Textile firms to sit on the fence

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Le Tien Truong, deputy general director of Vinatex, said: “After one year of economic pressure due to lack of capital for big investment projects, until now the garment and textile sector has not yet found any source of capital to invest in 2012, especially in material development projects”.

According to Truong, Vietnamese garment and textile firms have aimed at major targets to continue to mobilise and gather capital for manufacturing operations, importing raw materials to service for manufacturing domestic goods and exporting.

Not only small- and medium-sized firms, the number of large firms with big capital such as Viet Thang and Phong Phu also are cautious for new projects.

In 2011, in order to meet export market demands, Vicotex only invested around VND60 billion ($2.8 million) in equipment and machinery to increase the quantity and quality products.

Vicotex general director Nguyen Duc Khiem said: “Due to capital shortages and high lending interest rates, firms are not interested in big investment projects.”

Bui The Kich, general director of Donagamex, said: “In 2011, the company established and put into operation the Dong Viet Phu Company specialised in manufacturing non-woven products for garment and textile sector. Total investment capital for new firm was not huge to serve the domestic market.”

Thai Nguyen Investment and Trading general director Nguyen Van Thoi said: “In the first phase, Phu Binh Garment and Textile factory invested by Thai Nguyen with total investment capital over VND200 billion ($961 million), but the company has only gained profit 80 per cent of total capital. Thus, although the company was operational from June, 2011, until now, the project has not yet finished its construction”.

In order to cope with capital shortage for the project, the company restructured debt by transferring equipment and machinery invested by short-term capital into leasing finance.

“Facing capital shortages, garment and textile firms want the government to support capital to carry out investment projects,” Nghi added.