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FDI flow into garment and textile sector bounces back

The flow of foreign direct investment (FDI) into the Vietnamese garment and textile sector has rebounded thanks to the country’s sound investment climate and abundant workforce as well as its open economy, according to insiders.

Chairman of the Việt Nam Textile & Apparel Association (VITAS) Vũ Đức Giang said foreign garment and textile producers are expanding their operations in Việt Nam to take advantages in the Vietnamese market.

He held that various free trade agreements (FTA), particularly new-generation deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU-Việt Nam FTA (EVFTA) and Regional Comprehensive Economic Partnership (RCEP) to which Việt Nam is a signatory is a locomotive for the sector to lure both domestic and foreign investors.

The management board of industrial parks of the northern province of Nam Định has granted an investment certificate to Hong Kong-based Crystal International Group to carry out its US$60-million- Yi Da Denim Mill project.

The group has run various plants in the northern localities of Hải Dương, Hải Phòng, Bắc Giang and Phú Thọ and the southern province of Bình Dương, with a combined export revenue of some $1 billion and generating jobs for 40,000 local workers.

Meanwhile, the world’s leading zipper producer YKK Corp from Japan invested in its second plant at Đồng Văn Industrial Zone in the northern province of Hà Nam. According to YKK Vietnam General Director Yuji Furukawa, after 25 years of operation in Việt Nam, YKK has increased its zipper productivity by 100 folds, and the number of workers seven folds to 2,800 labourers.

Earlier, YKK had to import several materials to provide its local customers. However, its Vietnamese plant is now able to manufacture all of YKK products and even ship them to foreign countries like Cambodia and Myanmar, he said.
Most recently, SAB Industrial Vietnam Company Limited under China’s Weixing group put into operation its $62-million-factory in the north-central province of Thanh Hóa. Covering 66.44 hectares, the factory produces various items, including metal, plastic and nylon zippers, and plastic and metal buttons.

Besides helping the sector reduce its dependence on imported raw materials, FDI capital has played an important role in reducing manufacturing time and transport costs, making products become more competitive.

In the first quarter of 2024, Việt Nam gained nearly $8 billion from garment and textile export revenue, with FDI firms contributing over 60 per cent of the total.

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OTHER NEWS

Việt Nam to have many opportunities from digitalisation, green transformation: IMF

The International Monetary Fund (IMF) has forecast that Việt Nam will have many opportunities from digitalisation and green transformation.

Addressing a press conference on the Regional Economic Outlook for Asia and Pacific in Washington DC on Thursday, IMF Asia and Pacific Department Director Krishna Srinivasan said Việt Nam’s economic growth was likely to expand by about 6 per cent based on numerous potentials, significant foreign direct investment, and ongoing efforts to improve the business environment and infrastructure.

According to the expert, growth surprised on the upside in the second half of last year, as robust domestic demand fueled activities, especially in emerging Asian economies. Malaysia, the Philippines, Việt Nam, and, most notably, India recorded sizeable positive growth surprises.

He stated that growth for the region reached 5 per cent last year – much stronger than the growth of 3.9 per cent in 2022 – and is 0.4 percentage points higher than what IMF had projected in the Regional Economic Outlook in October last year.

The fund projects the region to grow by 4.5 per cent this year – an upward revision of 0.3 percentage points relative to October, saying that with this, Asia will contribute about 60 per cent of global growth.

Srinivasan said that promoting growth would depend on each country individually. In China and India, IMF expects investment to contribute disproportionately to growth. Meanwhile, in emerging Asia outside China and India, robust private consumption will remain the main growth engine.

He also mentioned the monetary policy challenge, recommending that governments should focus on consolidation to curb the rise in public debt and rebuild fiscal buffers.

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Localities get ready for fourth FDI boom

As the year 2024 is expected to witness the start of the fourth wave of foreign direct investment (FDI) to Việt Nam, localities nationwide are getting ready to absorb foreign capital flows.

The shift in global production chains, especially in core technology, chip technology and future technology industries, is opening up many opportunities for Việt Nam to attract high-tech FDI capital.

In the first quarter of 2024, Việt Nam registered US$6.17 billion of FDI capital poured in 17 out of 21 economic sectors, an increase of 13.4 per cent over the same period.

During a working session with Vietnamese Minister of Planning and Investment Nguyễn Chí Dũng in China late last month, Chinese Minister of Commerce Wang Wentao said that some Chinese production chains in textiles, household appliances and wooden furniture have moved to Việt Nam. Chinese investment in Việt Nam is increasing rapidly, particularly in the electronics sector. Many Chinese supporting businesses that supply products to major global electronics companies like Samsung and Apple have also set up factories in Việt Nam after surveying other competing countries.

As part of the shifting trend, Taiwanese Quanta Computer Inc Group – one of the largest computer manufacturers in the world, specialising in assembling MacBooks for Apple – decided to build its ninth computer factory in Mỹ Thuận industrial park in Việt Nam’s northern province of Nam Định with a registered capital of US$120 million and a capacity of 4.5 million products per year in Phase 1.

