Vinatex and Itochu embark on ambitious project

The string of projects aims to help Vinatex increase its self-reliance on material sources and expand its portfolio of finished textile, dyeing and raw material projects.

The initial stages of the project items are designed to primarily serve Vinatex’s member units.

In last October Itochu spent more than $9 million on buying a 3 per cent stake in its local partner Vinatex when the latter hosted its initial public offering (IPO).

According to Itochu Textile Prominent Asia CEO Shimizu Motonari, Vietnam is an important market in Asia for textile and garment investment, especially appreciating in light of Vietnam’s ongoing negotiations over diverse free trade agreements (FTAs).

Motonari stressed in particular the Trans-Pacific Partnership Agreement (TPP), negotiations over which will soon reach conclusion, then approaching the signing stage.

“More cooperative projects will be placed underway in the upcoming time between members of the two sides as Itochu is both a stakeholder and a long-time business partner of Vinatex,” said Motonari.

The string of projects is expected to generate $60 million in total revenue in the course of the next five years, and create thousands of jobs at project sites such as Nghe An and Quang Binh provinces.

Though the total investment capital of these projects is still withheld, it is expected to amount to several million US dollars since textile and dyeing tends to be a capital intensive investment.

Vinatex general director Le Tien Truong said, “Through having Itochu as a stakeholder and partner, Vinatex expects to expand its markets, access state-of-the art technology, and more importantly, tackle the bottleneck of costly textile-dyeing investment, striving to build up a comprehensive supply chain in textile and garment for Vinatex, as well as Vietnam’s textile clothing industry.”

As Japan’s third largest multi-sector group behind Mitsubishi Corporation and Mitsui &Co, with core businesses in textile clothing, metals/minerals, food, equipment and machinery, energy and IT, Itochu is in a strong position to support Vinatex when the two sides embark on a long-term cooperation.

Until present, Itochu is the first non-credit institution from Japan that invests in a Vietnamese state-owned enterprise, such as Vinatex.

To date, Itochu has developed trading relations with about 100 Vietnamese companies in the textile and garment fields.

According to Motonari, growing Japanese investment into the raw materials sector provides the opportunity for the Vietnamese textile garment industry to take advantage of the yard forward principle and gradually meet the technical and environmental standards to become a major exporter to Japan.

This year, Vietnam’s total export value of textiles and garments to Japan is expected to hit $2.9 billion, a 9 per cent jump from 2014.