HCM CITY  (VNS) — Vietnamese garment and textile firms are increasing their investments in locally made raw materials in an effort to satisfy strict rules of origin set by free trade agreements of which Viet Nam is a member.

“The garment and textile sector has depended on imported raw materials for a long time, under FTAs that the country has already signed or will sign, we cannot rely on imported sources any longer,” Bui The Kich, chairman of Dong Nai Garment Corporation, said.

On average, the garment and textile sector has to import about 70 per cent of raw materials, he said.

The domestic content rate at his company has increased to 45 per cent, thanks to investments in producing nonwoven materials, he said.

Last year the company also invested VND300 billion (US$13.39 million) in building the Hung Long Industrial Complex in Dong Nai Province, targeting to become a concentrated garment and textile place, he said.

Vu Duc Giang, chairman of the Viet Nam Textile and Garment Association (Vitas), and chairman of Garment 10 Joint Stock Company, said domestic garment firms had been encouraged to invest in yarn, weaving and dye, but the safest and most suitable way was a capital contribution or purchase of a stake in domestic and foreign firms to ensure material supply sources.

In its investment plan for this year, the company plans to work with its partners to produce yarn, he said, adding that this would ensure material supply for products for export and domestic sale.

Nguyen Hong Giang, general secretary of the Viet Nam Cotton and Spinning Association, said Viet Nam enjoyed high export growth last year with total export revenue of $28 billion, but the domestic supply of raw materials and accessories was very modest.

For instance, the country needs about 8.5 billion metres of fabric annually, but it produces only three billion metres.

The supply of domestic fabric has not kept pace with demand, while both the yarn-forward rule of origin under the Trans Pacific Partnership (TPP), and the fabric forward rule of origin under the Viet Nam – EU free trade agreement require intensive local supply, he said.

Therefore, to be able to enjoy benefits from FTAs, Viet Nam must quickly increase capacity for fabric production.

Dang Phuong Dung, Vitas’s general secretary, said to maximise benefits from FTAs, besides Government support, domestic firms should invest more in upgrading their production technology, designs and quality to gain a firm foothold in the world market.

She called for closer co-operation among domestic garment makers and raw material and accessory producers.

According to the Ministry of Industry and Trade, Vietnamese garments have to pay an average tariff duty of between 12-30 per cent when exporting to the US and EU.

For example, exports worth $10 billion require a tariff duty of $1.7 billion.

Once the TPP comes into force, tariffs will fall to zero, enhancing Vietnamese garments’ competitiveness, the ministry said.

According to Vitas, rules of origin, including the yarn–forward rule of origin, of FTAs will pose a business challenge, but in the long term this will motivate businesses to improve investment strategies and adjust production to meet market demand.

Each firm must establish its own supply chain or join hands with counterparts to form a supply chain in order to add more value to their products as well as improve competitive capacity, Vitas said.

With tariff advantages under free trade agreements, the garment and textile sector expects to enjoy export growth of more than 20 per cent this year, according to the association. — VNS

Vietnamnews

19/01/2016

Quote from: “http://vietnamnews.vn/economy/281359/firms-to-seek-local-suppliers.html“

VietNamNet Bridge – A survey conducted by the Korea International Trade Association (KITA) has found that the majority of Korean investors who plan to scale up their outward investment plan plan to come to Vietnam.

The third wave 

South Korea has been recognized as one of the biggest foreign direct investors in Vietnam. According to the Ministry of Planning and Investment, South Korea committed the highest investment capital of $43.63 billion for 4,777 projects last November.

The figure proves to come in line with KITA’s survey which showed that 49 percent of 540 businesses which were asked about the investment environment in 32 countries affirmed they would expand their business in Vietnam.

While Kumho Asiana, Posco, Daewoo and Samsung are listed as the first-generation Korean investors in Vietnam, Samsung, LG, Lotte and CJ are considered the representatives of the second-generation wave. And now analysts talk about the third wave investment which will come when the Vietnam-South Korea FTA takes effect.

Analysts believe that the third-generation investors would mostly pour money into agriculture, education, transport infrastructure, energy, environment, healthcare, finance, processing and manufacturing.

“Textiles & garments is the field which specially attracts Korean businesses,” commented Park Sag Hyup, director of the Korean Trade Promotion Agency in HCM City.

