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Textile, garment stocks to get boost from FTAs

Update: October, 31/2015 - 09:31
"FDI will help Viet Nam's textile-garment industry provide more job opportunities for local people and produce cheap and high-quality products for both domestic and overseas markets", Giang said. — VNA/VNS Photo Danh Lam
HA NOI  (VNS) — Vietnamese textile and garment stocks may receive a boost after Viet Nam completes free trade agreements with other countries and organisations, experts said yesterday at a meeting.

Dang Tran Hai Dang, deputy head of Vietinbank Securities Corporation's Market Analysis, said that textile-garment stocks were among the strongest gainers in the last 12 months with an increase of 27 per cent in value, behind only construction material producers.

He said that most local producers have fulfilled their production capacity until the end of this year and lower input costs had helped them increase profit margins.

He said that the growth potential for textile-garment stocks was along side the potential for the Vietnamese stock market as there are many positive factors that can boost the local market such as the price to earning ratio now is 12, proving that the country has a lot of investment opportunities compared to other markets such as Malaysia with P/E of 17.31 and Thailand with P/E of 16.53.

Vu Duc Giang, president of the Vietnam Textile and Apparel Association (VITAS) said that the textile and garment industry would be among three industries receiving the most benefits from the free trade agreements (FTAs) that the country is now finalising, including the Trans-Pacific Partnership.

He said that Vietnamese textile-garment producers were now expanding production all around country and some of them, such as Viet Tien Garment JSC and Garment 10 Corporation were completing procedures to be listed on the stock market in the near future.

At the moment, some of textile-garment producers are already listed on the stock market, such as Binh Thanh Import-Export Production & Trade JSC (GIL), Everpia JSC (EVE) and Thanh Cong Textile Garment Investment Trading JSC (TCM).

The industry has recorded a good annual growth rate of 17-18 per cent since Viet Nam joined the World Trade Organisation (WTO) in late 2006.

Last year, the textile-garment industry exported US$24.7 billion, equal to 16 per cent of the country's total export value, and Viet Nam was among top six textile-garment exporters in the world with China, EU, Turkey, Bangladesh and India.

This year, VITAS targets a maximum export value of $28 billion to make Viet Nam a top five textile-garment exporters.

Since the TPP talks reached final agreement in early October, Giang said that the TPP and other FTAs were expected to help boost the foreign direct investment (FDI) in the industry when they take effect.

FDI would provide huge additional capital for local companies, especially material producers as VITAS was trying to raise the percentage of local-made materials in textile-garment industry from the current 50 per cent to 70 per cent in the next three years, he said.

"FDI will help Viet Nam's textile-garment industry provide more job opportunities for local people and produce cheap and high-quality products for both domestic and overseas markets", Giang said.

In addition, Vietnamese companies would have many chances to learn from foreign business models and receive investment from them through buying shares and increasing foreign ownership in local companies, he said.

However, the local textile-garment industry would face some challenges from international partnerships, he said.

He said that the industry lacked a long-term development strategy for the next 30-40 years and the quality of human resources was insufficient to meet the industry's demand for managing the production chain.

The country must be aware of environmental issues related to textile-garment factories – which are often built in coastal areas and the Government should reconsider the monetary policy that may make Vietnamese companies less competitive in both domestic and global markets, he added. — VNS


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