Vietnam’s textile and garment sector will not be significantly affected by the UK’s vote to leave the European Union, industry insiders believe.

According to Mr. Le Tien Truong, CEO of the Vietnam National Textile and Garment Group (Vinatex), as the British Pound has been devalued, imported products will be more expensive than domestic products, eating into demand.

“Demand for garment products will fall, and the growth of 6 to 7 per cent in the first five months of this year will be hard to maintain,” Mr. Truong told VET.

“However, the impact will not be significant because most garment products in the UK are imported, so the ability to replace these with domestic goods is limited,” he added.

Mr. Phan The Vinh, CEO of the Agriculture Garment JSC, said that Brexit will be an opportunity for small and medium-sized enterprises (SMEs) in the textiles sector.

“The UK leaving the EU, if we look on the positive side, could provide a niche market for SMEs and we could export garment products to the market,” Mr. Vinh was quoted as saying.

Figures from Vinatex show that the UK is one of the largest markets of Vietnam’s textiles and garments among the EU’s 28 countries and is frequently in the Top 5 countries where Vietnam records the largest export turnover, together with France, Germany, the Netherlands and Spain.

“It is too early to talk about solutions at the moment because the decision by the UK to leave the EU is still new and the negotiating process to complete the leave will take at least two years,” Mr. Truong said.

“I think we need to calmly await the return to stability in the EU’s financial market and see the mentality of UK and EU citizens, then find solutions.”

According to figures from the Vietnam Customs, in the first five months of this year Vietnam’s textile and garment export turnover in the EU stood at over $936 million, up 8.2 per cent year-on-year. Export turnover in the UK stood at over $257 million.

Meanwhile, figures from the Foreign Investment Agency (FIA) under Ministry of Planning and Investment show that foreign investment in the textiles sector in the first five months of this year exhibited signs of deceleration.

There were no major textile projects registered in the first months, with such projects being in paper manufacturing, real estate, electronics, and solar and wind power.

Last year the textiles and garments sector attracted the most FDI. The three largest projects included one producing and processing fiber, owned by Turkish investors in southern Dong Nai province with total investment of up to $660 million, which was the highest investment ever in the sector.

It was followed by a project producing support products for the textiles industry, invested by the Polytex Far Eastern Co. from Taiwan with $274 million, and a project of the Lu Thai yarn factory, owned by a Hong Kong investor, with investment capital of $160.8 million.