As foreign direct investment is pouring into Vietnam’s textile and garment industry, it is causing concern in the country. Foreign investors, especially Chinese, are pouring huge capital into textile and dyeing projects in Vietnam. Local authorities have been asked to examine projects thoroughly before licensing to be sure that the projects can satisfy requirements of occupancy rates in industrial zones, and technological and environmental standards.

An increase in textile and garment complexes has been seen as a threat to the environment. There are also fears the complexes will import and use outdated energy consuming technologies. Many provinces in Vietnam now don’t welcome textile and dyeing projects. They have decided to say no to projects with high environmental risks.

Of the $11 billion worth of foreign direct investment poured into Vietnam so far this year, $3.5 billion went to textile and garment projects. The investment wave in textile and garment projects began in 2014 when foreign investors heard Vietnam was going to sign the Trans Pacific Partnership Agreement (TPP).

The TPP has encouraged many foreign textile and garment firms to boost investments in Vietnam. The yarn forward rule under the TPP requires that yarns, fabrics and final garments to be exported within the TPP should be produced in TPP member countries.