Mar 29, 2018 / 09:29

Foreign investors target garment shares to seize CPTPP

Foreign investors spent VND810 billion (US$35.68 million) to buy 50 million shares of the Vietnam National Textile and Garment Group (Vinatex), aimed to seize opportunities from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Vietnam’s textile and garment.

The purchase, which is equal to 10 percent of Vinatex’s charter capital, raised the foreign ownership at the group to 16.81 percent.
 
Foreign investors hold 16.81 percent of Vinatex’s charter capital
Foreign investors hold 16.81 percent of Vinatex’s charter capital
Currently, the Ministry of Industry and Trade holds 53.49 percent of Vinatex. Other two strategic investors of the group are Vietnam Investment Development Group (VID) with 14 percent and Vingroup Joint Stock Company with 10 percent.
Earlier, many shares of textile and garment companies such as Vinatex (VGT), Viet Tien Garment Corporation (VGG) and Thanh Cong Textile Garment Investment Trading Joint Stock Company (TCM) saw significant rise in the first month of the year thanks to the expectation from the signing of CP TPP. However, the group of shares has cooled down and declined for the past two weeks.
According to Pham Hong Hai, general director of HSBC Bank (Vietnam), with the United State not present in the CPTPP, Vietnam’s benefits may be less than the TPP, for example, GDP will only move up 1.32 per cent instead of 6.7 per cent, exports will increase by four per cent instead of 15 per cent. However, in general, industries like garments and textiles, leather footwear and labor intensive ones will still benefit.
Vietnam will be able to take advantage from accessing to member markets of the deal, especially those on the other side of the Pacific like Canada and Mexico.
According to Deputy Director of Vinatex Le Tien Truong, the textile and garment sector earned $4.3 billion from exports in the first two months this year, up 22.3 percent year on year. 
With the significant rise in exports posted in the first two months of the year, Vietnam’s textile and garment industry expected to meet the 10 percent growth target set for 2018.
To realize the target, the sector will improve product quality and ensure on-schedule deliveries at reasonable prices to enhance its competitiveness. 
The use of technology will be enhanced to increase automatic production, as well as IT-based management and workers’ skills. 
To boost exports, Truong Van Cam, deputy president of the Vietnam Textile and Apparel Association (Vitas), said that the industry has been striving to apply modern technologies, especially industry 4.0 technologies in production to improve efficiency, productivity, diversify products and enhance product quality for higher added value.
Nguyen Xuan Duong, President of the Hung Yen Garment Corporation, said: “In 2018, there might be many orders and a great volume of products but prices will drop. It’s a common trend in all markets and is causing headaches for Vietnamese garment and textile enterprises because all types of input costs including workers’ salaries are on the rise. Increasing labor productivity through improving technology, equipment, and business management is considered the only solution.”
Vitas has so far also proposed that the Government review its policies of wages, insurances, administrative procedures and checks for import/export for amendments to remove the bottlenecks for garment and textile companies.
Pham Tat Thang, a senior researcher with the Ministry of Industry and Trade, also noted that Vietnam's textile and garment import markets are experiencing unforeseen fluctuations caused by trade protectionism.              
Major markets are closing and this affects Vietnam. With competitors like Pakistan and China thriving, Vietnam must improve its competitiveness. Domestic companies should invest more in technology to catch up with the tendency, Thang said.