Vietnam textiles clearing the decks for FTAs
14:32, 2016/04/06
Vietnamese textile companies are getting ready for the introduction of a wide array of Free Trade Agreements (FTAs), hoping they will usher in an age of unparalleled growth and prosperity.
The Vietnam National Textile and Garment Group (Vinatex), the nation’s largest textile company, plans to invest US$91 million to construct a second plant on a 3.7-hectare site in the southern province of Kien Giang.
The plant, scheduled to open by the spring of 2017, will have 32 production lines and the capacity to produce 12 million items of clothing annually.
It is expected to bolster revenues from exports by US$37 million.
The company's first plant was erected in the same province in early 2015. With ready access the sea and a close proximity to Ho Chi Minh City, Kien Giang is rapidly transforming into a new thriving hub for the textile industry, thanks to FTAs.
Trade pacts such as the Trans Pacific Partnership (TPP) when they come into force will eliminate tariffs in many areas but, in principle at least, will only benefit clothing manufacturers sourcing materials from within the 12-member TPP community, due to the mechanism called the ‘rules of origin’.
Currently, most imports of sewing materials to Vietnam come from China, which did not take a seat at the TPP negotiating table.
Anticipation is as a result, growing that the local demand for materials and intermediary goods will increase in Vietnam, hence the upfront investments in the textiles supply chain and related activities.
An Phuoc, another textile company, is set to spend US$28.2 million (VND628 billion) to build a silk plant in Thanh Hoa Province in central Vietnam. Construction will start as early as April 2016 for a scheduled opening in February next year.
Overseas players are also eager to invest early. US-based Kraig Biocraft Laboratories, which produces artificial fibres, said in March it will establish a subsidiary in Vietnam along with a research base and a facility to produce test products.
It will also cooperate with the Vietnam government in studies pertaining to innovative, new material products and silkworm development.
In June of 2015, Taiwan's Far Eastern group broke ground on a plant in Binh Duong Province in southern Vietnam that had a budgeted cost of US$274 million. It will be the company's third production base following Taiwan and China.
The new plant will have a range of production lines capable of producing synthetic fibres, spinning and dyeing.
Last year, the Republic of Korea’s Rio Industries launched a plant in the central province of Quang Nam that had an initial investment of US$6 million, capable of producing 4,400 metric tons of synthetic fibre annually.
While the economic prospects for Vietnam look bright for foreign direct investment and the country's large textile companies, local small and midsized companies are not quite as enthusiastic about the FTAs.
They account for roughly 80% of Vietnam's 3,000 or so textile market and related companies.
Lacking the finances to increase capacity or build new facilities for materials production domestically, they stand to benefit marginally from the FTAs, and many could even suffer once they come into force.
The plant, scheduled to open by the spring of 2017, will have 32 production lines and the capacity to produce 12 million items of clothing annually.
It is expected to bolster revenues from exports by US$37 million.
The company's first plant was erected in the same province in early 2015. With ready access the sea and a close proximity to Ho Chi Minh City, Kien Giang is rapidly transforming into a new thriving hub for the textile industry, thanks to FTAs.
Trade pacts such as the Trans Pacific Partnership (TPP) when they come into force will eliminate tariffs in many areas but, in principle at least, will only benefit clothing manufacturers sourcing materials from within the 12-member TPP community, due to the mechanism called the ‘rules of origin’.
Illustrative image
|
Anticipation is as a result, growing that the local demand for materials and intermediary goods will increase in Vietnam, hence the upfront investments in the textiles supply chain and related activities.
An Phuoc, another textile company, is set to spend US$28.2 million (VND628 billion) to build a silk plant in Thanh Hoa Province in central Vietnam. Construction will start as early as April 2016 for a scheduled opening in February next year.
Overseas players are also eager to invest early. US-based Kraig Biocraft Laboratories, which produces artificial fibres, said in March it will establish a subsidiary in Vietnam along with a research base and a facility to produce test products.
It will also cooperate with the Vietnam government in studies pertaining to innovative, new material products and silkworm development.
In June of 2015, Taiwan's Far Eastern group broke ground on a plant in Binh Duong Province in southern Vietnam that had a budgeted cost of US$274 million. It will be the company's third production base following Taiwan and China.
The new plant will have a range of production lines capable of producing synthetic fibres, spinning and dyeing.
Last year, the Republic of Korea’s Rio Industries launched a plant in the central province of Quang Nam that had an initial investment of US$6 million, capable of producing 4,400 metric tons of synthetic fibre annually.
While the economic prospects for Vietnam look bright for foreign direct investment and the country's large textile companies, local small and midsized companies are not quite as enthusiastic about the FTAs.
They account for roughly 80% of Vietnam's 3,000 or so textile market and related companies.
Lacking the finances to increase capacity or build new facilities for materials production domestically, they stand to benefit marginally from the FTAs, and many could even suffer once they come into force.
15:12, 2024/11/14
North-South high-speed railway to open up new economic opportunities
The government proposes a design speed of 350 km/h for the railway to ensure a modern, integrated, and forward-looking infrastructure appropriate to Vietnam’s geographical and economic conditions.
17:25, 2024/11/07
Prime Minister calls on China to pilot border economic cooperation zone
This economic cooperation zone is an initiative proposed by China and has been under negotiation with several countries, including Vietnam, since 2007.
17:29, 2024/07/23
State-owned corporations set to pilot offshore wind power projects
Private and foreign investors are currently not being considered for pilot projects due to unresolved legal and security issues.
06:12, 2024/07/17
AIIB ready to fund Hanoi’s urban railway projects
Hanoi expects the AIIB to assist with planning, implementation methods, and financing strategies to rapidly deploy metro projects.
15:33, 2024/07/02
S.Korea’s industrial conglomerates to expand investment activities in Vietnam
Prime Minister Pham Minh Chinh welcomed the proposals, which are consistent with Vietnam’s green growth strategy.
11:29, 2024/05/08
Intel boosts Vietnam’s semiconductor workforce for ambitious goals
Kim Huat Ooi, Vice President of Manufacturing, Supply Chain and Operations and General Manager of Intel Products Vietnam, spoke to The Hanoi Times about Vietnam's semiconductor ambitions and Intel's contribution to making the country a global manufacturing and R&D hub.
- Vietnam among top investment destinations for SEA investors
- Vietnam looks to support FDI firms as global minimum tax looms
- Factors unlocking Vietnam’s potential in FDI attraction: HSBC
- Opportunity at hand: Leveraging global minimum tax for FDI attraction
- Vietnam: Leading destination for sustainable investment
- Vietnam targets to draw investment in hi-tech industries: Prime Minister