One of the biggest problems of the textile and garment industry, as pointed out by analysts, is the imbalance in investments in different links of the production chain. While 90 percent of total FDI (foreign direct investment) into the industry is poured into garment projects, only 8.3 percent of capital is used for textile and dyeing factories.
With the imbalance, Vietnam may not be able to take full advantage of CPTPP and other FTAs (free trade agreement) which all set requirements on the proportion of materials made in Vietnam and FTA-member countries.
Making higher investments in textile and dyeing, therefore, is a solution to help settle the problems of the industry. However, it is difficult to implement the plan.
Local authorities have become ‘reluctant’ to license textile and dyeing projects because of the concern about pollution. While they compete fiercely with each other to attract investment projects to their localities, they tend to ignore textile and dyeing projects.
Three years ago, Da Nang authorities stirred up the public when refusing a textile, dyeing and garment project registered by a Chinese enterprise, despite huge investment capital of $200 million.
Dong Nai and Ba Ria-Vung Tau provinces in the south have put textile and dyeing on the list of business fields in which they don’t encourage investment.
The Dong Nai provincial authorities disagreed on the registration for production expansion made by J.M Textile in Long Thanh IZ in Long Thanh district.
The waste water treatment system in the Long Thanh IZ runs at nearly full capacity, while the volume of waste water treatment from textile and dyeing factories are very big and it is not easy to treat waste to obtain standard waste water.
Dong Nai authorities decided to reject production expansion to protect rivers and streams in the province.
The $350 million textile and dyeing project registered by TAL Group is reportedly still on the table of Vinh Phuc high ranking officials.
It is still unclear if the project will get the operation license. Meanwhile, experts and scientists attending a workshop discussing the possible impact of the project on the lenvironment, recommended that local authorities say ‘no’ to the project.
The Vietnam Textile & Apparel Association (Vitas) is concerned as more localities are not licensing textile and dyeing projects.
“If local authorities continue refusing textile and dyeing projects, Vietnam will have to continue doing outsourcing for foreign partners, because it doesn’t have fiber and fabric for export,” said Truong Van Cam, deputy chair of Vitas.