Apparel / Textiles & Accessories

The new trend of international trade, according to a Vietnamese media report on August 25, Vietnam's textile industry still has a lot of room for development, and the demand for foreign investment is huge.

According to statistics from the Foreign Investment Agency of the Ministry of Planning and Investment of Vietnam, as of May 18, 2022, there were 2,787 valid foreign direct investment projects in Vietnam's textile industry, with a total registered capital of US$31.3 billion.

The influx of foreign capital has made the production capacity and export scale of Vietnam's textile industry increase rapidly. In 2018, Vietnam's textile and garment exports totaled more than US$36 billion; in 2021, it was US$40.3 billion, of which foreign direct investment accounted for more than 60% of total exports.

Although the scale of Vietnam's textile industry has continued to expand and has become an important link in the global supply chain, there is still a "bottleneck": the production of fabrics, yarns and accessories is uneven.

Nguyen Anh Tuan, 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 apparel, but also has a large trade deficit in fabrics. The yarn produced is mainly used for export, while domestic fabrics only meet nearly 50% of the demand, making Vietnam import various fabrics worth more than US$10 billion annually. The fabric shortage is a potential market for attracting foreign investment in Vietnam's fabric and yarn production.

According to Vietnam Customs data, in 2021, Vietnam's import of textile raw materials will reach 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 markets such as China, South Korea, Taiwan, and Thailand have increased sharply.

Although Vietnam's textile and apparel exports exceed US$40 billion, Vietnam cannot be independent of raw materials such as cotton, yarn, and fabric. In 2021, the import value 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 Vietnam's four major export markets, with an average annual import of textiles, garments and yarns from Vietnam totaling US$24 billion (2021). But the aforementioned markets are implementing many new regulations on imported clothing, such as requiring products to be green, chemical-free and recyclable. Therefore, if investment funds are not directed in this direction, it will be difficult for Vietnam's textile and apparel exports to maintain the top three positions.

"The textile industry should selectively attract foreign investment, give priority to investment in advanced textile printing and dyeing technology projects that will not adversely affect the environment, and establish links with domestic garment enterprises to form a full value chain chain and technological solutions for green textiles." Ruan Yingjun Say.

Mr. Truong Van Kam, Vice Chairman of Vietnam Textile and Apparel Association further emphasized the increasing requirements of importers, such as the production technology of yarn, fabric and printing and dyeing industries must meet the requirements of green supply chain, lower energy and water consumption, environmental protection and transparency.

At present, most Vietnamese enterprises are processing big brands in the textile and garment industry, and have accepted the "green" requirements in production, such as fulfilling social responsibilities, environment and emission reduction. The new generation of free trade agreements that Vietnam is involved in are also committed to protecting the environment and low emissions.

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