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Vietnam Builds Another Factory to up its Production Ahead of Free Trade Deals

Vietnam has made another move to upgrade its textile industry as it awaits potential benefits from pending trade agreements. The Vietnam National Textile and Garment Group (Vinatex) said Monday that it will invest $6.7 million to build a factory in the country’s Quang Binh province.

According to the Vietnam Economic Times, the coming Cam Lien Industrial Zone facility is part of the country’s plan to capitalize on pending free trade agreements like the Trans-Pacific Partnership (TPP).

The United States is negotiating the expansive TPP trade deal with 11 other nations including Vietnam, which is expected to be one of the agreement’s biggest beneficiaries.

Vietnam may draw on a greater share of China’s apparel exports as the TPP could include a “yarn forward” rule—which stipulates that a good can only qualify for duty free benefits if production happens in one or more of the agreement’s member countries from the time the yarn is manufactured forward to the end of production. The U.S. has already appealed to Vietnam to reduce its reliance on textile imports from China if the deal goes through.

The Quang Binh factory will be built on six hectares (nearly 15 acres) of land with a capacity to handle 8 million tons per year, and a wastewater treatment system will be part of the facility.

Vinatex said the first phase of the factory project is expected to be complete in March 2016, and that phase alone will provide 1,000 jobs. New equipment for the plant will allow garments made there to meet U.S., EU and Japanese quality requirements, according to the Economic Times.

In March, Vinatex also began building a new textile and garment factory in Vietnam’s Quang Nam Province—another area in the country’s central region where it has so far focused its investments—which is expected to produce 4,600 tons of material annually, a fabric dying area with a capacity of 5,000 tons per year, 20 production lines that will produce 20-25 million knit products each year, and, in this era of added compliance, a water treatment plant that can process 5,000 cubic meters of water per day.