VietNamNet Bridge – Though growth in investment in the textile & garment sector has slowed down, it is still attractive in foreign investors’ eyes.

The years 2014 and 2015 witnessed the massive landing of foreign textile & garment enterprises in Vietnam. In 2015 alone, $2 billion worth of foreign direct investment (FDI) capital was poured into the textile & garment sector. The three biggest projects alone have registered capital of $1 billion. 

Hyosung Dong Nai, a Turkish invested yarn manufacturer, has investment capital of $660 million. 

Meanwhile, a textile & garment material factory developed by Polytex Far Eastern from Taiwan has registered capital of $274 million, and Worldon Vietnam, a Hong Kong invested enterprise, $160 million.

However, the wave of FDI pouring into the textile & garment sector has reached a lull this year. According to the Foreign Investment Agency (FIA), the list of large FDI projects registered in the first five months of the year did not include textile & garment projects. 

Meanwhile, the projects capitalized at hundreds of millions of dollars were all in paper production, real estate, electronics and wind power.

Pham Xuan Hong, Chair of the HCM City Textile, Clothing, Embroidery and Knitting, commented that foreign investors have decided to delay their projects because they need to waitfor news about TPP (Trans Pacific Partnership Agreement), not because they see problems in Vietnam economy.

Nguyen Hong Giang, deputy chair of the Vietnam Cotton & Yarn Association, commented that though capital flow has slowed, Vietnam is still very attractive to foreign investors. 

Giang cited a report of the US Fashion Industry Association as saying that 68.8 percent of foreign retailers and brands want to choose Vietnam as the top-priority destination point if they have to shift orders from China. 

In the past, Bangladesh was the priority country. However, with complicated political issues, the country is no longer as popular.

Vietnam has attractive production costs and preferential tariffs.

The production costs in Vietnam, including expenses for land, energy and labor, are much lower than that in China. Vietnam’s exports can enjoy preferential tariffs thanks to FTAs between Vietnam and Japan, Vietnam-South Korea and Vietnam-EU. 

Therefore, Giang believes the FDI wave will continue in the time to come, while the information about the election in the US will be a factor in pushing the Chinese second FDI wave in Vietnam.

Commenting about the fact that Vietnam has lost big orders to the hands of its rivals, including Cambodia and Myanmar, Giang said ‘there are problems with world demand’.

He cited a report of a consultancy firm as saying that the number of orders placed with Cambodian producers has dropped by 30 percent.

Vietnamnet

12/10/2016

Quote from: “http://english.vietnamnet.vn/fms/business/165023/textile—garment-companies-still-attract-foreign-investors.html“

The European Union and Vietnam are set to implement their bilateral free trade agreement in early 2018.

The “EU-Vietnam FTA: New Opportunities” conference

Since signing the agreement in December, 2015, both sides have sped up legal revision process towards its verification.

A conference entitled “EU-Vietnam FTA: New Opportunities” was held in Brussels in September. The delegates were informed that both Vietnam and the EU have worked to keep the agreement on track.

Mutual benefit

When the EU-Vietnam Free Trade Agreement comes into effect, it will generate great tariff advantages for commodities of both sides. 

The EU will remove import tariffs for about 85.6% of Vietnamese goods immediately and 99% of its tariffs after 5 years and clear all import tariffs after 7 years.

Vietnam commits to remove 65% of import tariffs for EU commodities when the agreement comes into effect and 99% of its tariffs within 10 years.

EU machines and equipment will be tax free when the FTA comes into force or within 5 years. Vietnam agrees to reduce the import tax rate to zero for cars and motorbikes in the 9th and 10th year. 

Taxes on wine, beer, pork, and chicken will also be cleared within 10 years. EU Chief Negotiator for the EVFTA Mauro Petriccione said Europeans should realize that their welfare depends on trade. 

They should be aware that FTAs contribute a great deal to their prosperity, Mauro said.

Consumers in Vietnam and the EU will be able to buy high quality products at reasonable prices. 

Businesses on both sides will face tough competition as well as a great opportunity to penetrate and earn profits from the other’s markets. 

