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“

China’s textile industry has entered a new development phase by making overseas layout, according to the National Textile Industry Transfer Work Conference held last Friday. “The Belt and Road Initiative has provided an unprecedented opportunity for China’s textile industry,” said Xia Lingmin, vice president of the China National Textile and Apparel Council (CNTAC), adding that China’s acceleration of overseas layout was the result of market option and efficiency priority.

“On the one hand, China’s textile enterprises have built processing bases overseas in a bid to reduce labor costs. On the other hand, some enterprises seek to establish multinational groups with global competitive edge by settling different links of the industrial chain in different countries,” explained Xia.

According to statistics released by the CNTAC, by the end of 2014, Chinese enterprises had set up over 2,600 textile manufacturing, trading and design enterprises in at least 100 countries and regions. In 2015, Chinese textile enterprises have accelerated its pace to “go out.” China has been a big textile exporter for a long time. However, its textile industry has been dampened by the sluggish economic situation worldwide in recent years. Xia noted that “going out” was an important selection for the textile industry during the 13th Five-Year Plan period (2016-2020).

Xinhua Finance

11/01/2016

Quote from: “http://en.xinfinance.com/html/Industries/Consumer_Products_and_Services/2016/185896.shtml“

HA NOI  (VNS) — Mergers and acquisitions in Viet Nam’s textile and garment industry have increased, in a bid to take advantage of free trade agreements, especially the Trans Pacific Partnership (TPP), experts said.

According to the HCM City Association of Garment – Textile – Embroidery – Knitting (AGTEK), there was a wave of mergers and acquisitions in local garment and textile sectors as local enterprises found they could not fulfill requested orders due to their limitations in capital.

Pham Xuan Hong, deputy chairman of the Viet Nam Textile and Apparel Association (Vitas), said medium- and large-sized enterprises have maintained stable production and business, but small-sized firms have faced many difficulties in their business. Therefore, recently, many small textile and garment companies have sold their workshops and machines and entered other sectors.

In addition, some local enterprises have sold part of their factories to foreign investors, he said, including Chinese investors who have developed a system of processing and production for export products in Viet Nam to take advantage of the TPP deal.

Nguyen Van Hoan, former head of Ha Noi Industrial, Textile, Garment and Fashion College, said foreign investors had difficulties in expanding their production in Viet Nam because some provinces and cities have limited foreign investment in the garment and textile sectors due to concerns about environmental pollution. This has prompted foreign investors to purchase local textile and garment companies that already have production lines and employees.

Further, the Ministry of Planning and Investment said management offices carefully weighed requests before issuing investment licences for large textile and garment projects, since textile, fiber production and dyeing projects often cause environmental problems, reported vnexpress.net. So, some investors have bought factories from local partners.

In 2015, Viet Nam has issued investment licences for 30 textile and garment projects while foreign investment in industry was expected to continue increasing in the near future.

In 2016, part of the US$300 million provided by the Indian government would include investments in projects to manufacture textile and garment materials in Viet Nam, as part of the cooperation between the governments of Viet Nam and India. — VNS

By Vietnamnews

31/12/2015

Quote from: “http://vietnamnews.vn/economy/280565/mergers-acquisitions-increase-in-textiles-garments-market.html“

VIETRADE – The country’s garment and textile sector would likely to grow an average of 11.5% annually between now and 2020, the Vietnam Textile and Apparel Association (Vitas) has forecast.

Vitas said the sector was expected to post an export turnover of US$27.5 billion this year. The value would increase to US$31 billion next year and US$45 billion to $50 billion by 2020.

The Ministry of Industry and Trade (MoIT) reported that the sector earned US$19.18 billion from exports in the 11-month period, surging 18% against the corresponding period last year. Exports of fibre rose 19% to US$2.3 billion.

Vitas chairman Vu Duc Giang said that global integration would facilitate exports of Vietnamese garment and textile products over the next five years.

Following the Trans-Pacific Partnership (TPP), tariffs for these products would reduce from 18% to 0% and from an average 11% to 0% under the Vietnam-European Union Free Trade Agreement.

When these pacts took effect, they would accelerate the development of the garment and textile industry in the long run, attracting more investment in the sector while enhancing the value of local products in the global value chain.

Dau Tu Newspaper quoted the American Chamber of Commerce’s forecast as saying that after the TPP came into effect, Vietnam’s exports to the US would likely to reach US$51.4 billion, with garment and textile products alone hitting US$15.2 billion by 2020.

The garment and textile exports to the US, might also reach US$20 billion by 2025, the newspaper noted. The US is now one of the country’s leading importers of Vietnamese garment goods besides the EU, Japan and South Korea.

Vietnam has been among the top 10 garment and textile exporters in the world for the last 10 years. Last year, it ranked the fifth after China, Turkey, Bangladesh and India.

In order to increase its export turnover, in recent years, the local garment and textile sector have paid effective attention to diversifying material supply sources to ease the dependence on foreign source and increase competitiveness, vietnamnews.vn reported.

