IFC’s unparalleled vision to bolster the garment and textile industry of Vietnam

by Apparel Resources

20-May-2019  |  9 mins read

Phong Phu International
Image Courtesy: twitter.com

Unparalled growth, over the last few years, has made Vietnam one of the top five (largest) textile exporters in the world. Considering that the country earned an astounding US $ 36 billion from the export of apparels and textiles in 2018, it will not be a surprise if Vietnam joins the top three textile exporters in the years to come.

However, another bitter truth is that the garment and textile sector is the second largest source of water pollution in Vietnam and the local authorities in the country are now extremely careful in sanctioning any new textile project. Also, it is imperative to note that the country’s garment and textile units consume up to one-tenth of the energy than what is consumed by other industries in Vietnam.

The International Finance Corporation, better known as IFC, has been for quite some time executing its much-anticipated Vietnam Improvement Programme (VIP) in its efforts to help Vietnam enhance sustainable growth of the apparel sector. IFC has over 60 years of experience in unlocking private investment and also creating markets and opportunities where they are most required. It is important to note here that since 1956, IFC, a member of the World Bank Group, has leveraged US $ 2.6 billion to deliver over US $ 265 billion in financing for businesses in developing nations.

Through VIP, an initiative to bolster resource efficiency in Vietnam’s apparel, textile and footwear sector, IFC aims to empower all the garment and textile units in the country to upgrade their machinery and equipment so as to make them save more energy and become more sustainable. Sustainability is what sells today and makes one competitive worldwide. VIP ensures this happens without fail. Besides enhancing export revenue, IFC has been proactive in giving the companies financial avenue through its client banks.

IFC now works with 70 factories that supply to big retailers and apparel firms like VF Corp., Target Corp., Puma, New Balance, and Adidas among several others. IFC, in one of its reports, said that since 2016, VIP has helped 70 Vietnamese factories to invest US $ 26 million in resource efficiency measures and programmes that has helped them save US $ 24 million in water, energy and chemical operating costs.

“With Vietnam’s increasing participation in trade agreements, including the Trans-Pacific Partnership and the EU Free Trade Agreement, the local textile sector is poised for faster growth, creating increased demand for sustainable energy and water use practices,” underlined Kyle Kelhofer, IFC Country Director for Vietnam, Cambodia and Laos.

Phong Phu International (PPJ), one of the textile stalwarts in Vietnam, is one such factory that has been hailing its association with IFC. At the outset, IFC evaluated PPJ’s potential to achieve optimal energy and water efficiency and started working towards helping the company adopt latest technologies and processes that would enable them to attain their goals quickly. With 20 factories and almost 14,000 workers supplying denim, knit and woven apparels to renowned global brands, PPJ first implemented many resource-efficient solutions at its wash factory in Thanh Chau in 2016 and 2017.

IFC played a major role in making PPJ buy advanced laser machines to ‘dry process’ denim apparels – an innovative technique used to achieve the cool and faded look of denim. These new laser machines seem to have transformed the scene of denim production in a big and better way for PPJ. The company that used to dry mere 20 to 30 jeans daily, through labour-intensive manual process, is now drying a whopping 300 jeans in a single day. And, most importantly, it is also now saving the workers from those dangerous chemicals. A collosal surge in productivity with no risk for workers is what any company asks for and IFC helped PPJ to make this happen.

Soon, PPJ won many more orders. But, what was striking was that all the measures initiated enabled the company to cut its energy consumption by nearly 7 million kilowatt hours annually. Additionally, the company started using 2,00,000 cubic metres less water every year. Importantly, the company saves as much as US $ 7,00,000 yearly while also ensuring that all its workers are paid well enough to remain committed to the company.

“Improved efficiency and increased output have helped us attract new buyers who are in search of suppliers with global standards,” averred Nguyen Thi Lien, Vice General Director, PPJ. She also believes that increased profit leads to better salary for employees.

Kyle Kelhofer, IFC Country Directory
Image Courtesy: youtube.com

Once VIP’s recommendations are fully implemented in the next three years, the capital investment of US $ 40 million – necessary for retrofits and more efficient equipment – could save 4 million cubic metres of water and curb 7,88,500 tonnes of greenhouse gas emission every year. Now, this is akin to removing 1.1 million new cars from the road and that is quite some difference. IFC claims that the energy consumption in this sector could reduce nationwide by 30 per cent with technology upgrades and improved efficiency.

Like PPJ, Samil Vina Co. Ltd., too has gained rich dividends from its fruitful association with IFC. IFC was instrumental in helping the company get loan from Vietnam Industrial and Commercial Joint-Stock Bank to buy advanced dyeing machines. These machines are good in saving water, energy and chemicals. The transformation was immediate to be seen. The company, which is one of the strategic suppliers for Target, has witnessed a reduction in its production time by an impressive 17 per cent. The new low-MLR dyeing machines have also reduced the company’s water, energy and chemical consumption by 45 per cent.

Samil Vina too is today saving US $ 2 million every year in its operating costs. And when you save money, there is more to offer to your people. The transformation has helped the company in paying a 60 per cent higher salary to its staff – and all this within a year of installing the new machines. The firm will be soon building a new textile plant at an investment of US $ 60 million. The plant is expected to be operational by the year 2020 and will then employ an additional workforce of 2,000 people.

“IFC’s support helped us realise that instead of building a new factory to expand production, we can double our productivity with some basic but effective upgrades,” confirmed IB Park, General Director, Samil Vina Co., Ltd.

IFC has been constantly supporting Vietnam’s sustainable development and also playing an important role in enticing foreign investors to the country in its bid to strengthen the garment and textile sector and, the pace at which this is happening is a distinct indication that there is no stopping to Vietnam’s growth.

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