Trần Anh Dũng, Vice Chairman of the Nam Định provincial People’s Council said that to attract investors, the province has made preparations in all aspects from land funds for infrastructure development in industrial parks and economic zones, human resources, energy infrastructure and supporting industries to procedures. As a result, investment registration procedures for the project were completed within just 24 hours after receiving the dossier and only 15 days after the signing of the project development agreement. This shows the importance of a supportive eco-system in attracting investment.

Đỗ Nhất Hoàng, Director of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, said that a new wave of FDI is coming to Việt Nam. In the new southern policy of the Republic of Korea (RoK), Việt Nam is placed at the top position in attracting investment. Many MoUs between businesses of the two countries have been implemented since the official visit of the RoK President to Việt Nam in June 2023.

Hoàng affirmed that in this period, Việt Nam looks for investment in high technology, and new technology and says “No” to projects with outdated technology, environmental risks or labour-intensive ones.

The fourth FDI wave to Việt Nam is expected to bring US investment capital flows as many US business delegations are surveying the semiconductor chip ecosystem in Việt Nam. Many European business delegations are also surveying opportunities in Việt Nam with special attention to the country’s green growth strategy and its commitment to net-zero emission reduction by 2050.

Việt Nam has been concentrating on preparing clean land funds through infrastructure development in industrial parks, training high-quality human resources, developing new electricity sources, and logistic services and improving business climate, Hoàng said.

He added that in the past, it was difficult for FDI investors to meet provincial leaders and officials, but now top provincial leaders are willing to meet, discuss and support investors to solve their business problems.

To attract high-tech projects, economists recommended that the Government improve competitiveness by building an appropriate investment incentive policy framework, especially when Việt Nam started applying the global minimum tax regime on January 1, 2024.

In particular, Việt Nam needs to have policies to support domestic enterprises so that they can participate deeper in the supply and production chains of FDI enterprises, especially in the high technology segment.

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Garment & textile sector tries to keep growth momentum

The Vietnamese garment and textile sector is carrying out various measures to bolster production and business activities amidst formidable challenges posed by falling demand, high inventory, and geopolitical instability in several countries, according to insiders.

Enterprises have received more export orders but seen no improvement in prices while several contracts even plunge 30-50 per cent in value, they said.
Furthermore, cotton prices are expected to soar in the coming time due to speculation and logistics difficulties. In the meantime, it could be hard for Vietnamese firms to compete in the Chinese market where tax incentive and support policies on transport costs and electricity have been rolled out to back up domestic production.

Against this backdrop, General Director of the Vietnam National Textile and Garment Group (Vinatex) Cao Hữu Hiếu said that firms need to capitalise on all opportunities, make rational forecast, and get updated with the situation so as to take timely measures.

Besides, they should drastically restructure their organisations, apply advanced management solutions, and push ahead projects that help improve productivity, he added.

Vinatex Chairman Lê Tiến Trường stressed that besides challenges, there is ample room for development for those with sound business strategies, diverse products, deep engagement in supply chain, and rational steps towards digital economy and green economy.

The group will keep a close watch on the market and operation of its members so as to pen flexible and breakthrough measures to develop products and seek new markets to ensure business efficiency, he said.

Meanwhile, Chairman of Hưng Yên Garment Corporation Joint Stock Company Nguyễn Xuân Dương held that high input cost and workforce transition to such markets as the Republic of Korea and Japan have placed a burden on the company.

Along with global demand falling by 5-10 per cent, large fashion brands teetering on the brink of bankruptcy is another challenge that makes it hard for Vietnamese firms to recover tens of millions of US dollar, he said.

Duong suggested competent ministries and sectors to issue suitable policies to help enterprises get access to capital to strengthen investment and bolster production, adding workers also need assistance to improve their livelihoods.
During January – March, the garment and textile sector’s export turnover grew nearly 10% year-on-year to some $10 billion, a locomotive for enterprises to fulfill the set target of $44 billion for the whole year.

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VN focuses on revitalising aggregate demand and sustainable growth for 2024 economic prospects”

Việt Nam’s economic prospects for 2024 involve revitalising aggregate demand, promoting sustainable growth, and improving the investment environment to drive long-term development.

A national scientific seminar titled “Việt Nam Economy in 2023 and Prospects for 2024” was held in Hà Nội on Wednesday. The seminar, organised by the National Economics University (NEU) in collaboration with the Party Central Committee’s Economic Commission, marked the release of the annual publication “Việt Nam Economic Assessment 2023” under the theme “Promoting Aggregate Demand for Economic Growth in the New Context.”

During the seminar, experts assessed the current state of aggregate demand and its components, identified achievements, limitations, and underlying causes. They also evaluated the contributions of different factors to economic growth and proposed directions and policy recommendations for economic management in 2024 and beyond, with a focus on promoting aggregate demand and ensuring sustainable economic growth in the changing landscape.

