FDI in textile industry: "The outdated technology is still invested because it is cheap"

By Minh Nguyen - Oct 02, 2017 | 06:49 PM GMT+7

TheLEADEROutdated technology from China is coming to developing countries and Vietnam is believed to be an opportunity market, especially in the field of textile investment.

FDI in textile industry: "The outdated technology is still invested because it is cheap"
Taiwan is the country that invested most in Vietnam's textile industry. Photo: FIA

According to data from the Foreign Investment Agency (under Ministry of Planning and Investment), out of a total of US$4.981 billion in FDI inflows into 228 textile projects in the past five years, there were only five joint ventures with total registered investment capital of US$192 million. The remaining 223 projects were 100% foreign investment.

Among the nations and territories investing in the textile industry in Vietnam, Taiwan ranked first with US$1.016 billion. This amount was much higher than other countries' total capital.

According to many experts, although the United States decided to withdraw from the TPP (Trans-Pacific Strategic Economic Partnership Agreement), many textile enterprises in Taiwan, Hong Kong, China continue to expand investment in Vietnam.

It is considered the choice of "good land" to take advantage of low cost of production and cheap labor instead of the preparation to get the benefit from the TPP.

The fourth industrial revolution is being widely discussed in China. One of the prominent projects of this country is the "Made in China 2025" strategy announced in May 2015 to promote the country's manufacturing industry within the next 10 years. China's road map is to replace low-cost industry that consumes a lot of energy and pollutes the environment.

According to Nguyen Duc Thanh, head of Vietnam Institute for Economic and Policy Research (VEPR), the labour cost in China is increasing and this country is moving towards automation and high technology. Old technology from this country will come to Bangladesh, Sri Lanka or Vietnam. He said that Vietnam could be an opportunity for these investors.

Nguyen Duc Thanh also added that the old technology is like the sale product but it is still bought because it is cheap. This is an indispensable trend but not necessarily tragic.