Ministry of Planning and Investment
Sunday, 21/04/2024
Attractive Sectors
Viet Nam: Swimming Upstream Opportunities in Textile Manufacturing
Monday, 11/05/2015 03:51
Viet Nam: Swimming  Upstream Opportunities in Textile Manufacturing

Viet Nam’s success in the textile sector needs little introduction. After concluding a trade agreement with the United States in 2001 that pushed toward World Trade Organization membership in 2007, Viet Nam is a powerhouse in garments and textiles. The country is consistently a top five global exporter in the sector (MOIT).

However, Viet Nam has a reputation of being at the bottom of the manufacturing process—a low-value added contributor, principally the final CMT (Cut-Make-Trim) of garments and footwear. This reputation is being shredded. Viet Nam’s manufacturing is powering upstream to fabric and fiber produc- tion, creating incredible opportunities for foreign investors.

The country is experiencing a boom in the textile sector as several factors converge. Membership in WTO leveled the tariff structure for the country. The sector now has over ten years of experience, both in terms of the workers and regulations on the sector. And Viet Nam maintains stable wages at roughly half the cost of China. The result is an 178% increase in garment exports from 2009-13. And the rate of growth is accelerating.

While the deals are still in negotiation, the Free Trade Agreement (FTA) with the European Union and the twelve country Trans-Pacific Partnership (TPP) are set to give Viet Nam’s textile sector another major shake-up. This Third Wave of trade deals will push for more capital intensive manufacturing and a signifi- cant deepening across the sector.

Viet Nam’s shift from agriculture to textiles happened in a flash, and the shift to higher value production is matching that pace. The major players in the sector all have a presence, with companies like Adidas, Nike, Puma, The Gap, and many others pushing from 20% up to 60% of their total product through the country.

Viet Nam's government knows that in order to be competitive in the 21st century, the country must develop investment and trade policy that can fully leverage the coun- try’s natural advantages.

At the close of the 2014 National Assembly session, the government ratified the third national investment law. The third iteration in the past decade and a half. A law that is built and rebuilt in collaboration with the thou- sands of foreign corporate partners active in the country. The country's legal framework is an evolving codex under constant evolution to match deeper and increasingly substantial trade agreements.

Viet Nam's policy makers recognize the unique position of the country's economic profile: the only major East Asian country capable of providing cost competitive, labor intensive, high quality manufactured goods in the 21st century.

Volume 4 Brochure on Textile 221214.pdf
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