Textile Industry Is In Great Demand

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Vietnam's textile industry is in great demand for foreign investmen Aug 28, 2023

Vietnam's "Investment Newspaper" reported on August 25 that 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 Bureau of Vietnam's Ministry of Planning and Investment, 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 $31.3 billion.

A large influx of foreign capital has made the production capacity and export scale of Vietnam's textile industry rapidly increase. In 2018, Vietnam's textile and garment exports totaled more than $36 billion. $40.3 billion in 2021, with foreign direct investment accounting for more than 60% of total exports.

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

Deputy Director General of the Foreign Investment Department of Vietnam's Ministry of Planning and Investment, Nguyen Anh Thanh, said that Vietnam's textile industry lacks value chain connectivity. Vietnam has a large trade surplus in yarn and kimono, but also a large trade deficit in cloth. The yarn produced is mainly for export, while domestic fabrics only meet nearly 50% of the demand, making Vietnam import more than $10 billion of various fabrics every year. The shortage of cloth is a potential market attracting foreign investment in Vietnam's cloth and yarn production.

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

Although Vietnam's textile and garment exports exceed $40 billion, the country is not independent of raw materials, from cotton to yarn to cloth. In 2021, the import of textile raw materials reached 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 largest export markets, with annual imports of textiles, clothing and yarns from Vietnam totaling $24 billion (2021). But these markets are implementing many new rules 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 garment 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, do not have a negative impact on the environment, and establish links with domestic garment enterprises to form a full value chain and green textile scientific and technological solutions." Mr. Nguyen said.

Vice Chairman of the Vietnam Textile and Garment Association, Mr. Chang Van Jin, further emphasized the increasing requirements of importers, such as the production technology of yarn, cloth and printing and dyeing industry must meet the requirements of green, reduce energy and water consumption, protect the environment and transparency of the entire supply chain.