Vietnam : Textile and garment sector faces capital shortages

The textile and garment industry would find it difficult to notch up an export turnover of 8-10 billion USD by 2010 as capital investment in the sector had come down over the past five years, reported the State-run Viet Nam Textile and Garment Corporation (Vinatex).

According to Vinatex, the sector received total investment of 8.37 trillion VND (roughly 525 million USD) in 220 projects during the 2001-05 period, most of it in the first three years.

The figure was 30 percent lower than the industry's expectations, resulting in output falling by nearly 30 percent behind the set target.

Falling investments have also hit Vinatex, with the corporation investing only 345 billion VND in 18 projects in the first 11 months this year.

Capital shortages, Vinatex said, originally stemmed from difficulties in availing loans from commercial banks, though certain regulations on the development strategy for the whole industry for the 2001-10 period had addressed the issue.

To tackle the problem, Vinatex had to mobilise capital from other sources, including selling, contracting and leasing its assets, and work out ways to minimise re-investment costs.

However, despite these efforts, the corporation still lacked capital, and along with the sector now faces the challenges of harsh and increasing competition from major garment exporting countries, including China, Indonesia and India.

Vnanet.vn