investment in textile in vietnam 2017 - · pdf fileinvestment in textile in vietnam 2017 -...

INVESTMENT IN TEXTILE IN VIETNAM

2017 - 2025

Presented by: Mr. Nguyen Van TuanChairman of Vietnam Cotton and Spinning Association (VCOSA)

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I. Vietnam Textile Industry 2000 – 2016 in overview

II. The impact of TPP on the industry

III. The development directions in the context without TPP

and investment opportunities.

IV. Rang Dong IP - the ideal place to invest

Content

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1. Export turnover 2000 - 2016

- Export stands for 80% - 85% of total revenue

- Average growth rates of 2000 – 2012; 2013 – 2015 and 2016 are

15%, 18% and 5.5% respectively.3

2. FDI into Vietnam textile

Sector 1/2000 – 31/12/2013 1/2014 – 30/6/2016

Spinning 2.0 1.5

Fabric production 1.2 5.0

Garment 5.0 1.8

Total 8.2 8.3


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3. Current situation of Vietnam Textile


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4. Export structure in 2016


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No. Product QuantityAmount

(billion USD)Market

1 PSF 90,000 ton 0.1 ASEAN

2Filament yarn

130,000 ton 0.4 Turkey

3 Staple 960,000 ton 2.7 China

4 Fabric 660 million m 1.0 Korea, ASEAN

5 Garment 24.3 USA, EU, Japan, Korea

Total 28.5

5. Comment


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Textile and apparel exports account for 80 - 85% of total industryrevenue.

Export growth is mainly driven by yarn and garment growth. The growth of the garment sector (account for 86%) is based on cheap

labor force The growth of the spinning industry is mainly based on competitive

prices and the acceptance of China, Turkey and some ASEAN countries. Foreign direct investment (FDI) is the driving force behind this growth

(account for 70%). Rapid growth in the spinning and sewing segment has created an

imbalance of the supply chain with bottlenecks in the fabric segment(weaving, knitting, dyeing and finishing) that makes the sector heavilydepends on imported fabric (6.5 billion meters per year, equivalent to75% of demand) and is vulnerable.


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1. The impact of TPP

With the “yarn forward” formula in exchange for the dutyelimination from 17.5% to 0% at the US market (accountingfor 50% total export), TPP is the main driving force fordomestic fabric production. The summarizing FDI intoVietnam below with TPP expectation proved that:

From 2000 to 31 December 2013: 8.2 billion USD

From January 2014 to 30 June 2016: 8.3 billion USD

1/2000 – 31/12/2013 1/2014 – 30/6/2016

Spinning 2.0 1.5

Fabric production 1.2 5.0

Garment 5.0 1.8

Total 8.2 8.3


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2. Review the wave of FDI to welcome TPP

No Company NationalityAmount

(mil. USD)

1 TAL Hong Kong 60

2 THIEN SUN JV Hong Kong & Japan 80

3 HAPUTEX Hong Kong 120

4 CRYSTAL PACIFIC Hong Kong 545

5 HUAFU Hong Kong 300

6 LU THAI Hong Kong 161

7 BROS EASTERN Hong Kong 400

8 TEXHONG China 120

9 YULUN China 68

a) Typical projects


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No Company NationalityAmount

(mil. USD)

10 SHENGZHOU China 427

11 WORLDON China 300

12 YU YUANG Taiwan 58

13 POLYTEX FAR EASTERN Taiwan 274

14 SHEICO Taiwan 50

15 GLOBAL DYEING Korea 200

16 HYOSUNG Korea 660

17 PANKO Korea 70



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a) Recognition


Investors are mostly big businesses The projects are at large scale and divided into 02 or 03

stages The investment segment is focused on fabric production Purpose of investment to build up their own full supply

chain in Vietnam.

b) Investment’s situation

Phase 1 investment is completed. Waiting for the next evolution of post TPP. Surveys show that without either TPP or another

alternatives, investing for the next phase would be unlikely.


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Try to maintain the annual growing rate of 6 – 8% during the period of2017 – 2025.

In order for Vietnam's textile and garment to develop in a stable andsustainable manner, the task of the industry is to promote domesticfabric production, meeting the needs of the industry.

If the fabric produced domestically meets the demand, Vietnam'stextile and garment industry will not only increase its share in the valueof exports and domestic consumption, contribute to the growth of GDPbut also create more jobs, build a firm foundation for the developmentof the industry in a stable and sustainable manner that is preconditionfor the development of the fashion industry.

The solution to this objective is to increase the attractiveness of foreigninvestment combined with the promotion and support of domesticfirms involved in fabric production.

