More foreign direct investment in the garment and textile industry in recent months is a positive sign for the economy, but it poses challenges for domestic producers, experts have said.

In the first four months of the year, Vietnam granted investment certificates to 18 FDI projects, valued at a total of 20 million USD, in the garment and textile sector.

Foreign investors are attracted by low labour costs and skilled workers, according to experts.

Nearly half of 2,000 companies in the garment and textile sector in Vietnam are FDI companies, mainly from Taiwan and the Republic of Korea (RoK).

Garment and textile exports to Taiwan and the RoK and other markets have also increased as these importers have been selling products in their countries as well as exporting them.

The increase of FDI enterprises in the garment and textile sector has caused an acute labour shortage, with companies competing with each other to attract labourers.

Real earnings from garment and textile exports are low compared to other investment sectors since the garment sector is involved mostly in outsourcing.

While certain incentives are offered to FDI companies and not to local ones, unhealthy competition in the export industry might result, according to Pham Xuan Hong, deputy chairman of the Vietnam Textile and Apparel Association./.