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Foreign investment in garments declines
The country's textiles and garment sector is seeing a decline in foreign direct investment (FDI) during the past several years, and the sector is being held back by its reliance on imports of raw materials, according to the Viet Nam Textile and Apparel Association.
FDI in the sector has fallen from an annual average of US$460 million during the peak period of 2000-08, to an annual average of $450 for the last three years, and the number of FDI projects has also decreased during the past three years.
Total registered capital from foreign investors in the sector for 2009 and 2010 was at $185 million and $169 million respectively. The figure was about $450 million last year.
The Viet Nam Textile and Apparel Association (Vitas) said FDI capital pumped into the sector remained low due to the negative impacts of the global economic crisis.
Foreign investors also focused heavily on garment making that required low investment capital and out-dated technologies. They paid less attention to the production of raw materials and accessories such as fabrics and processing such as dyeing, that required high investment capital and high technologies and no promise of a quick return on investment, said the association.
Le Quoc An, former chairman of the association, attributed the situation to the fact that Viet Nam still lacked industrial zones specialising in fibre, textile and dyeing on large enough scale to attract major overseas companies.
Viet Nam earned $14 billion from textile and apparel exports last year, but it had to spend up to $9 billion on imports of raw materials and accessories.
An said the reliance on imports was the Vietnamese clothing industry's greatest weakness. However, he said it was also a good opportunity for the sector to organise its investment priorities and plan for solid growth in the future.
"Once the sector does this, giant foreign investors will enter Viet Nam," An said.
He added that the participation of the foreign investors in the garment sector, especially since the country adopted more liberal economic policies, had helped Viet Nam put its name on the global apparel map and become the 8th largest garment exporter in the world and the 4th largest exporter to the US market.
The major textile and garment investors in Viet Nam include South Korea, Taiwan, Hong Kong, Japan, Germany and Thailand.
South Korean companies have recently made great contribution to the country's clothing exports.
South Korea's Hansae Co is one of the top ten foreign garment exporters in Viet Nam, with export turnover more than $160 million during the first five months of this year.
Despite the global economic recession, the company plans to put into operation its third factory in Viet Nam, a project worth $30 million.
The factory, located at Tan Huong Industrial Zone, in the southern province of Tien Giang, will have an annual production capacity of 30 million clothing products.
The second and first facilities in HCM City and the southern province of Tay Ninh have a combined capacity of more than 70 million products per year.
Kim Chul Ho, Hansae Viet Nam's director general told Vietnam Investment Review that thanks to strong business result in the first half, the enterprise hoped it would reach an export value at $400 million by the end of this year
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