Vietnam’s textile sector brings in $37 billion in FDI

VITAS said that Vietnam was home to around 3,500 foreign-invested textile and garment projects worth $37 billion, boosting the sector’s production capacity and making a significant contribution to export turnover.

The foreign-invested enterprises play an important role in the textile and garment sector, contributing 65 per cent to the sector’s total export turnover. Major investors mainly come from South Korea, Taiwan, Hong Kong, and China. Among them, South Korea is the largest foreign investor in Vietnam’s textile and garment sector.

The expansion of foreign direct investment (FDI) has boosted both the scale and capacity of the local textile and garment sector. Vietnam is still the third-largest textile and garment exporter worldwide, trailing behind China and Bangladesh. In 2022, the country's textile and garment export turnover surpassed $44 billion, a huge leap from $2 billion in 2000.

In 2023, Vietnam’s textile industry posted an export turnover of $40.3 billion, down 10 per cent from the previous year due to shrinking demand from major markets like the United States and EU.

In the first four months of 2024, textile and garment orders have shown signs of improvement, with an export turnover of $10.3 billion, up 6.3 per cent on-year. The US is the top export market for Vietnam’s textile and garment products, followed by the EU, South Korea, China, and Japan.

The industry currently imports nearly all of its cotton and spends tens of billions of dollars on raw fabric each year. Over the past four months, cotton imports reached over $1 billion, an increase of 20.2 per cent on-year.

The import value of fabric was up 6.5 per cent to $4.34 billion. The figure for textile yarn was $833 million, an increase of 22.5 per cent. Meanwhile, $2.24 was spent to import raw materials for textiles, garments, and footwear, a rise of 18.9 per cent against last year’s period.

The leading localities in FDI attraction in the textile and garment sector are Dong Nai, Binh Duong, Tay Ninh, Long An, Nam Dinh, Hai Duong, and Binh Phuoc.

Companies seek to diversify supply chains to tap into opportunities from a wide range of new-generation free trade agreements and an increasing flow of investments into the local market.

Despite its continued reliance on traditional markets, the garments and textiles industry in Vietnam is gaining momentum for a gradual recovery in 2024 due to the diversification of its consumer base, products, and markets.

At a conference on March 14 to resolve difficulties in manufacturing and to promote growth and macroeconomic stability, Le Tien Truong, chairman of Vietnam National Textile and Garment Group (Vinatex), provided a stark overview of the garments and textiles industry with the prime minister and numerous business leaders from various sectors in attendance.