THE PRIME MINISTER

DECIDES:

Article 1.- To ratify the strategy for development of Vietnam�s textile and garment industry till the year 2010 with the following contents:

1. Objectives:

To develop the textile and garment industry into one of the key and spear-head export-led industries; to satisfy the higher and higher domestic consumption demands; to create more jobs for the society; to raise the Vietnamese products� competitiveness; and to steadily integrate into the regional and world economies.

2. The strategy for development of Vietnam�s textile and garment industry till the year 2010

a/ With regard to the textile industry, including: production of textile raw materials, yarns, weaving, printing and dyeing:

- The State-run economic sector shall act as the core and play the leading role; to encourage other economic sectors, including foreign direct investment sector, to participate in the development thereof.

- The development investment must be linked to the environmental protection; to plan the construction of clusters for yarn production and finished weaving, printing and dyeing establishments far from big urban centers.

- To concentrate investments on modern facilities and equipment, high technologies, advanced techniques and high specialization level. To attach importance to the designing of new textile products, with a view to gradually consolidating the labeling prestige of Vietnamese textile products on the international market.

- To reorganize the quality control system according to the international standards, to make a leap-and-bound advance in textile products� quality, and to quickly raise their output, thus meeting the export and domestic consumption demands.

b/ With regard to the garment industry:

- To accelerate the equitization of garment enterprises where the State needs not to hold 100% of equities. To encourage all economic sectors to invest in the development of the garment industry, especially in populated areas and those with large labor forces.

- To step up the fashion designing and garment product modeling activities. To increase investment in the improvement of the production management and quality control systems, to apply economical solutions in order to quickly raise the productivity, lower the production costs and raise the competitiveness of Vietnamese garment products on the international market.

c/ To step up the investment in developing areas cultivated with cotton, silkworm mulberry and other fibrous plants, artificial fibers, assorted raw materials, auxiliary materials, chemicals and dyes to be supplied to the textile and garment industry, so as to be largely self-sufficient in raw materials, materials and auxiliary materials, which shall substitute for imports.

d/ To encourage all forms of investment, including foreign investment, in the development of textile and garment mechanical engineering, then proceed to the adequate supply of spare parts, assembly and manufacture of textile and garment equipment at home.

3. Major targets:

a/ Production:

- By the year 2005, the outputs of the main products shall reach: Fiber cotton 30,000 tons; synthetic fibers 60,000 tons; assorted fibers 150,000 tons; finished silk fabric 800 million square meters; knit products 300 million pieces; garment 780 million products.

- By the year 2010, the outputs of the main products shall reach: Fiber cotton 80,000 tons; synthetic fibers 120,000 tons; assorted fibers 300,000 tons; finished silk fabric 1,400 million square meters; knit products 500 million pieces; garment 1,500 million products.

b/ Export turnover:

- By the year 2005: Between USD 4,000 and 5,000 million.

- By the year 2010: Between USD 8,000 and 9,000 million.

c/ Labor:

- By the year 2005: Between 2.5 and 3.0 million laborers shall be employed.

- By the year 2010: Between 4.0 and 4.5 million laborers shall be employed.

d/ The value ratio of domestic raw materials and auxiliary materials used in export textile and garment products shall be:

- By the year 2005: Above 50%

- By the year 2010: Above 75%

e/ Development investment capital:

- The total development investment capital for Vietnam�s textile and garment industry in the 2001-2005 period shall be around VND 35,000 billion, of which around VND 12,500 billion shall go to the Vietnam Textile and Garment Corporation.

- The total development investment capital for Vietnam�s textile and garment industry in the 2006-2010 period shall be around VND 30,000 billion, of which around VND 9,500 billion shall go to the Vietnam Textile and Garment Corporation.

- The total capital for investment in development of raw material cotton-growing areas till the year 2010 shall be around VND 1,500 billion.

