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Vinatex to invest in rural areas
Jul '11
The Vietnam National Textile and Garment Group (Vinatex) has come out with a 10-year (2011-20) plan which envisages setting up of new manufacturing facilities in rural provinces rather than in urban areas.

Vinatex expects the shift towards countryside to prove beneficial on several counts. It would not only solve the problem of labour shortage, but would also result in a decrease in production costs owing to lower land rents.

Moreover, it would help cities like Ha Noi and HCM City by easing infrastructure and other pressures relating to transportation, increasing number of immigrants, and environmental pollution.

Under the 10-year plan, Vinatex would invest more than US$ 2 billion to set up 31 fibre manufacturing facilities, 21 dyeing and weaving units, and 164 sewing factories.

After conducting a series of surveys, Vinatex has been able to short-list some areas as ideal investment locations. These are Phu Tho, Thai Nguyen and Tuyen Quang provinces in the north; Quang Tri, Nghe An and Thanh Hoa in the north-central region; Binh Dinh, Phu Yen, Quang Nam and Thua Thien-Hue in the south-central region; and Dong Thap, Tien Giang and Tay Ninh in the south.

These areas have benefits like availability of labour, and comparatively low rents of land. However, these localities lack adequate infrastructural facilities, especially those needed for export business, which may increase the transportation costs.

On the other hand, these areas would benefit by the establishment of textiles and garment facilities, as it would generate employment and enhance the income of the local people.

As per last year's data, there are 3,710 textiles and garment companies in Vietnam. 62 percent of which are located in the southern part, most of them in HCM City and few in Binh Duong, Long An and Dong Nai provinces. Among the 38 percent of industries located in the North, Ha Noi accounts for about half of them.

The main reason for Vinatex deciding to shift the labour intensive textile industry to the countryside stems from the fact that the industry had to compete with other sectors to get sufficient number of workers to meet export deadlines. The textiles and garment industry was unable to offer higher wages as other sectors were able to, hence it lost out on many occasions.

Presently, the average salary of textile workers in urban areas is US$ 120 per month, which is very low and is expected to increase in the coming years, which the textile sector may not be able to afford. Similarly, land rentals in the urban areas are also expected to rise enormously in the coming years, adding pressure to the already low profit margins.

The Vinatex report estimates that the number of people working in the Vietnamese textiles and garment industry would touch the one million mark in the next ten years, even after the use of modern technology and machinery to decrease labour demand.

Fibre2fashion News Desk - India

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