Meanwhile, according to Kim Su Ho from the Republic of Korea’s Consulate General in HCMC, Korea believes Vietnam’s economic development potential is very high compared with other regional countries. Therefore, they are interested in pouring capital into the finance & credit sector.

In fact, Korean first-generation investors have expanded their business in Vietnam. Samsung has committed to inject $14.2 billion into Vietnam, planning to invest in some other business fields including energy, shipbuilding and airports. 

Lotte, which has developed a series of projects in Vietnam, has recently proposed a $2 billion project in HCMC named Eco Smart City. Meanwhile, CJ, which runs projects in the entertainment sector, has shown its interest in agriculture projects.

FTA to serve as jumping board

Samsung Electronics has relocated its production lines from China to Vietnam. LG Electronics, another giant, has spent $1.5 billion on a smartphone & household electronics assembling factory in Hai Phong City earlier this year.

Meanwhile, according to Nikkei, Doosan Engine, the South Korean leading heavy industry group, considers Vietnam the ideal destination for the time to come.

The Vietnam-ROK FTA is believed to be the ‘jumping board’ for South Korean investors to enter the Vietnamese market.

In the textile & garment sector, for example, the tariff will be cut from 3-18 percent to zero percent as soon as the FTA takes effect.  

These include the $660 million Hyosung project in Dong Nai province, the $30 million Panko in Quang Nam province and $8.5 million Viet Pan Pacific in Thanh Hoa.

 WTO Center/Vietnamnet

18/01/2016

Quote from: “http://wtocenter.vn/news/fta-bring-south-korean-investment-third-fdi-wave“

While the three leading contenders in the U.S. presidential race say they oppose the Trans Pacific Partnership (TPP) deal, Asia’s apparel and footwear manufacturers are acting as though it’s a done deal.

“Thousands of companies invested in China are diversifying and moving part of their production into Vietnam,” Oliver Massmann told about two dozen members of the Sports and Fitness Industry Association during a Jan. 14 webinar. “This is happening now.”

Massmann was asked to address the TPP by the Sports and Fitness Industry Association because he has 20 years of experience practicing commercial law in Vietnam, where he is a partner in Duane Morris Vietnam LLC. In his 40-minute presentation, Massmann said the trade agreement establishes a degree of legal certainty for investors unmatched by any other international standard and far above that of the World Trade Organization.

“I have just attended here in Hanoi, in Vietnam today, an information round with European delegation from Brussels,” Massmann said. “They have concluded three trade agreements between Vietnam and the European Union and I asked for a comparison of TPP with their free trade agreements and they refused to compare. One reason being they are concerned about the very high level of the TPP and really shy away from comparison.”

The TPP agreement, which was reached in October after a decade of negotiations, sets more liberal trade rules between 12 countries that account for a third of world trade. As the group’s poorest country, Vietnam is expected to benefit the most from the deal. And as reported by The B.O.S.S. Report in November, 2015 Vietnam’s textile, garment and footwear industries stand to benefit the most if they can meet the yarn-forward provisions of the agreement. 

Asian and European investors have been pouring billions into Vietnam’s power and textile industry in recent years to not only offset rising costs in China, but to build up Vietnam’s capacity to make yarns, fibers and fabrics in anticipation that the United States, Vietnam and Japan will ratify the agreement.

Under TPP, U.S. investors would be able to seek redress against Vietnamese companies in U.S. venues. Theoretically, he said, a U.S. company that prevailed in a U.S. arbitration proceeding against a state-owned Vietnamese company could enforce their judgement by seizing their assets in the United States. That provides a degree of legal certainty unmatched by any other multilateral trade agreement. 

“If you are a company from the U.S. that is producing machines that produce this yarn or other raw resources then you should come here to Vietnam and invest now, because this is the time,” he said.

Under the agreement, Vietnam and Japan will also permit U.S. companies to establish wholly-owned import, distribution and retail companies for the first time.

“It’s the most modern trade agreement ever created by mankind,” Massmann said. “Thailand, Indonesia, the Philippines will have to join TPP at some point and are probably not doing themselves any favor by waiting too long.”  