1. Goals


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2. Perspective by 2025

Item UnitQuantity

+ / -2016 2025

Labour Mil. pax 2.6 5.0 + 2.4

MaterialsCotton, VSF, PSF,

filament fiber (Mil. MT)1.8 4.5 + 2.7

Spinning Mil. spindles 7.2 17.9 + 10.7

Fabrics Bil. m2 2.85 12 + 9.15

Export Bil. USD 28.5 50 +21.5


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3. Main subjects are also interested in investing in fabric production in Vietnam without TPP

No. Subject Nationality Reasons

1Yarn manufacturers

Vietnam

- Inability to invest abroad- Export markets are shrinking and competed fiercely,

especially from India and Pakistan.- The demand for fabric in the country is very large

and stable.- Absolutely capable of producing grey fabrics- The difficulties are technology, dyeing and finishing

techniques but those can be searched in the market

2The small and medium fabric manufacturers

Korea

- Production cost in Korea is too high- Vietnam meets the conditions for production from

materials, labor, land, …- Fabric demand in Vietnam is large and stable.- Korea has FTA with both The US and EU

3

The small and medium weaving, knitting, dyeing producers

China

- High production costs and strict environmental protection policy in China.

- Vietnam meets the conditions for production from materials, labor, land, …

- Fabric demand in Vietnam is large and stable


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4. Investment Opportunities

Item Unit Quantity

Materials (Cotton, VSF, PSF,

filament fiber)MT 2.7 million

Spinning Spindles 10.7 million

Fabrics m2 9.15 billion

In which, FDI in fabric production is of high appreciation

and support by the Government of Vietnam


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5. Solutions for FDI attracting

To set up large-scale industrial zones specializing in fabricsproduction in suitable locations in Vietnam with completeinfrastructure system.

The government has preferential policies and supportivesolutions for each investor.

Especially create conditions for domestic enterprises todevelop, in which promotes the launching of the model of"Vietnam Textile Village".

Enhance the role of associations to increase investmentconnections between domestic and foreign enterprises.

Study on the possibility of promoting the negotiation on theVietnam-US Bilateral Trade Agreement.


Life Support District

Industrial park(Phase II)

Industrial park(Phase I)

Life Support District

Industrial park(Phase II)

Industrial park(Phase I)

1. Location

Located close to Beibu gulf and

on the Southeast of Nam Dinh

city, Nam Dinh province, Rang

Dong IP is 140 km far from

Hanoi capital and 120 km far

from Hai Phong port

17

850 ha

519 ha

675 ha

2,044 ha

2. Total area

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3. Project goal

Take advantages of land resources and labor force in Vietnam

to build the international first-class textiles supply chain city,

that fused the innovative industrialization mode of textiles

supply chain city and the advanced experience of Singapore

industrial park.


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THE STRUCTURE:

ONE ROAD; THREE CENTERS; FIVE AREAS

ONE ROAD

The main road of functional development

THREE CENTERS

Two big industrial service centers

One large cultural exhibition center

FIVE AREAS

Two big industrial parks

One international textile town of culture

One coastal lake sports leisure tourist area

One seaside eco-tourism resort


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Phase I: 5 years (2016 – 2020)

Phase II: 5 years (2021 - 2025)

Supporting area: 7 years (2024 – 2030)

4. Implementation schedule


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2 (two) IPs with total area up to 1,369 ha

1 (one) water plant with total capacity up to 150,000 m³/day

1 (one) waste water treatment plant with total capacity up to

110,000 m³/day

Dormitory for 150,000 workers

5. Expected Results (When completed)


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Section 1: 300 ha; during 2016 – 2017

Section 2: 219 ha; during 2018 – 2020

6. Staging implementation


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7. The motivation for investment


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Base Salary Total Pay Burden *

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Souce: JETRO

12/2013

a) Cheap labour force

b) Low production Costs

- Electricity (7cents/kw)

- Land leasing (40 – 60 USD/m2 for 50 years)

- Complete infrastructure

- Encouraging and priveledge Policies for investment

o Corporate tax 20%

o Subject to the size and location of

investment, corporate tax will be exampted 2 years

and 50% reduced for the next 4 years or 4 years and

50% reduced for the next 9 years

o VAT for machine importation will be refunded


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c) The size of export markets


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Vietnam

ATIGA

ASEAN – Australia,

New Zealand

RCEP

ASEAN - China

ASEAN - Korea

ASEAN - India

ASEAN - Japan

Vietnam - Japan

VN – Eurasian

Economic Union

Vietnam - Chile

Vietnam - Korea

VN– EU FTA

TPP

VN - Cuba

ASEAN - Hongkong VN - Israel

Signed and effective

Signed

and

effective

Conclude

negotiation –

await ratification

On going negotiation


Thank you for your attention

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