Ministry Of Commerce: Vietnam'S Textile Industry Has A Great Demand For Foreign Investment

Vietnam's "investment daily" reported on August 25 that Vietnam's textile industry still has a great development space, and there is a huge demand for foreign investment.

According to the statistics of the Foreign Investment Bureau of the Ministry of planning and investment of Vietnam, as of May 18, 2022, there were 2787 effective foreign direct investment projects in Vietnam's textile industry, with a total registered capital of 31.3 billion US dollars.

With the influx of foreign capital, the production capacity and export scale of Vietnam's textile industry have increased rapidly. In 2018, Vietnam's total textile and garment exports exceeded 36 billion US dollars; In 2021, it is US $40.3 billion, of which FDI accounts for more than 60% of total exports.

Although Vietnam's textile industry is expanding and has become an important part of the global supply chain, there are still "bottlenecks": uneven production of fabrics, yarns and accessories.

Nguyen Jun Jun, deputy director of the Foreign Investment Bureau of the Ministry of planning and investment of Vietnam, said that Vietnam's textile industry lacks the connectivity of the value chain. Vietnam has a large trade surplus in yarn and clothing, but also a large trade deficit in cloth. The yarn produced is mainly used for export, while the domestic cloth only meets nearly 50% of the demand, making Vietnam import more than 10 billion US dollars of various fabrics every year. Fabric shortage is the potential market to attract foreign investment in Vietnam's fabric and yarn production.

According to the data of Vietnam General Administration of customs, in 2021, Vietnam's import of textile raw materials reached 14.3 billion US dollars, an increase of 20.6% over 2020, accounting for 60.0% of the total import of raw and auxiliary materials in the textile and garment industry. Among them, imports from mainland China, South Korea, Taiwan, Thailand and other markets have increased sharply.

Although Vietnam's textile and clothing exports exceed 40 billion US dollars, Vietnam is not autonomous in terms of raw materials such as cotton, yarn and cloth. In 2021, the import volume of textile raw materials will reach 23.86 billion US dollars, an increase of 21.3% over 2020.

The United States, the European Union, South Korea and China are the four major export markets of Vietnam, with an average annual import volume of 24 billion US dollars (2021). Many of the above-mentioned requirements for recycled products and non recyclable products are being implemented. Therefore, if the investment funds are not directed in this direction, Vietnam's textile and clothing exports will be difficult to maintain the top three position.

"The textile industry should selectively attract foreign investment, give priority to investment in advanced textile printing and dyeing technology projects, without adverse impact on the environment, and establish ties with domestic garment enterprises to form a full value chain and green textile technology solutions." Ruan Yingjun said.

Mr. Zhang Wenjin, vice president of Vietnam textile and Garment Association, further stressed the increasing requirements of importers, such as the production technology of yarn, cloth and printing and dyeing industry must meet the requirements of green supply chain, reduce energy and water consumption, protect environment and transparency.

At present, most Vietnamese enterprises are processing for large brands in the textile and garment industry, and have accepted the "green" requirements in production, such as fulfilling social responsibility, environment and emission reduction. Vietnam's participation in the new generation of free trade agreements is also committed to environmental protection and low emissions.

Mr. Kam suggested that the Vietnamese government should approve the development strategy of textile industry as soon as possible, establish a large-scale textile industrial zone, solve the problems of cloth, printing and dyeing, chemical industry, etc., so as to promote enterprises to invest in fabric production.

(source: website of the Ministry of Commerce)