Apparel exporters in Tirupur have sought the Union government’s intervention to check incessant surge in yarn prices.
Usually, yarn prices increase with cotton prices, said R Sakthivel of Daffodil Fashion. “Prices go up by Rs 2 to Rs 5 per kilogram. But, this time, there has been a continuous increase, disproportionate with cotton prices. Since December, yarn prices have increased by Rs 65 per kilogram, which is expected to go up. Yarn prices have never gone up so steep in the last few decades,” he said.
Exporters are struggling to take new orders and to process existing orders because of the price rally, Sakthivel said. “Its impact would become visible within two months. A lot of apparel units might shutdown due to lack of orders and it will have a ripple effect on the industries depending on them.”
Most of the yarn mills in the northern part of the country that used to make a significant percentage of yarn are functioning with 50 to 60% of workforce since the lockdown, said another exporter. “Now, most of them prefer to export yarn rather than sell it in the local market, leading to yarn shortage. This has triggered panic buying,” he said.
About 90% of the products exported from Tirupur are core products that can be made in any other country, said V Elangovan, president of the Buying Agents Association. “Already countries like Bangladesh and Vietnam have an advantage over us due to the free trade agreement. In this situation, if we demand retailers in European countries to revise the price, then chances are high that we might lose our orders. It will be very difficult to regain our place.”
The government should immediately ban yarn export to bring down prices, Elangovan added.
Source: The Times of India
The quantity-wise denim apparel imports of USA have seen a rise of 4.50 per cent to 2.75 million dozens in January ’21 – as says OTEXA data. However, the values of the imports were marginally down by 5.36 per cent to US $ 251.80 million.
Bangladesh – the top denim apparel shipper to USA – has noted 18.64 per cent surge on Y-o-Y basis to ship 694,583 dozens of denim apparels.
As far as value-wise shipment of denim apparels is concerned, Bangladesh experienced an increase of 8.73 per cent to US $ 56.40 million.
Mexico, which was one of the most affected countries in denim apparel export to USA in 2020, saw a rise of 1.16 per cent and 1.31 per cent in quantities (361,116 dozens) and values (US $ 42 million) during Jan. ’21 in the US market.
China dropped by 4.39 per cent in quantity-wise shipment to 371,378 dozens, while value-wise the country clocked US $ 28.44 million from its denim apparel shipment to USA, dropping 16.42 per cent on Y-o-Y basis.
Vietnam witnessed massive fall in both quantities and values of the shipped denim apparels to USA in Jan. ’21 on Y-o-Y basis. The country exported 254,065 dozens (down 30.15 per cent) of denim apparels worth US $ 24.96 million (down 34.50 per cent).
Source: Apparel Online
India is expecting a 50% increase in cotton exports in 12 months to 7.5 million bales within the 2020-21 crop 12 months starting October with a renewal in international demand from China and Bangladesh within the final one month, mentioned commerce our bodies.
Though Indian cotton contains the highest wastage in the world it is also the cheapest in comparison with the US, Brazil, and Australia and therefore there is a large potential to export.
Mahesh Sharda, President of Indian Cotton Affiliation said, “The exports can increase further if Pakistan unlocks its marketplace for Indian cotton.”
Trade between India and Pakistan has been on hold since 2019.
Sharda added, “Within the final ten days, China alone has ordered over 1 million bales (one bale of 170 kg every) with international costs firming up. Additionally, Pakistan which has a shortfall in manufacturing might import cotton and yarn from India if commerce between the 2 nations resumes. These elements can simply lead cotton exports to 7-7.5 million bales these 12 months in comparison with 5 million bales in 2019-20.”
Sharda explained that apparel manufacturing countries are generally buying cotton from us as our cotton costs had been 15 percent cheaper than COTLOOK A index, which represents the worldwide uncooked cotton market value.
Till February, India exported 3.8 million bales of cotton largely to China, Bangladesh and Vietnam and has signed future contracts for 0.7 million bales, said exporter and dealer Dharmendra Jain.
“There is common export demand and we can count on the export of 0.5 million bales to Pakistan which may take whole export for these 12 months to 7.5 million bales,” told Jain.
Cotton might be exported from the Attari border in Punjab with mills from adjoining states to fulfill the contracts, mentioned Jain.
Saurabh Pahade, the analysis analyst at Kedia Advisory said, “Cotton costs gained almost 5 percent in a single month resulting from tight providing and excessive demand from export and mills.”
Within the final one-year costs have seen a 20 percent progress.
