Textiles and garment industry expected to achieve double-digit growth after TPP is signed.
Savills has announced that large-scale projects approved for the textile and garment industry in the first half drove the development of the manufacturing and processing sector, which accounted for 76 per cent of fresh foreign direct investment (FDI) commitments of $4.18 billion to Vietnam in the period.
The textile and garment industry is expected to achieve double-digit growth when the TPP is approved. The agreement stipulates that fabric and final garments exported within the TPP must be produced in TPP member countries. Investors from China, Taiwan, and Hong Kong have recently entered the fray to stay one step ahead of the TPP’s approval.
Recent research by Standard Chartered Bank showed a shift in investment from China to the ASEAN community in a bid to capitalize on the TPP. Forty-four per cent of respondents said they would choose Vietnam for its large domestic market, 29 per cent for its lower operational costs, and 18 per cent for its ample labor supply.
Notably, tech giant Microsoft has closed its two Nokia plants in China in favor of a new location in Vietnam. The company was reported to be expanding its $210 million plant at northern Bac Ninh province’s Vietnam-Singapore Industrial Park, tripling its existing head count of 5,000.
Ho Chi Minh City is the economic hub of the Southern Key Economic Zone, which has received the largest number of FDI projects. In the first half the UK was the largest investor, accounting for 59 per cent of FDI, followed by the British Virgin Islands with 15 per cent and South Korea with 10 per cent.
In the first quarter there were 16 operating industrial parks (IPs) with 2,300 ha of leasable in the city, attracting $425 million in FDI, an increase of 50 per cent year-on-year.
In Hanoi and the Northern Key Economic Zone, meanwhile, there are a total of 12 operating IPs and high-tech zones on a total area of 2,400 ha with approximately 1,500 ha of leasable area. In August Hanoi’s industrial parks attracted $55.1 million in investment capital, an increase of 52 per cent year-on-year.
There are a total of 588 projects in Hanoi’s IPs, including 312 FDI projects with total registered capital of $4.85 billion and 276 domestic investment projects with more than $530 million in registered capital.