Textile and garment enterprises rush to sell factories

Besides difficult cases, many newly established textile and garment enterprises have also been put up for sale to foreign partners recently, in the context of Vietnam preparing to join the TPP.

The phenomenon of transferring factories and workers in the textile industry has been happening vigorously recently. In the past 2 months, there have been hundreds of announcements of transfers worth up to hundreds of billions of VND. In particular, on websites advertising factories for sale, the textile sector accounts for the majority.

A typical example is a garment factory on Phan Huy Ich Street (Go Vap District, Ho Chi Minh City) with a campus of up to 7,000m2, a factory area of ​​5,000m2, 450 sewing machines and 450 workers in operation. According to this company, if the buyer wants to transfer the whole thing, they will have to pay 10 billion VND.

Another company has a factory in Long Hau Industrial Park (HCMC) with an area of ​​5,300m2 and full infrastructure, and is also looking to transfer it for 26 billion VND.

In Dong Thanh commune, Hoc Mon district, a 2,200 square meter production facility including an office, a rest house for workers, a kitchen, 6 sewing lines and 120 workers is also being offered for sale at 11 billion VND.

Many textile and garment enterprises were established with the aim of selling to foreign partners. Photo: QH

In addition to transferring and selling factories that have been in operation for many years, the phenomenon of domestic enterprises completing construction and reselling them to foreign enterprises also occurs everywhere. There are factories that are actually invested by foreign investors, but are registered under the name of Vietnamese owners, and then transferred after a while.

In early October, through discussion, a leader of the Ministry of Science and Technology said that a few days after completing negotiations on the Trans-Pacific Partnership Agreement - TPP, many businesses called him to ask about the procedures for applying for licenses for fiber, weaving, and dyeing projects. When asked about investment capital, most of these businesses said they came from foreign organizations, mostly Chinese and Taiwanese investors.

“Usually, when applying for large-scale textile projects, the management agency is often quite considerate, especially for foreign investors. In particular, dyeing and weaving projects are closely related to environmental issues, so obtaining an operating license is not easy. However, to proceed faster, investors often choose to transfer from Vietnamese partners,” said this leader.

According to the Ministry of Planning and Investment, since the beginning of the year, nearly 30 textile and garment projects have been granted investment licenses. Notably, localities in the Southern Key Economic Zone have exceeded their annual plans for attracting foreign direct investment. In particular, textile and garment is one of the top industries in attracting capital.

FDI capital in the textile and garment sector will continue to flow strongly into Vietnam. It is expected that in 2016, a part of the total 300 million USD in funding from the Indian Government for textile and garment cooperation projects between the two countries will be transferred to Vietnam to be materialized through investment projects in the production of raw materials.

At the press conference on the results of production and business activities in 2015 held on December 21, talking to VnExpress, Mr. Hoang Ve Dung - Deputy General Director of the Textile and Garment Group (Vinatex) said that when free trade agreements are signed, the opportunities for all businesses operating in Vietnam are the same, regardless of whether they are Chinese, Japanese, Korean or Malaysian businesses established in any form.

However, with regards to businesses that invest illegally, impersonate Vietnamese businesses to bring in old machinery and equipment, this person affirmed that "the group absolutely does not support". Although the licensing story is related to management policies in many localities, he is concerned that "if any problems occur, it will cause damage to domestic textile units and even legitimate FDI businesses.

Although there was a textile and garment industry plan before, this person said that Vinatex had recommended to the Government and localities to have a more detailed plan to be able to form a production chain from raw material areas, fiber factories, weaving, dyeing to garment satellites. Bring factories to districts and communes to take advantage of available labor resources.

At the same time, to take advantage of all opportunities that FTAs ​​bring, according to the group's leaders, in the coming time, they will disseminate and communicate to each member enterprise so that they can better understand the terms and increase competitiveness; otherwise, the domestic textile and garment industry will lose right at home.

Assessing the general situation, Mr. Pham Xuan Hong - Vice President of Vietnam Textile and Apparel Association said that the textile and garment industry now has to do both economic and social activities, so economic efficiency is not high.

Relatively large and medium-sized enterprises still maintain stable business operations. Some small enterprises face many difficulties, so many units change their business lines. Therefore, recently the situation of transferring factory premises has also been strong.

In addition, to anticipate the TPP, many foreign investors want to accelerate their investment in Vietnam, so they seek to buy and merge textile and garment enterprises. Others choose to stand behind Vietnamese enterprises. Thus, depending on the benefits they achieve and the financial potential of each unit, they have different directions.

However, the leaders of the Ministry of Science and Technology as well as Mr. Hong advised that enterprises acting as "shields" for foreign enterprises should be cautious. Depending on the form and scale of investment, there should be a way to negotiate and consider appropriately.

According to the Ministry of Planning and Investment, localities should have plans to monitor environmental protection activities for textile industrial parks and projects involving dyeing, weaving, etc. Notably, when granting investment registration certificates for projects in the textile sector, management agencies need to strictly follow the process of examining and evaluating investment projects, focusing on evaluating the technology used.

According to VNE