Most capital in first seven months heading to textiles sector.
The Foreign Investment Agency (FIA) under the Ministry of Planning and Investment has announced that in the first seven months of this year Vietnam attracted nearly $9 billion in foreign direct investment (FDI), primarily to the textiles sector in a number of multi-million dollar projects.
Textile becomes appealing
Most recently, the Polytex Far Eastern Co. from Taiwan invested $274 million in a project producing and processing yarn at the Bau Bang Industrial Park in southern Binh Duong province.
Previously there were a series of other foreign investors pouring capital into the sector. Significantly, the Hyosung Vietnam Limited Company, a Turkish investor, invested $660 million in a project producing and processing yarn in industrial zones in southern Dong Nai province. Meanwhile, a British Virgin Islands investor, Worldon Vietnam Co., also invested $330 million in a project producing high-grade garments in Ho Chi Minh City.
It is clear to see that FDI flowing into the textiles sector in the first seven months is a new feature of FDI attraction this year. Many experts believe that the progress in negotiations over the Trans-Pacific Partnership (TPP) has made the textiles sector become more attractive in the eyes of foreign investors.
They also predicted that the number of large-scale projects in the sector would continue to increase. Because of the “yarn forward” rule in the TPP, which requires businesses operating in the textiles sector to use domestically-produced yarn or yarn from other members of the TPP, there are many investors investing in yarn production in Vietnam.
The appearance of several major textile projects helped the total FDI capital in the textiles sector to exceed $1 billion, with manufacturing seeing the most FDI and raising total foreign investment to nearly $9 billion in the first seven months.
FIA also revealed that in the seven-month period the total of newly-registered capital and additional capital was $8.8 billion, a decline compared with the same period of last year. But the number of newly-registered capital reached $6.9 billion, an increase against last year’s $6.8 billion, with additional capital falling. In the seven months additional capital was just $1.8 billion, or approximately 70 per cent of the figure in the same period of 2014.
It also indicated that the three sectors leading the way in attracting FDI in July were still processing and manufacturing, with $1.95 billion, real estate, with $1.23 billion, and wholesale, retail and repair, with about $18 million. They were also the leading sectors in the first seven months, with $6.1 billion, $1.7 billion, and $295 million, respectively.
In July the ranking of countries and territories investing in Vietnam changed. The UK rose to second place, ousting Turkey, with total investment capital of $1.25 billion. South Korea held on to its lead, with $1.91 billion, while the British Virgin Islands was third, with total investment of $835 million.