INVESTMENT IN TEXTILE IN VIETNAM Presented by: Mr. Nguyen Van Tuan Chairman of Vietnam Cotton and Spinning Association (VCOSA)

Transcription

1 INVESTMENT IN TEXTILE IN VIETNAM Presented by: Mr. Nguyen Van Tuan Chairman of Vietnam Cotton and Spinning Association (VCOSA) 1

2 Content I. Vietnam Textile Industry 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 2

3 I. Vietnam Textile Industry in overview 1. Export turnover Export stands for 80% - 85% of total revenue - Average growth rates of ; and 2016 are 15%, 18% and 5.5% respectively. 3

4 I. Vietnam Textile Industry in overview 2. FDI into Vietnam textile Sector 1/ /12/2013 1/ /6/2016 Spinning Fabric production Garment Total

5 I. Vietnam Textile Industry in overview 3. Current situation of Vietnam Textile 5

6 I. Vietnam Textile Industry in overview 4. Export structure in 2016 No. Product Quantity Amount (billion USD) Market 1 PSF 90,000 ton 0.1 ASEAN 2 Filament 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

7 I. Vietnam Textile Industry in overview 5. Comment Textile and apparel exports account for 80-85% of total industry revenue. 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 heavily depends on imported fabric (6.5 billion meters per year, equivalent to 75% of demand) and is vulnerable. 7

8 II. The impact of TPP on the industry 1. The impact of TPP With the yarn forward formula in exchange for the duty elimination from 17.5% to 0% at the US market (accounting for 50% total export), TPP is the main driving force for domestic fabric production. The summarizing FDI into Vietnam 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/ /12/2013 1/ /6/2016 Spinning Fabric production Garment Total

9 II. The impact of TPP on the industry 2. Review the wave of FDI to welcome TPP a) Typical projects No Company Nationality Amount (mil. USD) 1 TAL Hong Kong 60 2 THIEN SUN JV Hong Kong & Japan 80 3 HAPUTEX Hong Kong CRYSTAL PACIFIC Hong Kong HUAFU Hong Kong LU THAI Hong Kong BROS EASTERN Hong Kong TEXHONG China YULUN China 68 9

10 II. The impact of TPP on the industry 2. Review the wave of FDI to welcome TPP No Company Nationality Amount (mil. USD) 10 SHENGZHOU China WORLDON China YU YUANG Taiwan POLYTEX FAR EASTERN Taiwan SHEICO Taiwan GLOBAL DYEING Korea HYOSUNG Korea PANKO Korea 70 10

11 II. The impact of TPP on the industry 2. Review the wave of FDI to welcome TPP 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. 11

12 III. The development directions in the context without TPP 1. Goals Try to maintain the annual growing rate of 6 8% during the period of In order for Vietnam's textile and garment to develop in a stable and sustainable manner, the task of the industry is to promote domestic fabric production, meeting the needs of the industry. If the fabric produced domestically meets the demand, Vietnam's textile and garment industry will not only increase its share in the value of exports and domestic consumption, contribute to the growth of GDP but also create more jobs, build a firm foundation for the development of the industry in a stable and sustainable manner that is precondition for the development of the fashion industry. The solution to this objective is to increase the attractiveness of foreign investment combined with the promotion and support of domestic firms involved in fabric production. 12

13 III. The development directions in the context without TPP 2. Perspective by 2025 Item Unit Quantity / - Labour Mil. pax Materials Cotton, VSF, PSF, filament fiber (Mil. MT) Spinning Mil. spindles Fabrics Bil. m Export Bil. USD

14 III. The development directions in the context without TPP 3. Main subjects are also interested in investing in fabric production in Vietnam without TPP No. Subject Nationality Reasons 1 Yarn 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 2 The 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 14

15 III. The development directions in the context without TPP 4. Investment Opportunities Item Unit Quantity Materials (Cotton, VSF, PSF, filament fiber) MT 2.7 million Spinning Spindles 10.7 million Fabrics m billion In which, FDI in fabric production is of high appreciation and support by the Government of Vietnam 15

16 III. The development directions in the context without TPP 5. Solutions for FDI attracting To set up large-scale industrial zones specializing in fabrics production in suitable locations in Vietnam with complete infrastructure system. The government has preferential policies and supportive solutions for each investor. Especially create conditions for domestic enterprises to develop, in which promotes the launching of the model of "Vietnam Textile Village". Enhance the role of associations to increase investment connections between domestic and foreign enterprises. Study on the possibility of promoting the negotiation on the Vietnam-US Bilateral Trade Agreement. 16

17 IV. Rang Dong IP - the ideal place to invest 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 Industrial park (Phase I) Industrial park (Phase I) Industrial park Industrial park (Phase II) (Phase II) Life Support District Life Support District 17

18 IV. Rang Dong IP - the ideal place to invest 2. Total area 2,044 ha 519 ha 850 ha 675 ha 18

19 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. 19

20 IV. Rang Dong IP - the ideal place to invest 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 20

21 IV. Rang Dong IP - the ideal place to invest 4. Implementation schedule Phase I: 5 years ( ) Phase II: 5 years ( ) Supporting area: 7 years ( ) 21

22 IV. Rang Dong IP - the ideal place to invest 5. Expected Results (When completed) 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 22

23 IV. Rang Dong IP - the ideal place to invest 6. Staging implementation Section 1: 300 ha; during Section 2: 219 ha; during

24 Trung Quốc, 375 Thái Lan, 366 Indonesia, 234 Philippines, 248 Ấn Độ, 217 Việt Nam, 162 Cam pu chia, 101 Bangladesh, 86 Indonesia, 346 Philippines, 327 Ấn Độ, 269 Việt Nam, 250 Cam pu chia, 147 Bangladesh, 112 USD/month Trung Quốc, 625 Thái Lan, 578 IV. Rang Dong IP - the ideal place to invest 7. The motivation for investment a) Cheap labour force Base Salary Total Pay Burden * Souce: JETRO 12/

25 IV. Rang Dong IP - the ideal place to invest 7. The motivation for investment b) Low production Costs - Electricity (7cents/kw) - Land leasing (40 60 USD/m 2 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 25

26 IV. Rang Dong IP - the ideal place to invest 7. The motivation for investment c) The size of export markets Signed and effective ATIGA ASEAN - China ASEAN - Korea Vietnam - Japan Vietnam - Chile Vietnam - Korea Signed and effective ASEAN - India ASEAN Australia, New Zealand Vietnam VN Eurasian Economic Union ASEAN - Japan VN EU FTA TPP Conclude negotiation await ratification RCEP VN - Cuba ASEAN - Hongkong VN - Israel On going negotiation 26

27 Thank you for your attention 27