|A worker at Shinwon Ebenezer, a Korea-invested garment firm in northern Thai Nguyen Province. Foreign investment in the textile and garment sector is increasing rapidly as firms look to take advantage of the Trans-Pacific Partnership Agreement when it comes into effect. — VNA/VNS Photo Trong Dat
HCM CITY (VNS) — Foreign investment in the textile and garment sector is increasing rapidly as international firms seek to take advantage of the benefits Viet Nam's will potentially derive when the Trans-Pacific Partnership Agreement comes into being.
Several companies from mainland China, Hongkong, Taiwan, Japan, the US and South Korea have made large investments in the sector, according to Thoi Bao Tai Chinh (Finance Times) newspaper.
The textile and garment industry in the TPP member countries is expected to benefit the most from the trade deal.
For instance, products made from domestically sourced materials or imported from other TPP member countries will enjoy zero tariff when exported to signatory countries.
According to Le Tien Truong, vice chairman of the Viet Nam Textile and Apparel Association, up to 60 per cent of the country's textile and garment exports go to member countries.
Analysts estimate that once Viet Nam becomes a TPP member the average tax on Vietnamese garments will come down from the current 17-18 per cent to zero.
In that scenario, exports to the US market could increase three-fold from US$8.6 billion last year to $20 billion in 2020.
It is with an eye on such opportunities that foreign firms are scrambling to invest in the Vietnamese textile and garment industry.
In June South Korea's Dong-IL Corporation began building a $52 million yarn factory in Dong Nai Province's Long Thanh District.
The plant will have an annual capacity of 9,000 tonnes of fibre when it opens in mid-2015.
In HCM City, Forever Glorious, a subsidiary of Taiwan's Sheico Group, announced it would set up a $50 million weaving-dyeing-garment production chain for premium sports garments.
In March city authorities had issued a licence to China's Gain Lucky Limited, a subsidiary of Shenzhou International, for building a $140 million centre for fashion design and garment manufacture. The company produces garments for brands like Nike, Adidas, and Puma.
Also in March Hong Kong-based Esqual Group opened a $25 million garment plant in the northern province of Hoa Binh.
Not long ago the northern Province of Nam Dinh issued an investment license to China's Jiangsu Yulun Textile Group for a $68 million textile, dyeing, and yarn plant at the Bao Minh Industrial Zone.
Besides the new investments, many existing foreign garment firms have increased their investments to expand their activities.
Speaking about the strong foreign investment flow into the sector, Dang Phuong Dung, deputy secretary of the Viet Nam Textile and Apparel Association, said the chronic bottlenecks in the weaving and dyeing sectors in terms of intensive investment, experience, technology, and workforce have been addressed.
According to analysts, the fact that more and more foreign firms are investing in the textile and garment industry would encourage Viet Nam to quickly wrap up final negotiations for the agreement.
Becoming a TPP member would offer not only the textile and garment industry more opportunities to develop but also its support industries and even the economy as a whole, they said, pointing also to other obvious benefits like employment generation. — VNS