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Vietnam May Become China’s Technological Landfill

By   /   December 11, 2015  /   No Comments

China / Vietnam – VietNamNet Bridge reports that the Trans-Pacific Partnership (TPP) is expected to bring many advantages for Vietnam, especially for the textile-garment industry. However, the sudden increase of Chinese projects has triggered many concerns.

 Dr. Duong Dinh Giam, former Director of the Institute for Industrial Policy and Strategy Studies of the Ministry of Industry and Trade, talks about the issue.

– Under TPP, textile materials will enjoy zero percent tax rate in TPP member states so when Chinese enterprises invest in textiles in Vietnam, will they also enjoy the advantages brought by the TPP?

That’s right since TPP regulates that commodities or raw materials used to produce the commodities to enjoy tax privileges must be produced in the member countries of the TPP, whether they are produced by domestic or foreign firms.

Currently, Chinese enterprises have invested heavily in textile manufacturing in Vietnam, especially fibre production to take advantage of cheap labor in Vietnam.

– This means that Chinese businesses will not only benefit from the tax rate of 0%, but also from Vietnam’s exports of their products. Worse, some have warned of China’s “export” of obsolete and polluting textile-garment technology to Vietnam, turning Vietnam into a technology landfill.

Not only Chinese companies but also companies from other countries can bring outdated, polluting technology into Vietnam. Of course, concern for Chinese enterprises is greater than those from other countries.

– Another risk is the massive migration of Chinese workers into Vietnam. Do you think that Vietnam will be affected in this regard?

Foreign firms, including those from China, bring their technology, capital and even manual workers to Vietnam. The projects in the Central Highlands and Ha Tinh Province are good examples of this. This is one of our concerns.

In fact, commodities and labor of Vietnam have entered the world market but it is not clear about commodities and labor of other countries entering Vietnam.

– What should we do to prevent the abuse of TPP to bring outdated technology and even polluting factories from China to Vietnam?

Vietnam has to strictly control the import of technology into the country. Vietnam now has hundreds of regulations and standards on technical barriers to control quality of imported technologies as well as goods and raw materials. The Ministry of Industry and Trade has more than 120 standards and regulations alone.

I believe that if we implement these regulations well, the imports of low-quality commodities and services, including obsolete and polluting technology of the Chinese enterprises and foreign enterprises in Vietnam will be prevented.

However, it also depends on the capacity, the thinking of the authorities and especially the staff who directly do this task.

– TPP has very strict constraints on the environment; can Vietnamese companies meet these standards?

TPP have very tight constraints on the environment. If the criteria are not guaranteed, especially environmental ones, the member countries will refuse to import goods. Therefore, it requires the State of Vietnam, especially local governments, to change their thinking about environmental management and to not pursue economic growth at all costs.

It is noteworthy that attracting investment in the textile-garment industry is a current tendency in many provinces and cities in Vietnam. This is suitable for Vietnam because the country has conditions to become one of the world’s factories in this field.

– China has been dubbed the “world’s workshop” but they are paying dearly for environmental pollution. So if Vietnam becomes a factory of the world, is that worth being proud of?

The attraction of investments in the textile-garment industry, especially weaving and dyeing, must be based on a national strategy to take full advantage of specialized industrial zones. We should not build textile-garment industrial parks everywhere since we should avoid waste in investment.

For example, in the Red River Delta, while the industrial park specializes in textile-garments in Hung Yen, developed by the Vietnam Textile and Garment Group (Vinatex), is not filled up, the neighboring provinces such as Hai Duong, Nam Dinh and Thai Binh offer incentives to attract textile-garment projects.

China invests massively in Vietnam

Statistics from the Ministry of Planning and Investment showed that, since late 2014 when the TPP had not been approved, about 810 Chinese and Taiwanese businesses invested in 52 provinces of Vietnam.

According to the authorities, the large-scale textile-garment projects approved in the first half of 2015 are worth $4.18 billion, accounting for 76% of the total foreign capital registered in this period. Most of the projects belong to investors from China, Taiwan and Hong Kong.

A number of major projects include a $400 million project to build a textile-garment industrial zone in Nam Dinh; a $300 million project of Texhong in Quang Ninh Province; and a $200 million of TAL in Hai Duong province.

Vietnam has to import a large quantity of fabrics (about 80%) for the production of export products. Vietnam also has to import up to 80% of materials, half of them from China.

Source: VietNamNet Bridge

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