Germany’s DEG to invest $18 mln in Turkish diaper plant in Vietnam

DEG, the German Development Finance Institution, has approved an investment of 17 million euros ($18.1 million) into Hayat Kimya Vietnam Company, an Asian Development Bank-backed maker of baby diapers, wet wipes, and women’s hygiene pads.

The funding will be used to build up production capacity in Vietnam to reduce logistic costs and time, DEG said in a disclosure seen on Monday.

“The aim was to tap underserved markets with high growth potential like Vietnam, Thailand and Malaysia, and offer affordable branded products like baby diapers, sanitary napkins and wet tissues in these emerging markets,” said DEG, the investment arm of German state-owned development bank KfW.

“Through this engagement, DEG is providing substantial long-term financing which is not readily available locally. This investment in future markets like Vietnam fits with DEG’s strategy and it will contribute to female empowerment in the healthcare value chain,” it added.

Hayat Kimya Vietnam is fully owned by the Turkish hygiene products manufacturer and existing DEG client Hayat Kimya A.S., established in 1937 and headquartered in Istanbul.

The Asian Development Bank signed a 20-million euro (around $21 million) loan with Hayat Kimya Vietnam Company in December. ADB said the project aims to expand consumer choices and improve the affordability of these products, which will also be exported to Malaysia and Thailand. An additional loan of 15 million euros was issued by Deutsche Investitions- und Entwicklungsgesellschaft mbH.

The bank said it will also help Hayat Kimya Vietnam develop a gender-inclusive action plan which includes promoting gender equality in their branding and marketing, implementing awareness campaigns about the benefits of hygiene products, and developing a gender-inclusive corporate framework.

The company inaugurated its $250 million baby diaper factory in the southern province of Binh Phuoc in March 2022, and Vietnamese Prime Minister Pham Minh Chinh attended the opening ceremony.

The 32-hectare site is envisaged as Hayat Kimya A.S.’s production base in Southeast Asia, exporting about 40% of its output to Thailand and Malaysia, according to the Vietnam subsidiary.

The facility is designed with zero carbon emissions and the ability to minimize environmental impact and save water and raw materials. An on-site 5.3 megawatt-peak solar energy system is part of the green plant.