With the establishment of the ASEAN Community, EU businesses can expand their business with ASEAN countries through Vietnam.

To keep the EVFTA on track

To ensure the EVFTA’s progress, Vietnam has adopted inventive policies to attract foreign investment and open government procurement markets to EU businesses. 

Vietnam’s Chief negotiator for EVFTA, Deputy Minister of Industry and Trade Tran Quoc Khanh said, “We’ve worked out a specific roadmap and both sides have closely followed the progress. This is the 2nd legal review and one or two more legal review sessions will be held before the end of this year. We’ll have to translate the documents before entering other stages.”

The EU’s Chief Negotiator for the EVFTA Mauro Petriccione said the EU has a rule for fast ratification of the agreement before its member states ratify it. Vietnam and the EU are set to put the EVFTA into effect in 2018.

“We are on the legal review step and we have kept to our schedule. There are a lot of technical issues but we expect to complete legal review by the end of this year. Then we have to translate the agreement into Vietnamese and all the EU languages. We hope to reduce the time for translating the documents,” he said.

It took 2 and half years to conclude the EVFTA negotiation, an impressively short time for an FTA negotiation.

Vietnamnet

25/09/2016

Quote from: “http://english.vietnamnet.vn/fms/business/164273/vietnam–eu-set-to-implement-fta-in-early-2018.html“

Vietnam’s textile-garment exports still increased in the first first eight months of this year but at a slower pace than in the same period last year.

Vietnam shipped abroad US$18.7 billion worth of textile-garment products in the January-August period, up 4.4% year-on-year, according to the Vietnam Cotton and Spinning Association (VCOSA).

VCOSA vice chairman Nguyen Hong Giang said the growth slowed compared to that in previous years and below expectations due to a lack of orders and falling demand on global markets.

If the tough situation continues, it will be hard for the sector to earn US$29 billion in revenue this year, which is even lower the target of US$31 billion set earlier this year, Giang said at a news briefing on Tuesday to introduce the 16th Vietnam International Textile and Garment Industry Exhibition (VTG 2016) slated to take place in November.

The decrease in export orders resulted from mounting competition from rivals including China, India, Cambodia, Bangladesh, Myanmar, and Sri Lanka. In addition, Cambodia and Myanmar enjoy tax incentives when selling textile-garment products to the European Union (EU), making their products even more competitive.

In the past two weeks, a number of textile and garment exporters have had no orders to fulfill, said Pham Xuan Hong, chairman of the HCMC Association of Garment-Textile-Embroidery-Knitting (AGTEK).

Given fierce competition on global markets, Hong suggested firms invest in advanced machinery and equipment, choose high-quality materials to cut production costs and raise the competitiveness of their products, and focus on free-on-board (FOB) contracts.

Besides competition, domestic apparel firms are grappling with difficulties, brought about by the minimum wage rise and regulations on inspections.

Fewer foreign direct investment (FDI) approvals have been registered for the textile and garment industry this year than in previous years.

In 2014 and 2015, many foreign enterprises rushed to invest in the sector to capitalize on opportunities from the Trans-Pacific Partnership (TPP) trade agreement, which allows firms to enjoy tax breaks when exporting products to member states.

But investors are in standby mode in the U.S. election year as it the election result could affect the future of the multilateral trade pact, Giang of VCOSA said.

Hong of AGTEK shared Giang’s view, saying that the implementation of FDI projects in Vietnam’s garment and textile sector may be slower than scheduled as investors would wait for the U.S. presidential election result.

But Giang said Vietnam is still attractive to foreign investors thanks to its free trade agreements with Japan, South Korea and the EU, not to mention the fact that the production cost in Vietnam is cheaper than in many other markets.

Up to many foreign retailers want to choose Vietnam to invest instead of China, Giang said, citing data from the U.S. Fashion Industry Association (USFIA).

Vietnamnet

25/09/2016

Quote from: “http://english.vietnamnet.vn/fms/business/164245/textile-garment-export-growth-cools.html“