Big year likely for Vietnam’s textile, garment exports

Textile and garment exports are set for a boom this year, according to the Vietnam Industrial and Trade Information Centre (VITIC), a Ministry of Industry and Trade agency.

In January exports were worth over USD 1.9 billion, marginally up from last year, but many companies in the textile and garment industry have received orders to be executed in the first and second quarters.

The US topped the list of importers, buying textiles and apparel worth nearly USD 926.7 million, or nearly half of Vietnam's total exports. Japan and the Republic of Korea also bought more than USD 100 million worth of products.

Photo for illustration. Photo: xuatkhaulaodongs.com

The full year's exports to the US are expected to top USD 11 billion, a year-on-year increase of 13 percent.

Japanese firms' increasing investment in supporting industries in Vietnam has created favourable conditions for the textile and garment industry, VITIC said.

Exports to Japan are expected to rise by 9 percent this year to USD 2.9 billion.

VITIC said once a free trade agreement with the EU is wrapped up, exports of textiles and garments to that market would begin to rise, reaching USD 4 billion this year.

The Vietnam National Textile and Garment Group (Vinatex) plans to invest VND 9.4 trillion (USD 441.3 million) by 2017 in 59 textile, dyeing, garment and infrastructure projects, according to the corporation.

They include 15 fiber production projects, 18 textile and dyeing projects,18 garment projects and eight infrastructure projects.

Under the plan, Vinatex will disburse VND 2.425 trillion (USD 113.85 million) to develop these projects this year, with VND 805 billion (USD 37.8 million) going to fibre projects, VND 713 billion (USD 33.5 million) to textile anddyeing projects, VND 726 billion (USD 34.1 million) to garment projects, and VND 181 billion (USD 8.5 million) to infrastructure in industrial zones for the textile and garment industry, reported the Dau tu (Vietnam Investment Review) newspaper.

With the investment, Vinatex expects to increase this year its production capacity to 6,000 tons of fiber, six million meters of dyed cloth, two million vests and blazers and four million trousers, as well as one million shirts and two million knitwear products.

Vinatex is currently considered to have the largest scale in production in the textile and garment industry, with 100 member companies, and holds 15 percent of the total national textile and garment export value.

However, the member companies of Vinatex still face difficulties in investment in sub-material production, textile and dyeing projects.

Vinatex General Director Le Tien Truong said that the member companies don't have large investment capital, presenting a major challenge for local textile and garment firms in increasing the localisation rate.

The Phong Phu Joint Stock Corporation is a member of Vinatex that has the largest capital amount of VND 700 billion (USD 32.86 million), while other large member companies have lesser capital, such as Viet Tien with VND 200 billion (USD 9.4 million), Garment 10 with VND 100 billion (USD 4.7 million), and Nha Be with VND 150 billion (USD 7.05 million).

The large garment companies could not invest in full supply chains, especially regarding the production of materials and sub-materials for textile and garments, to receive export orders as original design manufacturers (ODM), Truong said.

Vinatex has equitised its operations from January 1^st this year, he added, so the group will promote management, investment and market and staff development.

The parent company will also take on the role of a direct investor to increase production capacity, especially self-reliance in material production, in a move to reduce dependence on imports, rather than manage State-owned capital at its member companies, as it did before equitization.

The group has set a target for its parent company to earn VND 900 billion (USD 42.25 million) in revenue and VND 288.4 billion (USD 13.54 million) in after-tax profit in 2015; VND 2.3 trillion (USD 107.98 million) and VND 342.3 billion (USD 16 million) in 2016; and VND 3.26 trillion (USD 152.8 million) and VND 405.9 billion (USD 19 million) in 2017 respectively.