To take full advantage of the benefits from the Trans-Pacific Partnership Agreement (TPP) to raise more capital for material production projects, the Vietnam National Textile and Garment Group (Vinatex) has appealed to the Government to allow enterprises to keep the money obtained from selling the State stakes for five years after equitisation. An insight by the online Vietnam Economic News of the Ministry of Industry and Trade.

General Director of Vinatex Tran Quang Nghi said 2014 is an important and decisive year for preparation of textile and garment enterprises in anticipation of the TPP. It is expected that in the first half of 2014, the TPP will be officially agreed, bringing a huge opportunity for Vietnam’s textile and garment export growth.

According to its plan, in 2014 Vinatex will carry out 57 investment projects, including 15 on yarn, eight on weaving, 24 on sewing and two on farm cotton.

Nghi explained that Vinatex’s weaving and dying projects this year require a large source of capital which will be slow to retrieve and the projects are not backed by local authorities as they are concerned about environmental issues. Meanwhile, the group’s charter capital is too small to meet the requirement, meaning it needs to borrow.

According to Le Tien Truong, Vinatex Deputy General Director, investment in material projects is very important for the group to take full advantage of the benefits from the TPP. However, these are capital-intensive projects and also require a team of skillful workers. That is the reason why in 2012 and 2013, Vinatex mainly invested in sewing and weaving projects while the yarn production and dying projects are left for this year, close to the moment the TPP is signed, for more efficiency.

Vinatex is now on the horns of a dilemma because of the failure in meeting the timing of the investment, it will not take advantage of the TPP and it is also being stuck in capital shortage for the implementation of these projects. However, there is still an opportunity for the group as it is going to undergo equitisation by the end of June 2014, after which the group’s charter capital will increase to 5 trillion VND (235 million USD), with 49 percent of the shares to be sold, with the State retaining a 51-percent stake.

To solve Vinatex’s capital shortage, the group’s leaders has appealed the Government to allow enterprises to keep the money obtained from selling the state stake for five years after their equitisation to support their investment projects, especially in material production. They also asked for more favourable policies in terms of lower land rent and adjustment of the environmental criteria to attract more investment.-VNA