Professor Phạm Hồng Chương, the Rector of the National Economics University, emphasised the challenges faced by the Vietnamese economy in 2023. He highlighted the difficulties arising from global economic slowdown, high global inflation, tightened monetary policies in many countries, and increased geopolitical tensions. These factors led to lower economic growth compared to the pre-COVID-19 period, particularly due to weakened aggregate demand, consumption, and investment, as well as a lack of improvement in growth quality.

Aggregate demand plays a vital role in determining economic activity, employment levels, and overall growth. A decline in aggregate demand indicates the risk of an economic recession, impacting industrial production, employment rates, and people’s income and expenditure.

To address these challenges, the Government and relevant entities must promptly implement appropriate measures to strengthen the drivers of recovery and create conditions for economic development in the new context. Restoring aggregate demand is essential for Vietnam’s economic stability and growth.

Dr. Nguyễn Đức Hiển, Deputy Head of the Central Committee’s Economic Commission, emphasised the decline in aggregate demand, which affected all three components: investment, exports, and consumption. Social investment in 2023 saw a modest increase of 6.2 per cent compared to the previous year. State sector investment from the budget reached only 85.3 per cent of the annual plan, while non-state sector investment and foreign direct investment (FDI) also experienced slower growth.

Furthermore, both exports and imports witnessed significant declines in 2023, attributed to reduced demand from major markets such as the United States, ASEAN, the EU, and certain East Asian countries. Consumer spending also decreased, with retail sales of goods and consumer service revenues growing at a slower rate compared to the previous year.

Professor Tô Trung Thành from the National Economics University suggested that in 2024, the government should focus on demand-oriented policies to revive consumption, investment, and exports in the short term. Fiscal policy should play a central role in providing support, while monetary policy can complement these efforts.

In the long term, the government needs to improve the investment environment and facilitate private investment as the primary driver of sustainable economic growth, as relying solely on public investment is not a viable solution, he said.

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Việt Nam earns $1.43b from rice exports in Q1

Việt Nam in the first quarter of 2024 exported 2.18 million tonnes of rice, earning US$1.43 billion, an increase of 17.6 per cent in volume and 45.5 per cent in value year on year.

Meanwhile, the average export rice price also increased by 23.6 per cent to $653.9 per tonne.

According to preliminary statistics from the General Department of Customs, in March 2024, Việt Nam’s rice exports increased by 99.7 per cent in volume and 90 per cent in turnover compared to February 2024, reaching over 1.12 million tonnes valued at $709.6 million.

The Philippines was the largest export market of Vietnamese rice in the first three months of 2024, reaching over 1.01 million tonnes, worth about $649 million. The exports accounted for 46.4 per cent of Việt Nam’s total volume and 45.5 per cent of the total value.

The export price to this market reached $641.7 per tonne, up 27.3 per cent compared to the first three months of 2023.

Rice exports to Indonesia ranked the second, increasing sharply by 199.7 per cent in volume and 308.8 per cent in revenue to 445,326 tonnes and $285.06 million. The average export price surged by 36.4 per cent to $640 per tonne.

The third largest market was Malaysia with a growth of 28.8 per cent in volume and 60.6 per cent in turnover to reach 98,917 tonnes and $61.55 million, respectively.

In 2024, Việt Nam aims to maintain rice cultivation area of 7.1 million hectares and rice output of over 43 million tonnes, ensuring domestic consumption and export of over eight million tonnes of rice.

The rice exports last year witnessed a breakthrough, with volume reaching 8.1 million tonnes worth $4.7 billion, up 14.4 per cent in volume and 35.3 per cent in value compared to the previous year. This is a record high export for Việt Nam’s rice industry.

According to the Ministry of Industry and Trade, as of January 22, 2024, Việt Nam had 161 eligible traders to export rice.

Hồ Chí Minh City is the locality with the most rice exporters, with 36 traders. Followings are Cần Thơ (34 traders), Long An (22), Đồng Tháp (15) and An Giang (14).

Some other localities have only one trader qualified to export rice, including Hà Nam, Hậu Giang, Khánh Hòa, Lạng Sơn and Thanh Hóa.

State reserves department authorises purchases of 220,000 tonnes of rice for 2024

The Government has greenlit a plan to purchase a total of 220,000 tonnes of rice for the year 2024, according to the General Department of State Reserves.
The plan included 22 reserve departments in cities and provinces across the country, who are put in charge of 196 bidding packages to purchase domestically produced, long grain 15 per cent broken rice, milled from the 2024 Spring harvest.

Contractors are to compete in open as well as online bidding sessions this month with a deadline set on May 2.

For bidding packages valued at over VNĐ10 billion, contractors must produce a security deposit of 3 per cent of the package and 1.5 per cent for those valued under the amount. The winners will be announced and published by the national bidding system.

In cases of price fluctuations, local reserve departments are tasked with reporting to the general departments for guidance and instructions to ensure purchase prices will not exceed those regulated by the Ministry of Finance.