“China’s demand for Indian yarn reached to pre-COVID ranges throughout November-December 2020. Pakistan may restart cotton import from India using the land route as predictions of the slow restoration of bilateral commerce ties,” Pahade stated.
Atul Ganatra, President, Cotton Affiliation of India said, “In the local market, cotton costs have raised gradually since October from Rs 40,000 per sweet of 356 kg to the current value of Rs 47,000 per sweet.”
“The exports within the first 6 months of the season, starting October have been good, however at this excessive price might not maintain. As much as February we’ve got achieved export shipments of around 3.4 million bales and we can count on cotton exports in 2020-21 to be near 6 million bales,” he further adds that, “The Indian cotton costs will transfer in tandem with the worldwide development which was agency resulting from a decreasing crop within the US.”
Source: Textile Today
After falling by 20 per cent in underwear imports during 2020, USA has seen some positivity to start 2021 in this product category.
According to OTEXA, USA imported US $ 312.32 million worth of underwear in Jan. ’21 – noting 18.34 per cent surge from Jan. ’20.
All major shippers experienced a notable surge in their respective shipment of underwear to USA.
China remained the top shipper with US $ 70.66 million worth of underwear exports to USA and rose 30 per cent in Jan. ’21 on Y-o-Y basis.
Vietnam tapped US $ 59.40 million from its underwear exports to its largest destination and noted 21.40 per cent surge on yearly note in Jan. ’21.
Bangladesh too marked good growth of 21.29 per cent to clock US $ 34.26 million in its underwear exports to USA, while India’s growth remained marginal as it grew by just 4 per cent to US $ 25.09 million in underwear shipment to the US in Jan. ’21.
Source: Apparel Online
Globally fabric and yarn importers are bearing the brunt of rising freight costs amid a global shipping crisis that may last months.
Such disturbing situations are emphasized by the ever-falling shipping crisis out of China. Ships loaded with containers are stuck in Chinese ports.
Goods waiting for containers are stuck on factory loading docks. And shipping costs for those goods that are getting out have increased vastly, abolishing the value-chain proposition that is supposed to underline China’s benefit as a low-cost manufacturing country.
Which is ultimately creating a silver lining for the second-largest apparel manufacturing country i.e., Bangladesh.
Bangladesh backward linkage industry experts are saying that big readymade garment (RMG) factories are turning to local fabric manufacturers for fabric and yarn.
One of the prominent leaders of Bangladesh apparel industry, Faruque Hassan Managing Director of Giant Group said, “China is the main source for the apparel sector’s raw materials but the supply chain has been disrupted due to pandemic and to ensure timely shipments, manufacturers are procuring from the domestic market.”
Khorshed Alam, Owner of Little Star Spinning Mill said, “There are some apparel manufacturers, mostly the large player, who never purchased fabrics from local sources and they are repeatedly asking us for fabrics.”
While highlighting that the motive for the same is the higher prices of fabrics in the importing countries, Alam further added that upsurge in freight costs and the inaccessibility of containers made importing fabrics tougher.
Shahiduallah Azim, Managing Director, Classic Fashion Concept told that obtaining fabrics from the local market is more fitting and hassle-free.
Shahiduallah explained that “This put a reign on the cost of business and lead time. That is why we are buying more from the local manufacturers than in the past.”
In terms of domestically sourced raw materials, especially fabrics; Bangladesh is still some distance from China in achieving self-sufficiency.
According to Bangladesh Textile Mills Association (BTMA), currently, local fabric manufacturers can produce around 35 percent of the demand for woven fabrics from garment exporters and 90 percent for knitwear.
The reliance on foreign destinations, mainly China — Bangladesh imports some 60 percent of its woven fabrics from China (according to an assessment report of the Bangladesh Trade and Tariff Commission-BTTC) and 15-20 percent of raw materials and 80-85 percent of dyeing chemicals and accessories of the knitwear sector come from China while some 40 percent of raw materials for garment accessories and the packaging manufacturing industry also arises from China every year — for raw materials did not augur well for Bangladesh during the COVID-19 pandemic.
According to reports, even as the pandemic had started to inflict chaos in China in the early days before spreading worldwide, causing a supply chain interruption, which impacted the Bangladeshi RMG makers.
It is a different story though that Bangladesh had to suffer more after the pandemic taking the entire world in its grip that resulted in shutdowns, order cancellations, export debacles, etc.
Dr. Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said, “In general, we are possibly going to take a hit for three to four months.”
Mohammed Hatem, Senior Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) underlined that “I am forced to airship fabrics and raw materials to meet deadlines.”
Adding that due to the short supply, prices of raw materials grew by 30 to 40 percent.
