Decision No. 55/2001/QD-TTg Approving the Strategy for the Development and Certain Mechanisms and Policies to Support the Implementation of the Textile and Garment Industry Development Strategy until 2010

Pursuant to …;

Approving the Strategy for Development and Some Supporting Mechanisms and Policies

to Implement the Strategy for Developing the Textile and Garment Industry in Vietnam until 2010

_____________________

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

Pursuant to the Master Plan for the Overall Development of the Textile and Garment Industry in Vietnam until 2010, which has been approved by the Prime Minister under Decision No. 161/1998/QĐ-TTg dated September 4, 1998, and the conclusions of the Prime Minister at Government Office's Notification No. 140/TB-VPCP dated October 20, 2000 on the Strategy for Developing the Textile and Garment Industry in Vietnam until 2010;

Considering the proposal of the Vietnam National Textile and Garment Corporation (Circular No. 1883/TT-KHĐT dated December 19, 2000); opinions of the Ministries: Trade (Circular No. 43 TM/XNK dated January 5, 2001), Industry (Circular No. 139/CV-KHĐT dated January 11, 2001), Planning and Investment (Circular No. 256 BKH/CN dated January 12, 2001), Science, Technology and Environment (Circular No. 169/BKHCNMT-CN dated January 15, 2001), Agriculture and Rural Development (Circular No. 152/BNN-VP dated January 16, 2001), Finance (Circular No. 1236 TC/TCDN dated February 16, 2001), State Bank of Vietnam (Circular No. 36/NHNN-TD dated January 10, 2001),

DECISION:

Article 1. Approves the Strategy for Developing the Textile and Garment Industry in Vietnam until 2010 with the following contents:

1. Objectives:

Developing the textile and garment industry into one of the key industries for export; satisfying increasingly higher domestic consumption needs; creating many jobs for society; enhancing competitiveness and firmly integrating into regional and global economies.

2. The Strategy for Developing the Textile and Garment Industry in Vietnam until 2010:

a) For the textile sector, including: production of textile raw materials, yarns, weaving, printing and dyeing:

- State-owned economy serves as the backbone and plays a leading role; encouraging all economic sectors, including foreign direct investment, to participate in developing this field.

- Investment development must be linked with environmental protection; planning construction of yarn, weaving, printing and dyeing industrial clusters far from major urban centers.

- Concentrating on investing in modern equipment, high technology, advanced techniques, and high levels of specialization. Emphasizing product design for new textiles to gradually consolidate the reputation of Vietnamese textile brands in international markets.

- Organizing quality management systems according to international standards, making significant leaps in quality, increasing production volumes of textile products to meet both export and domestic consumption demands.

b) For the garment sector:

- Accelerating shareholding reform in garment enterprises where the State does not need to hold 100% capital. Encouraging all economic sectors to invest in developing the garment industry, especially in densely populated areas with abundant labor.

- Promoting fashion design and garment product styling. Concentrating on improving production management systems, quality management, and applying cost-saving measures to rapidly increase labor productivity, reduce production costs, and enhance the competitiveness of Vietnamese garment products in international markets.

c) Vigorously investing in developing cotton planting regions, mulberry cultivation, fiber-producing plants, artificial silk, and various raw materials, auxiliary materials, chemicals, and dyes supplied to the textile and garment industry to achieve self-sufficiency in most raw materials, materials, and auxiliary materials, reducing imports.

d) Encouraging all forms of investment, including foreign investment, to develop textile machinery, aiming to supply spare parts, assembly, and manufacturing of textile machinery domestically.

3. Main indicators:

a) Production:

- By 2005, main products should reach: Cotton fiber 30,000 tons; synthetic fiber 60,000 tons; yarns of various types 150,000 tons; finished silk fabric 800 million square meters; knitted goods 300 million items; ready-made garments 780 million items.

- By 2010, main products should reach: Cotton fiber 80,000 tons; synthetic fiber 120,000 tons; yarns of various types 300,000 tons; finished silk fabric 1,400 million square meters; knitted goods 500 million items; ready-made garments 1,500 million items.

b) Export turnover:

- By 2005: 4 to 5 billion US dollars.

- By 2010: 8 to 9 billion US dollars.

c) Labor utilization:

- By 2005: Attracting 2.5 to 3.0 million workers.

