In the first four months of the year, Vietnam granted investment certificates to 18 FDI projects in the garments and textiles sector, valued at a total of US$20 million. Foreign investors are attracted by the low labour costs and skilled workforce, say experts.

Nearly half of the 2,000 companies in the garments and textiles sector in Vietnam are FDI companies, mainly from Taiwan and the Republic of Korea (RoK).

Exports to Taiwan, the RoK and other markets have also increased as these importers have been selling products in their own countries as well as exporting them.

The increase of FDI enterprises in the garments and textiles sector has caused an acute labour shortage, with companies competing with each other to attract workers.

However, the real earnings from garment export are low compared to others as the sector mostly outsources. As certain incentives are only offered to FDI companies, unhealthy competition in the export industry can result, according to Pham Xuan Hong, the Deputy Chairman of the Vietnam Textile and Apparel Association.