Although the COVID-19 pandemic enforced some tough times, it has also given Bangladesh’s textile manufacturers the necessary push — demand for domestically-manufactured fabrics observed around 20 percent rise — given hope for a much-attained dream of self-sufficiency, in terms of fabric manufacturing, is possibly not so far away.
As discussed in the beginning, amid the rise in freight charge, inaccessibility of containers, delays in getting imported raw materials and the augmented prices of imported fabrics, all of which aided turn things around for Bangladesh’s primary textile sector.
As per Bangladesh textile and apparel industry insiders, usually, the prices of raw materials like fabrics, yarns, cotton and packaging materials, increased by 5 to 10 percent in the last few months.
SM Khaled, Managing Director of Snowtex Group said, “Every week, raw materials prices are rising.”
“Unfortunately, we have seen in the past years that though the production costs have increased manifold for different reasons, many buyers did not increase the prices. So, ultimately the manufacturers have to bear the brunt, which should not be the case,” Khaled said.
Besides, the unexpected and steep surge in freight charges lately due to the opposing effects of COVID-19 on the global shipping sector, which saw all main mainline operators increasing freight rates blaming severe scarcity of empty containers following a surge in demand for imports, have also pushed the price up for the clothing makers, who were already being forced to deal with the supply chain disruptions.
Nasir Uddin Chowdhury, Chairman of the standing committee on port and shipping of BGMEA said, “As most of our raw materials are imported, the freight charge hike will increase the import cost. The export cost will also be raised for the same reason.”
Adding that the hike in freight rates would affect the country’s RMG exports.
To add to the increase in shipping charges, air cargo charges have reportedly almost doubled in the last few months.
According to reports, apparel exporters have been dealt a fresh blow by a doubling of air shipment rates for cargoes flying out of Dhaka’s Hazrat Shahjalal International Airport (HSIA) as airlines raised the rates after the growing demand for air shipment amid a positive global outlook and reducing of carrying capacity from the HSIA by 60% on the back of postponement of cargo and passenger flights by some international flight operators.
Fabric prices also grew from importing countries with prices going up by at least US$1 a yard, while the freight charge spiraled to US$ 3,000 from US$900 a container, according to the garment makers.
The overall effect of all these has led to increasing in demand for locally-made fabrics with apparel makers urging for further increasing fabric production.
Although the fabric prices went up in Bangladesh, it is lower than elsewhere, said Khorshed Alam.
Mohammad Ali Khokon, President, BTMA said, “Now, we have more orders than capacity,” he further went on to add that manufacturers have sufficient work orders for fabrics and there are no unsold fabrics or stock.
Khokon added, “The primary textile sector is now in a better state than what it was a few months ago.”
“This is a good sign for us as the strong backward linkage improves value addition as well as the industry’s strength in competing well in the global market,” said Hassan.
Urging the fabrics manufacturers not to set high prices so that exporters do not go to another country for sourcing.
Industry experts and leaders also called upon the garment manufacturers to continue with their patronization of the domestic textile sector for their raw material needs.
Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI) said, “To become the leading garment supplier, Bangladesh needs a robust backward linkage industry for both woven and knitwear fabrics.”
Ahsan added that fabrics manufacturers have to advance quality standards and the RMG exporters have to change their mindset and help the local manufacturers to grow.
While the BTMA President called upon the government to provide policy support so that Bangladesh can become self-reliant in fabrics.
Source: Textile Today
The significance of nonwovens and technical textiles sector has been well-understood during the COVID-19 crisis. To provide insights and opportunities in this sunrise sector, Fibre2Fashion, one of the world's leading textile-garment-fashion portal, is organising a webinar. The webinar will also discuss challenges and latest innovations in the field.
The webinar, to be held on March 24, 2021, at 4.00 p.m. India time, will discuss the importance of technical textiles seen in the pandemic year 2020, and how global trade got dominated by technical textiles.
The Webinar, to be conducted by Deepti Lahane, general manager-Market Intelligence, Fibre2Fashion, will also talk about the latest innovations across various sub-sectors like Packtech, Mobiltech, Protech, Meditech & others. It will also focus on opportunities in technical textiles sector in the new decade 2021-2030.
In recent years, the technical textiles and nonwoven sector has seen an upward trend globally due to improving economic conditions, technological advancements, increase in end-use applications, cost-effectiveness, durability, user-friendliness, and eco-friendliness.
Source: Fibre2Fashion News
Perikal M Sundar, President, FKCCI, said the Chief Minister has presented a balanced budget. He has not levied additional taxes on the common man. The government has encouraged the industrial sector by providing budgetary support to the establishment of textile park, plastic park, bulk drug park and food park.
