In this paper, the authors examined the development of garment enterprises and the effects of some industrial policies on the industry. Though the number of enterprises in garment industry increased over time, these were small and medium-sized. It was expected that industrial policies, such as access to preferential loan, tax break, vocational training... will provide enough rents for group of firms (often SOEs) to upgrade in global production chain. To the contrary, industry failed to upgrade in the global value chain due to (1) the expansion of low-value added market\ (2) private firms specialized in low value-added market because the failure of both capital and labor markets, (3) the structure of garment industry and textile industry deterred incentive to increase localization and as a consequence, depends heavily on international imports.