Vietnam's state-owned textile and garment conglomerate, Vinatex plans to invest $26.7 million in the construction of five new cotton
processing mills in the next two years in a bid to satisfy the demand of the country's textile producers.

The five new mills, which are to be situated in Quang Nam, Quang Ngai, Binh Dinh and Son La provinces, would help to increase the combined processing capacity to more than 150,000 tonnes annually.

Vinatex currently operates five cotton processing mills in Dak Lak, Khanh Hoa, Binh Thuan and Dong Nai provinces with a combined capacity of 40,000 tonnes per year.

Vinatex general director Mai Hoang An said the investment plan was in line with the government-approved project to expand Vietnam's cotton farming and processing until 2010.

"Paradoxically, Vietnam's textile industry still has to rely heavily on foreign cotton imports while the country's natural bounty offers good conditions for cotton farming and production.

"Our plan to develop cotton production - used as raw material in
textile industry — is to improve our competitiveness," An said.

An said Vietnam's textile producers at present had to import 85 per cent of the cotton wool (between 90,000-100,000 tonnes) it needs annually since the country's cotton output failed to fill the gap between supply and demand.

Vinatex figures show Vietnam has just 33,000ha of cotton, mostly
concentrated in the Central Highlands of Daklak and Gia Lai, and the central provinces of Binh Thuan, Ninh Thuan, Phu Yen, Quang Nam and Quang Ngai.

Vietnam's cotton yield per hectare remains relatively low, at 1.2
tonnes of seeds, compared to the world average return of two tonnes. These areas produce only 13,500 tonnes of cotton wool each year.

Last year, the government approved a multi-million dollar project to expand Vietnam's cotton farming and processing until 2010. Under the project, the nation's cotton plantations would increase to
115,000ha, producing 80,000 tonnes of cotton wool and meeting 50 per cent of demand, by the end of 2005.

Farming would then further increase to 230,000ha, producing 180,000 tonnes, or 70 per cent of demand, by the end of 2010.

During the same period, an additional 20 cotton processing mills are to be built across the country.

In a bid to promote cultivation, the government has agreed to grant an exemption on agricultural land tax for cotton fields and to establish a pricing subsidy fund for cotton products.