State-owned national textile and garment group Vinatex has requested that the Vietnamese government allow the group to use the capital raised through selling off the state’s shares following equitisation to bolster productivity.
The textile giant has asked for cash to be used over the next five years to feed its key raw material production projects valued at VND20 trillion ($952 million) which are slated for execution during 2014-2015.
Vinatex is desperate to source funding for these projects that would ease the firm’s reliance on importing raw materials from abroad. The group complained that the projects also would be characterised by a slow return on investment and that they received little support from local authorities due to environmental concerns.
“If our proposal gets the green-light, we could immediately kick-start a raft of important projects, paving the way to shape powerful weaving and dyeing and garment chains in crucial development areas,” said Vinatex’s general director Tran Quang Nghi.
As planned, Vinatex’s initial public offering (IPO) is set for late June. After being equitised, the group’s chartered capital would reach VND5 trillion ($238 million) with 49 per cent of the group’s shares slated to be sold to outside investors, with the state retaining a majority holding.
The group is desperately keen to be prepared to take advantage of the Trans-pacific Partnership Agreement (TPP) currently under negotiations between Vietnam and other 12 TPP member countries which hold 60 per cent (about $12 billion) of Vietnam’s total textile and garment export value.
The stuttering negotiations could provide the grounds for Vietnam to observe the yard-forward principle to benefit from preferences following TPP ratification which is a driving force for the local textile and garment sector to spur material and accessories investment, said Nghi.
By Hai Yen
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