To date, it had raised the localization rate to more than 50 per cent, the newspaper added.

Mr. Le Tien Truong, General Director of the Vietnam National Textile and Garment Group (Vinatex), said the group’s subsidiaries had increased investment in material production, adding that their textile fabric output could meet 60% of domestic demand.

Besides ensuring adequate material resources, Truong also emphasized the importance of building a trademark for the nation’s garment and textile products.

He urged the sector to improve its competitiveness in the global garment supply chain.

Meanwhile, the MoIT suggested domestic garment and textile businesses to seek other material suppliers from ASEAN countries, particularly India, to avoid over-dependence on a single market. /.

By VIET TRADE

29/12/2015

Quote from: “http://www.vietrade.gov.vn/en/index.php?option=com_content&view=article&id=2400:garment-textile-exports-forecast-to-grow-115-a-year-to-2020&catid=270:vietnam-industry-news&Itemid=363“

Vietnam established diplomatic ties with more than 170 countries and territories and trade relations with 224 out of 255 markets and territories; and signed 86 bilateral agreements, 46 agreements on investment promotion and protection and 40 anti-double tax pacts.

The economic relations between Vietnam and its current potential partners have developed in both depth and width. However, after joining TPP Vietnam’s economy will be more affected, especially on key goods.

Dr. Vo Hung Dung, Director of VCCI Can Tho Branch believes that joining TPP will give opportunities to Vietnam to export its agricultural and seafood products to large markets within the TPP bloc with a prioritised tariff as well as opportunities for cooperation in high technology and modern agricultural development.

Vietnam has a rather large agricultural production area so it has a high demand in expanding markets for its agricultural products. Yet, the main difficulty lies in the fact that TPP countries tend to limit negotiations, maintain protection and subsidies to local farmers and not open doors by using technical barriers to trade and in the form of hygiene measures.
 

Joining TPP will  give opportunities for Vietnam to expand the market for its fruit. Photo: Phuong Vy/VNA
 

According to Dr. Nguyen Anh Tuan, Editor-in-Chief of the International Research Magazine, the Diplomatic Academy of the Ministry of Foreign Affairs, when joining TPP, Vietnam must eliminate 100% of tariffs for all goods, including agricultural products while there are no technical barriers or having them but not very high. The reduction of tariffs will surely lead to a rapid increase of imports from TPP countries into Vietnam with competitive prices.

For aquatic products, according to the Vietnam Association of Seafood Exporters and Producers (VASEP), 40% of Vietnam’s aquatic products were exported to TPP countries in 2013, including 20% to the US and 17% to Japan. Japan is the major market of Vietnam’s tuna exports, but the tariff is at 6.4-7.2%.
 

Tuna is a potential export of Vietnam. Photo: Ly Kha/VNA

Related to husbandry products which have less competitiveness in comparison with other TPP countries, there is a limitation in production capacity and technology, whereas this sector regularly faces epidemics. Vietnam’s husbandry industry is now the sector providing many jobs for farmers, but with a low and unstable income and it is the most vulnerable.
 

Vietnam’s husbandry sector has less competitiveness in comparison with other TPP countries. Photo: Vu Sinh/VNA

The Vietnam Textiles and Garments Association expects TPP will facilitate Vietnam to increase its export turnover of textiles and garments to 30 billion dollars in 2020 and 55 billion dollars in 2030.

Out of the annual total import tax revenue of 1.3 billion dollars from TPP members to the US, about 1 billion dollars is from Vietnam’s imports and 80-90% of this number is from garment and footwear exporters.

At present the tariffs for Vietnam’s garment and footwear exports to the US are over 7% and 12%. The reality shows that these sectors of Vietnam will benefit when the tariff is lowered to zero. The import tax for Vietnam’s footwear to TPP members will be zero from the current 3.5-57.4%
 

The garment and textile sector will reach 30-55 billion dollars by 2020-2030. Photo: An Hieu/VNA

With a total number of 500 enterprises which now provide jobs for 600,000 labourers, this sector will expect to generate more than 1 million jobs with TPP’s commitments.

Associate Prof. Nguyen Anh Tuan acknowledged that when Vietnam’s footwear sector participates in the global value chain, with its advantages in a “gold” human force, it will provide favourable conditions for implementing the stages using many labourers.

When TPP comes into force, Vietnam is believed to be one of the large beneficiaries from increasing trade with the US and Japan which are the two largest markets of TPP. The tariff reduction will facilitate Vietnam to export its garments, footwear and agricultural products. However, besides the advantages, Vietnam will also face many risks. Therefore, Vietnam needs initiatives and key resolutions to take full use of key products  as a TPP member.
 

 

According to economic experts, 37 out of 97 sectors of export goods are more competitive than partners. These goods, including  garments and textile, footwear, aquatic products and coffee, account for 75% of the total export value of Vietnam, equivalent to 120 billion dollars.

 

By VNA/VNP

28/12/2015

Quote from: “http://vietnam.vnanet.vn/english/tpps-impacts-on-vietnams-key-products/205414.html“