Vietnam Faces Hobson’s Choice In Resolving Textile Investment Imbroglio

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The textile and garment industry investors cried foul on local authorities in Vietnam rejecting permission for new textile and dyeing projects on grounds that it will exacerbate the existing pollution problem in the country.

Analysts who have studied the textile value chain in Vietnam reported that there is a big imbalance in the investment profile in different links of the production chain. This imbalance is one of the biggest problems faced by the textile and garment industry. One of the analysts said, “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.”

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This is a major inhibiting factor for Vietnam to avail full benefits of the CTPP and Free Trade Agreements (FTAs) it has signed with various foreign governments. This sets constraints on the set requirements of the proportions of materials made in Vietnam and its FTA member countries. Stating this, the analyst said, “It would be prudent for Vietnam to make higher investments in textile and dyeing. The problem will get automatically resolved. However, this is a solution that is very difficult to implement.”

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According to an industry analyst, “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.” 

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