“The budgetary provision is also made for two Mega Industrial Townships and Peenya Industrial Township. Industrial clusters have been proposed at Bidar & Nippani which would definitely lead to employment generation,” he added.
The government has rightly made provision of venture capital of ₹100 crore to start-ups in Bangalore, which is the national hub for start-ups.
CII Karnataka
CII Karnataka Chairman Ramesh Ramadurai said the Budget has given priority to create a congenial atmosphere for the economic development of the State. “State Government has started economic activities which had stopped during Covid-19 lockdown, as per the guidelines issued by the Central Government. Inspite of the Covid-19 pandemic all efforts are being made to attract capital investment in districts. In addition to this, priority has been given to create a convenient atmosphere by providing necessary infrastructure facilities. Emphasis has been given to new airports, development of highways, self reliance in electricity, railway projects and for the development of other sectors.”
Kassia
By providing special schemes for women aimed at all round development of Women entrepreneurs, Kassia welcomed the gesture along with a loan upto Rs 2 crore at 4 percent for women entrepreneurs. The purchase of land directly by Industries from the farmers definitely helps the all round development of industries in rural areas.
Laghu Udyog Bharati
Laghu Udyog Bharati-Karnataka (LUB-K) termed the Budget as a “Please all Budget” as the BJP Government announced a slew of measures that fosters growth of farming community, rural masses and industrial development in the State. Srikanta Dutta, President LUB-K, said A long-standing demand of LUB-K with regard to announcing a slab system in property tax has been addressed in this Budget. “Our demand to announce a slab system in property in industries in urban areas has been addressed in this budget. This will encourage new Capex spend in the State.
Source: The Hindu Business Line
The Centre has released Rs 1.06 lakh crore to the states since October 2020 to meet GST compensation shortfall, the Finance Ministry said on Tuesday.
The ministry has released the 19th weekly instalment of Rs 2,104 crore to 23 states and 3 Union Territories with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), taking the total amount released so far under the special borrowing window set up in October last year to Rs 1.06 lakh crore.
The remaining five states of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of Goods and Services Tax (GST) implementation.
So far, an amount of Rs 1,06,104 crore has been borrowed by the Central Government through the special borrowing window at an weighted average interest rate of 4.8842 per cent, the ministry said in a statement.
The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST. The borrowings are being done through this window by the Centre on behalf of the States and UTs.
Under the special window, the Centre has been borrowing in Government Stock with tenor of 3 years and 5 years. The borrowing made under each tenor is equally divided among all the States as per their GST compensation shortfall.
“Till now, 96 percent of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs 97,242.03 crore has been released to the states and an amount of Rs 8,861.97 crore has been released to the 3 UTs with Legislative Assembly,” the statement added.
Nineteen rounds of borrowings have been completed so far starting from October 23, 2020.
Source: The Financial Express
The production-linked incentive (PLI) scheme that seeks to push domestic manufacturing in as many as 14 sectors has the potential to generate additional revenue worth Rs 35-40 lakh crore over the next five years, a report said. The PLI scheme is offering over Rs 1.8 lakh crore of incentives/subsidies to manufactures to invest in local manufacturing. The scheme was announced at the peak of the pandemic-driven lockdown to attract investors leaving China.
Most of the new manufacturing should begin over the next 24-30 months that can attract Rs 2-2.7 lakh crore of Capex, according to an analysis by
Crisil
NSE 0.15 %, which also sees that the incentive-to-Capex ratio is particularly attractive at around 3.5 times for mobile phones, electronics, telecom equipment, and IT hardware where our local manufacturing base is relatively low.
The PLI scheme has the potential to generate incremental revenue to the tune of Rs 35-40 lakh crore over the next five years, Crisil said in the report.
According to Crisil managing director and chief executive Ashu Suyash, the PLI scheme will be one of the key growth drivers of the economy next fiscal along with government spending on key infrastructure.
The report expects Capex to jump 45-50 per cent in industrial investments alone in fiscal 2022 after a fall of 35 per cent during the outgoing fiscal and after this, it will moderate to 7 per cent through fiscal 2025.
But, this front-loading of Capex augurs well for the economy because of its high multiplier effect, the report noted.
This will have a salutary impact on banking with credit demand seen growing 400-500 basis points higher to 9-10 per cent next fiscal, partly also riding on economic recovery.
