VietNamNet Bridge – Four textile and garment companies made IPO in the previous three months to be equitised, and it is expected that we will see the IPOs of 20 more companies in the last two months of the year and first quarter of 2008.

The four companies were the Phong Phu Textile Company, Phong Phu Fabric Weaving Company, Viet Tien Garment Corporation and the Hanoi Textile and Garment Company.

Shares of textile and garment companies prove to be attractive share items thanks to their high growth rate in recent years brought about by high exports.

According to the Ministry of Industry and Trade, garment export turnover reached $5.8bil in the first nine months of the year, and the turnover of $7.5bil for 2007 is considered within reach.

As Vietnam has joined the WTO, it does not bear the quota scheme when exporting to the US market any longer, which means that Vietnamese garment companies have opportunities to expand exports to the large market.

Nevertheless, Vietnam’s textile and garment industry is still facing a lot of challenges. Vietnam’s garment industry relies heavily on material imports, while local production cannot meet the demand for materials. The production of cotton just meets 5% of the demand, while general fibre, 30%. That explains why US importers always choose Chinese, Taiwanese and Indian cloth producers to supply materials to Vietnamese garment companies.

In the domestic market, Vietnamese garment products now have to compete fiercely with imports from India, China, Pakistan and Bangladesh.

The biggest risk for garment companies’ shares is the falls of the industry that may occur when Vietnam has to face anti-dumping lawsuits.

In June 1, 2007, the US government kick-started the Vietnam apparel products monitoring programme, which also meant a barrier for Vietnam’s apparel products to be exported to the US.

In the latest news, US Commerce Department Secretary Carlos M.Gutierrez announced that the US would maintain the monitoring scheme through the end of Bush’s presidency.

Mr Gutierrez said that though there was no evidence of dumping, the US Congress is still worried that Vietnam’s apparel products may threaten the US garment industry. Therefore, Bush’s government tried to reach an agreement with the country’s congress that the monitoring scheme would be kept until the presidency ends. This also means that an anti-dumping lawsuit against Vietnamese garment companies could be raised at any time.

(Source: TBKTVN, VnMedia)