Vietnam has taken a decision not to permit projects that violate environmental norms. Two textile and dyeing projects proposed by foreign investors that were to be located in an area known for its sandy beaches have been refused clearance. In principle, only facilities that use clean technologies will be approved. The reasoning is that the added value a textile and garment project can bring to a locality should not be smaller than the losses it causes to the environment.

Some analysts argue such restrictions will prevent Vietnam from taking full advantage of the pending US-led Trans-Pacific Partnership. The country as a whole licensed only 448 new FDI projects by April end, a drop of 17.1 per cent from the previous year. Some cities have experienced a sharp decline of as much as 45 per cent in foreign direct investment in the first three months of the year.

Vietnam is currently the second largest garment exporter to the US and is the fastest growing garment manufacturer in the world. The top three areas in Vietnam where foreign direct investment takes place are manufacturing, trading, energy and water distribution. Helped by low costs and an eager government, Vietnam is taking over China’s role as Asia’s hot spot for foreign investment in manufacturing.