade, from $7.78 billion in 2007 to $28.02 in 2016, accounting for 16 per cent of total export turnover. The industry is expected to grow by 7 per cent in 2017, reaching $30 billion in total export value.

Competitive labour costs and preferential policies have made Vietnam the ideal destination for investors in the textile industry in recent years. FDI in the last decade has helped the country turn one of the five largest textile and apparel exporters in the world. At the moment however, Vietnamese textile and apparel products account for a mere 3 per cent of the EU market. (DS)

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