Despite temporary setbacks owing to the US withdrawing from the TPP, the Vietnam textile industry has emerged a winner in attracting Foreign Direct Investment (FDI). The accelerating factors in their favour were the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). Both these agreements in conjunction have helped Vietnam’s textile-garment sector in a big way to attract FDI.
In a recently held press conference, Thi Tuyet Mai, general secretary of Vietnam Textiles and Apparels Association (VITAS) from Ho Chi Minh City, observed that Vietnam is a favorite destination for investors who are interested in taking part in attractive markets for the apparel sector. He was speaking at the third Denims & Jeans exhibition held at the venue.
This is in sharp contrast to what had happened early in 2017 after the US had withdrawn from the TPP. Investors from many countries had decided against investing in the Vietnam apparel sector and had opted for neighboring countries like Cambodia, Myanmar and Bangladesh. The FDI inflow had consequently dipped.
However, things changed rapidly from the third quarter of 2017-18 when FDI in the Vietnam apparel sector increased again. This was largely because of domestic textile garment enterprises’ high quality products and short delivery time.
At the conference, the VITAS spokesperson said, “Vietnam has inked 16 bilateral and multilateral free trade agreements (FTAs), including CPTPP and EVFTA, which will take effect in the near future, creating numerous opportunities for local textile-garment producers.”
Mai who also addressed the conference said, “Import duties of the European Union, Vietnam’s second-largest importer, currently ranging from 10% to 12%, will be cut to zero when EVFTA comes into force. South Korea would overtake Taiwan to become the largest investor in Vietnam’s textile-garment sector in the near future as this country has clinched a two-way FTA with Vietnam and a cooperation agreement with the European Union.”
Sandeep Agarwal, CEO India-based Balaji Enterprises Company, spoke at the conference and said, “Indian textile-garment producers could see potential in the Vietnamese market and are seeking export opportunities here.”
A large volume of FDI has been attracted by Vietnam in the apparel sector that includes 137 projects which were approved in 2014. The total registered capital runs into nearly USD 1.75 billion.