Article 2.- A number of mechanisms and policies to support the implementation of the strategy for development of Vietnam�s textile and garment till the year 2010

1. The State shall provide support funds from the budgetary source and/or ODA source for projects on planned development of raw materials regions, cotton and mulberry growing and silkworm rearing; investment in waste water treating facilities; planning of textile industry clusters; construction of infrastructure of new industrial clusters; training and research activities of specialized textile and garment research institutes, schools and centers.

2. Projects for investment in such production fields as: fiber production; finished weaving, printing and dyeing; textile materials, garment auxiliary materials, and textile and garment mechanical engineering:

a/ Shall be entitled to borrow the State�s credit capital for development investment, of which 50% shall enjoy an interest rate equal to 50% of the currently prescribed interest rate at the time of capital withdrawal, with a term of 12 years and a grace period of 3 years; the remaining 50% shall be borrowed according to the regulations of the Development Assistance Fund;

b/ Shall be considered domains of investment preferences and enjoy investment preferences provided for by the Law on Domestic Investment Promotion.

3. The Finance Ministry shall study and propose the Government to submit to the National Assembly Standing Committee for permission to apply the mechanism that home-made fabrics and apparel auxiliary materials, which are sold to Vietnam-based units engaged in the production and/or processing of exports, shall enjoy value added tax rates applicable to exports.

4. The State enterprises engaged in fiber production; finished weaving, printing and dyeing; textile raw materials, apparel auxiliary materials and textile and garment mechanical engineering:

a/ In case of necessity, shall be provided guarantee by the Government for the deferred payment procurement of equipment and/or borrowing of commercial loans from suppliers or financial organizations at home and abroad;

b/ Shall be re-allocated capital use levy for the five-year period (2001-2005) for reinvestment;

c/ Shall be given priority in the additional allocation of 30% of working capital in lump sum to each enterprise.

5. The whole source of collected textile and garment quota and quota bidding charges shall be reserved for the expansion of export markets, including expenses for activities of joining the international textile and garment organizations, for trade promotion and textile and garment human resource development.

6. The Government encourages enterprises to boost the export of textile and garment products to the US market. The Finance Ministry shall assume the prime responsibility and coordinate with the concerned bodies in studying in the second quarter of 2001, then submitting to the Prime Minister the appropriate policy on support for textile and garment products exported to the US market.

Article 3.- Organization of implementation

1. The Industry Ministry shall coordinate with the concerned ministries and branches in directing the Vietnam Textile and Garment Corporation to:

- Build two or three pilot comprehensive textile and garment clusters, then draw experiences therefrom and assist the People�s Committees of the provinces and centrally-run cities in organizing the wide application thereof in their respective localities according to the overall planning, in order to achieve the targets specified in Article 1 of this Decision.

- Guide investors to make and complete dossiers of projects in the fields specified in Article 2 of this Decision strictly according to the current regulations.

- Finalize the Scientific and Technological Strategy of this industry for the 2001-2010 period; organize the market information system to help enterprises grasp the market demands and domestic and foreign customers� tastes.

2. The Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam and the Development Assistance Fund shall base themselves on their respective assigned functions and tasks to arrange and lend capital sources according to the annual plans for execution of projects specified in Article 2 of this Decision.

3. The Ministry of Agriculture and Rural Development shall coordinate with the People�s Committees of the provinces and centrally-run cities and the Vietnam Textile and Garment Corporation in elaborating the planning for development of raw materials areas according to the Strategy for development of Vietnam�s textile and garment industry till the year 2010 ratified in this Decision.

Article 4.- This Decision takes effect 15 days after its signing. To annul the previous stipulations which are contrary to this Decision.

Article 5.- The ministers, the heads of the ministerial-level bodies, the heads of the agencies attached to the Government, the presidents of the People�s Committees of the provinces and centrally-run cities and the Vietnam Textile and Garment Corporation shall have to implement this Decision.

For the Prime Minister
Deputy Prime Minister
NGUYEN TAN DUNG