–Charlie Lunan

SportsOneSource

15/01/2016

Quote from: “http://www.sportsonesource.com/news/article_home.asp?section=5&id=59054&Prod=4“

News Report Vietnam’s RMG export to the US market almost doubled in the year 2015 superseding that of Bangladesh.

According to the US data, the apparel exports of Vietnam grew 14.05 per cent during the first 11 months of 2015. During the same period Bangladesh exports grew 11.41 per cent. Vietnam exported RMG worth $9.7 billion and Bangladesh RMG export was worth $5 billion only during the period under reference. Vietnam garment industries started its journey from the beginning of 90’s whereas Bangladesh RMG sector laid its foundation during the mid-70’s. Vietnam got market access to the US during the mid-90’s and Bangladesh got the same from the very beginning of its RMG journey. Bangladesh RMG sector will face most difficult time when the US led Trans Pacific Partnership (TPP) agreement will be in operation.

Under the deal Vietnam will enjoy duty-free export facilities to the US market and Bangladesh will have to pay 15 per cent duty for exporting RMG products to the US market. If the US administration restores suspended Generalized System of Preference (GSP) Bangladesh RMG sector will not be competitive with Vietnam because the GSP covers only 0.24 per cent of the total Bangladesh export to the US market. Vietnam, according to the BGMEA sources, has taken up massive expansion programme of its RMG sector.

It has set a target to attract $3 billion FDI in the RMG sector during the next two years to meet the growing demand of RMG products after the TPP comes in operation. On the other hand, investment in Bangladesh RMG sector is not at all satisfactory. Some investment around $200 million per year has taken place in the Export Processing Zones, which is quite insufficient to face global market challenge. In another development the European and North American retailer groups blacklisted a large number of Bangladesh RMG factories for poor progress of working condition improvement by the RMG owners.

After the collapse of Rana Plaza in 2013, the European retailers formed accord to look into the fire and building safety and North American retailer groups formed alliance to look into the workers safety issue in Bangladesh RMG sector. Both the Accord and Alliance inspected around 3500 RMG factories and found none of the factory up to the mark.

They suggested some remedial measures and urged the garment owners to implement the prescriptions as early as possible. During the last one and a half years RMG owners did a lot to change the environment, but still a good number of owners could not meet the standard prescribed by the Accord and the Alliance.

The Accord, according to source, has warned 120 RMG factories of losing business if they fail to meet the standard of safety within the next couple of months. The Alliance suspended business of 23 RMG factories because they could not meet the safety standard. The Alliance has also warned 12 more factories to face the similar situation, the source said.

The Newstoday

13/01/2016

Quote from: “http://www.newstoday.com.bd/index.php?option=details&news_id=2432473&date=2016-01-13”

U.S. apparel import growth slowed in November, bringing total imports for the January through November 2015 period to $79 billion.

Judith Russell

Sourcing Journal

12/01/2016

Quote from: “https://sourcingjournalonline.com/vietnam-bangladesh-enjoy-biggest-share-gains-of-u-s-apparel-imports/“

Foreign investors, especially ones Chinese, are buying Vietnam’s textile and garment companies. The enterprises on sale are mostly small ones mostly located in localities with advantageous transport conditions.

Some of the factories comprise production workshops, a security room, a canteen and pleasure room for workers, and electricity systems. The trend has gathered momentum to an extent that there is a view that foreign invested enterprises, and not Vietnam’s textile and garment industry, would benefit from the Trans Pacific Partnership agreement and that with their powerful financial capability and experience, they have taken over Vietnam’s enterprises precisely to get benefits from the TPP.

About 70 per cent of Vietnam’s textile and garment export turnover is made up from foreign owned enterprises, which shows their large operating scale and the big role they play in the industry. Foreign investors are supposed to have a hidden motive in acquiring Vietnam’s textile and garment enterprises. It’s that this way they can dodge the regulations set up by local authorities aiming to restrict investment projects in the textile and garment sector.

In time, it is feared, foreign owned enterprises would become even larger, while Vietnamese enterprises would lose their market share and shrink.

FashionatingWorld

11/01/2016

Quote from: “http://www.fashionatingworld.com/new1-2/item/4531-foreign-buyers-eye-vietnam%E2%80%99s-textile-units.html“