Vietnam’s textiles and apparel sector is seeing a decline in foreign direct investment (FDI) during the past several years, and the sector is being held back by its reliance on imports of raw materials, according to the Viet Nam Textile and Apparel Association.
FDI in the sector has fallen from an annual average of US$ 460 million during the peak period of 2000-08, and the number of FDI projects has also decreased during the past three years.
Total registered capital from foreign investors in the sector for 2009 and 2010 was at $185 million and $169 million respectively.
Foreign investors also focused heavily on garment making that required low investment capital. They paid less attention to the production of raw materials and accessories such as fabrics and processing such as dyeing, that required high investment capital and high technologies and no promise of a quick return on investment, said the association.
Le Quoc An, former chairman of the association, attributed the situation to the fact that Viet Nam still lacked industrial zones specialising in fibre, textile and dyeing on large enough scale to attract major overseas companies.
Viet Nam earned $ 14 billion from textile and apparel exports last year, but it had to spend up to $ 9 billion on imports of raw materials and accessories.
An said the reliance on imports was the Vietnamese clothing industry’s greatest weakness. However, he said it was also a good opportunity for the sector to organize its investment priorities and plan for solid growth in the future.
“Once the sector does this, giant foreign investors will enter Viet Nam,” An said.