- By 2010: Attracting 4.0 to 4.5 million workers.

d) Ratio of value of domestic raw and auxiliary materials used in exported textile and garment products:

- By 2005: Over 50%

- By 2010: Over 75%

đ) Investment capital for development:

- Total investment capital for the development of the textile and garment industry in Vietnam during the period 2001-2005 is approximately 35 trillion VND, of which the Vietnam National Textile and Garment Corporation is approximately 12.5 trillion VND.

- Total investment capital for the development of the textile and garment industry in Vietnam during the period 2006-2010 is approximately 30 trillion VND, of which the Vietnam National Textile and Garment Corporation is approximately 9.5 trillion VND.

- Total investment capital for the development of the cotton planting region until 2010 is approximately 1.5 trillion VND.

Article 2. Some mechanisms and policies to support the implementation of the Strategy for Developing the Textile and Garment Industry in Vietnam until 2010:

1. The State supports from budget funds, ODA funds for projects planning the development of raw material regions, cotton planting, mulberry planting, silkworm breeding; investment in wastewater treatment works; planning textile industrial clusters; infrastructure construction for new industrial clusters; training and research by institutes, schools, and specialized research centers in the textile industry.

2. Projects investing in production fields: yarns, weaving, printing and dyeing, textile raw materials, garment auxiliary materials, and textile machinery:

a) Are eligible to borrow development credit from the State, of which 50% can borrow at an interest rate equal to 50% of the current prevailing rate at the time of withdrawal, with a loan term of 12 years, including 3 years of grace period; the remaining 50% can borrow according to the regulations of the Development Support Fund;

b) Are considered preferential investment fields and enjoy investment incentives as stipulated in the Law on Encouraging Domestic Investment.

3. The Ministry of Finance studies and proposes to the Government to submit to the Standing Committee of the National Assembly for approval of a mechanism allowing domestic-produced fabrics and garment auxiliary materials sold to units producing export processing goods in Vietnam to enjoy a VAT rate equivalent to that applied to exports.

4. For state-owned enterprises producing yarns, weaving, printing and dyeing, textile raw materials, garment auxiliary materials, and textile machinery:

a) In cases where necessary, to be guaranteed by the Government when purchasing equipment on credit, commercial loans from suppliers or financial institutions both domestically and internationally;

b) To be refunded the capital usage fees collected over a period of five years (2001-2005) for reinvestment;

c) To be granted additional working capital up to 30% once for each enterprise.

5. To allocate all revenue from quota fees and bidding for quotas in the textile and garment industry for expanding export markets, including costs for participating in international textile organizations, promoting trade activities, and training human resources for the textile and garment sector.

6. The Government encourages enterprises to increase exports of textile and garment products to the United States market. The Ministry of Finance shall take the lead and coordinate with relevant agencies to study in the second quarter of 2001 and submit to the Prime Minister appropriate support policies for textile and garment exports to the United States market. 7. The Ministry of Industry shall coordinate with relevant ministries and sectors to direct the Vietnam Textile and Garment Corporation:

Article 3. Implementation organization:

- To pilot the construction of 2 to 3 integrated textile and garment clusters to gain experience and assist provincial people's committees in organizing and implementing such projects widely within their jurisdictions according to the overall planning, aiming to achieve the targets set forth in Article 1 of this Decision.

- To guide investors in preparing and completing project documentation in accordance with current regulations for areas specified in Article 2 of this Decision.

- To finalize the Science and Technology Industry Strategy 2001-2010; organize market information systems to help enterprises understand market demands and customer preferences both domestically and internationally.

2. The Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam, and the Development Support Fund shall allocate funds and provide loans annually according to plans to implement the projects mentioned in Article 2 of this Decision.

3. The Ministry of Agriculture and Rural Development shall cooperate with provincial people's committees and the Vietnam Textile and Garment Corporation to develop raw material region planning in line with the approved Vietnam Textile and Garment Industry Development Strategy until 2010 as stipulated in this Decision.

This Decision takes effect fifteen days after its date of issuance. Previous provisions contrary to this Decision are hereby abolished.

Article 4. Ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, chairpersons of provincial people's committees under the central government, and the Vietnam Textile and Garment Corporation are responsible for implementing this Decision./.

Article 5. The Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of People's Committees of provinces and centrally governed cities, and the General Vietnam Textile and Garment Corporation shall be responsible for implementing this Decision./.