by Deepak Mohindra
10-February-2019 | 4 mins read
Clocking the highest turnover in three years – Vietnam’s apparel and textile sector recorded export of US $ 36 billion in 2018, an impressive increase of 16 per cent compared to that in 2017, with apparels alone accounting for US $ 28.7 billion, a rise of 14.4 per cent. The industry welcomes the new year with renewed thrust and enthusiasm, more so at the back of a string of Free Trade Agreements and not to forget the US-China trade war, which is expected to give a further impetus to Vietnam’s exports.
In fact, 10 out of 12 FTAs signed by Vietnam have already been enforced including the ASEAN-China FTA’ the ASEAN-Korea FTA and ASEAN Trade in Goods Agreement (ATIGA). However, one agreement, which I am following up very keenly, is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which officially came into effect on 30 December 2018.
Though the industry is a bit reserved about underlining the positives of CPTPP and understandably so due to the not so significant benefits that the country has been able to gain from the previous free trade agreements, one thing is but sure that CPTPP is bound to have a positive impact both on the investment environment and on the generation of job opportunities, besides enhancing the economic growth of the nation, as has been highlighted by Ngo Chung Khanh, Deputy Director, Multilateral Trade Policy Department, Ministry of Industry and Trade.
Call it the robust growth opportunities that the industry promises to offer or the FTAs or for that matter the US trade war with China that has opened gates for foreign entities to take the Vietnam route to increase foothold in the US market, many companies are making a beeline to invest in Vietnam. Several Japanese enterprises have already drawn up plans to increase their investment in Vietnam’s fast-growing apparel and textile sector. If Itochu – a prominent trading house in Japan – has invested US $ 47 million to buy an additional 10 per cent of the Vietnam National Textile and Garment Group (Vinatex), Sakai Amiori, another Japanese establishment, recently opened a garment export production unit in Phu Ha Industrial Zone (IZ). Similarly, Matsuoka Corporation, in less than four years, has expanded its production capacity by six to seven fold through the Matsuoka Phu Tho plant… I am sure many other foreign companies are working out details to invest in Vietnam now.
What was even more heartening for me to note has been the gradual revival of Nam Dinh at a time when Vietnam is all poised to touch new landmarks. Though a traditional garment hub with lot of factories built by French colonists, Nam Dinh saw a slump in 1990s with the increase in salaries and increasing competition from other centres. But from 2000 onwards, this erstwhile garmenting stronghold is making a steady progress… Today it is home to nearly 480 textile firms with more than 70,000 workers.
A significant surge in foreign investments, complemented by opportunities created by FTA, CPTPP along with the recent trade conflict between China and US have now opened multiple doors for the country’s apparel and textile industry. All it needs now is the continuing Government support. The industry, in 2019, is therefore set to scale greater heights, considering the existing positives!