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TRANSCRIPT
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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I. Vietnam Textile Industry 2000 – 2016 in overview
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
I. Vietnam Textile Industry 2000 – 2016 in overview
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3. Current situation of Vietnam Textile
I. Vietnam Textile Industry 2000 – 2016 in overview
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4. Export structure in 2016
I. Vietnam Textile Industry 2000 – 2016 in overview
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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
I. Vietnam Textile Industry 2000 – 2016 in overview
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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.
II. The impact of TPP on the industry
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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
II. The impact of TPP on the industry
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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
II. The impact of TPP on the industry
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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
2. Review the wave of FDI to welcome TPP
II. The impact of TPP on the industry
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a) Recognition
2. Review the wave of FDI to welcome TPP
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.
III. The development directions in the context without TPP
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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
III. The development directions in the context without TPP
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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
III. The development directions in the context without TPP
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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
III. The development directions in the context without TPP
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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
III. The development directions in the context without TPP
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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.
IV. Rang Dong IP - the ideal place to invest
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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IV. Rang Dong IP - the ideal place to invest
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.
IV. Rang Dong IP - the ideal place to invest
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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
IV. Rang Dong IP - the ideal place to invest
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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
IV. Rang Dong IP - the ideal place to invest
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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)
IV. Rang Dong IP - the ideal place to invest
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Section 1: 300 ha; during 2016 – 2017
Section 2: 219 ha; during 2018 – 2020
6. Staging implementation
IV. Rang Dong IP - the ideal place to invest
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7. The motivation for investment
IV. Rang Dong IP - the ideal place to invest
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Souce: JETRO
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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
7. The motivation for investment
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IV. Rang Dong IP - the ideal place to invest
c) The size of export markets
7. The motivation for investment
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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
IV. Rang Dong IP - the ideal place to invest
Thank you for your attention
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