After a period of stagnation, foreign direct investment (FDI) in the textile and garment industry has gradually become active again.
Capital flows into upstream projects
The investment registration certificate for Yi Da Denim Mill (VN) Co. Ltd to implement a project to produce textile products at Rang Dong Textile Industrial Park (Nghia Hung) was granted by the Nam Dinh Province Industrial Parks Management Board in February 2024. According to the certificate, the project has a total registered capital of VND 1,467 billion, divided into 3 phases.
Phase I of the Project has an investment of more than VND 880 billion, investing in the production of dyed and undyed fabrics and clothing, and will officially go into production from the third quarter of 2026. The following phases of the Project are expected to be implemented from the fourth quarter of 2026 to the fourth quarter of 2030. This project is invested by Crystal Group, Hong Kong (China).
Before investing in the project in Nam Dinh, Crystal Group had factories operating in Hai Duong, Hai Phong, Bac Giang, Phu Tho and Binh Duong, with total export revenue in Vietnam of about 1 billion USD, creating jobs for 40,000 workers.
The world's leading zipper company YKK has invested in a second factory in Vietnam, located in Dong Van Industrial Park (Ha Nam), with a larger scale and more modern technology than the factory invested in Dong Nai. Mr. Yuji Furukawa, General Director of YKK Vietnam, said that after 25 years of presence, YKK Vietnam has increased zipper production 100 times and increased the number of employees seven times, with 2,800 people.
According to the Vietnam Textile and Apparel Association (Vitas), FDI capital in the textile and garment sector will increase rapidly in the fourth quarter of 2023 and the first quarter of 2024. While projects in fabrics, zippers, and sewing threads are expanding investment, capital in the fiber industry has slowed down. Some projects invested in 2022-2023 have begun to be completed and put into production, helping to improve the industry's supply capacity and create a boost for new projects.
Recently, SAB Group (China) put into operation the SAB Vietnam Industrial Factory in Bim Son Industrial Park (Thanh Hoa). The factory started construction in July 2022, with an area of 66.44 hectares and a total investment of about 62 million USD. The factory specializes in manufacturing clothing accessories such as metal zippers, plastic zippers, nylon zippers, plastic buttons, metal buttons, etc. The project's operation helps reduce the import of these raw materials in the textile industry.
Boost from FTAs
Mr. Vu Duc Giang, Chairman of Vitas, assessed that many international textile and garment manufacturers have been expanding their operations in Vietnam to take advantage of the investment and labor environment and the increasingly open economy. “I think that a series of free trade agreements (FTAs), especially new-generation FTAs such as CPTPP, EVFTA, RCEP of which Vietnam is a member, are the driving force to attract domestic investors as well as foreign investors to invest in the supply shortage segment of the textile and garment industry,” said Mr. Giang.
According to Mr. Yuji Furukawa, in the past, YKK Vietnam had to import some zipper products from foreign YKK companies to supply domestic customers, but now, the factory in Vietnam produces most of YKK's products. In addition to "local export", the products are also exported to countries such as Cambodia and Myanmar.
Along with helping the textile and garment industry gradually reduce its dependence on imported raw materials, FDI capital also contributes to solving a number of key issues: faster production time, lower transportation costs, more competitive prices, and taking advantage of tariff incentives from 15 current FTAs.
It is known that Vietnam's textile and garment exports are gradually recovering after negative growth in 2023. In the first quarter of 2024, textile and garment exports reached nearly 8 billion USD, up 7.9%; textile fiber exports reached 1.05 billion USD, up 12.1% over the same period. FDI enterprises contributed over 60% of total export turnover.
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