With the promise of Trans-Pacific Partnership (TPP), Vietnam is seeing a wave of investment from foreign textile and garment manufacturers keen to cash in on the tax benefits. Vietnam’s clothing makers are in a race to find the right suppliers as its own textile mills only produce a fifth of the country’s needs today.

The TPP being negotiated by 12 countries, including the US, promises major tax cuts for Vietnam’s garment exports, but only if they use fabric made locally or in other TPP countries, which excludes China. However, the raw material for more than half of the garments made in Vietnam comes from China as sourcing locally is tough and expensive. Even some zippers or some special raw materials are very difficult to find.

For years, Vietnam has focused on far less capital intensive part of the global garment business: cutting and sewing the final products for export. Value addition to the products is low. Businesses that do not have the capital to invest are stuck waiting for large domestic or international producers to build up their local fabric supply. So, for Vietnam’s thousands of small and medium-sized garment makers, the benefits of TPP are not too obvious.