Bank credit growth had contracted 0.8 per cent in the first half of the fiscal, it recovered sharply in the third quarter by growing 3 per cent sequentially. In the fourth quarter, too, it should clock 3 per cent sequential growth. Overall, bank credit so far this year is growing under 5 per cent.
Source: The Economic Times
The textile and apparel industry, which managed to survive three waves of COVID-19 thanks to its decision to produce face masks and personal protective equipment, will focus on sportswear and yarn, according to the Vietnam National Textile and Garment Group.
Le Tien Truong, its general director, said demand for face masks and personal protective equipment will shrink rapidly.
Armed with their experience of coping with the pandemic, many textile and footwear enterprises are quietly confident of altering plans when required and finding new markets to cope with new situation after COVID-19 is under control.
Sportswear has arguably been the most successful segment during the pandemic as awareness of physical exercise rose.
According to Euromonitor International, in 2020 the demand for sportswear world-wide decreased only about 8 percent, the lowest in an industry which saw an overall decline of 16 percent.
The compounded annual growth rate for the sportswear market in the last five years was 6.5 percent, 1.5 times the industry average, and it is expected to be worth 479 billion USD globally by 2025.
The Thanh Cong Textile Garment Investment Trading JSC is considered one of the most successful businesses in 2020 thanks to seizing opportunities to export COVID-19 related apparel products such as fabric masks and PPE.
But Tran Nhu Tung, its deputy general director, said the demand for cloth masks and protective gear is returning to pre-COVID levels with the advent of vaccines. This year his company has stopped taking orders for medical protective gear and antibacterial masks.
It is focusing on traditional products such as T-shirts and sportswear, demand for which would continue to increase, and there are already enough orders for sportswear for the first 6 months of the year, he said.
According to the Vietnam Textile and Apparel Association, many businesses now have orders for until the end of April, mainly for sportswear.
Dang Trieu Hoa, general director of the The Ky Yarn Joint Stock Company, said his company plans to focus on yarns with high quality and competitive prices.
The EU-Vietnam Free Trade Agreement (EVFTA) that took effect on August 1 last year has reduced tariffs on Vietnam’s garment exports by more than 70 percentage points.
The footwear and textile sectors also benefit significantly from tariff cuts, according to Bao Viet Securities Joint Stock Company.
With most other countries that export textile and garment to the EU not having a trade deal with the bloc, the EVFTA has opened up a great opportunity for Vietnam’s footwear, textile and garment exports if companies meet origin requirements, it added.
Source: Vietnam News
The successful efforts of the value added garment and home textile industries facing jeopardy in the wake of unavailability of cotton yarn and abrupt decrease of value of rupee against dollar.
For the reason, the garment and home textile exporters fearing steep downfall in exports in coming months. In last six months, dollar has also depreciated against Pak Rupees by 5.58% from 166.5 to 157.2 while exporters previously had negotiated and finalized their export orders at dollar rate of PKR 166.5. Similarly, during last three months, cotton yarn 30/1 prices have been increased by 15% and that also is not available in the market. Due to uncertainty and recurring fluctuations rupee dollar parity, exporters are reluctant for new orders as both are uncertain about the cost of the product. Exporters are hurting from both sides, therefore, Government must intervene to save the value added textile exports.
The gravity of situation demands the Government to immediately abolish Customs duty on import of cotton yarn in the interest of value added garment and home textile exports and the country. This is demanded by Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum & Former Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association. Despite decline in cotton crop and acute shortage of cotton yarn, spinning mills have exported 209,290 Metric Tons during last seven months of Fiscal Year 2020-21. Value Added Garment and Home Textile Export Sector fervently appealed to restrict exports of cotton yarn which is basic raw material as yarn exporters are exporting coarse count yarn which involves cotton and gas which all are short in our country, he said.
The Value Added Textile Sector is continuously drawing the attention of the Government, through appeals and press statements, towards unavailability and shortage of cotton yarn - which is basic raw material since last five months but to no avail.
Inconsiderate response tantamount to Government's lack of priority and non-seriousness to enhance value added textile exports which contribute to around 62% in total exports, provides 42% urban employment particularly to female workforce who mostly are widows and orphans, earns highest foreign exchange and supports approx. 40 allied industries.
During Feb 2021, 4.5% decrease in exports endorse the view point of exporters that unavailability of cotton yarn will shatter the export orders in hand which will eventually be diverted to other competing countries if the cotton yarn is not made available in required quantity. Once the buyer is diverted to other country, it is next to impossible to bring them back. The Government policy should be attractive to invite buyers to Pakistan instead of discouraging them to divert to other countries.
The textile exporters are also highly perturbed over the dubious dealings of spinners who have taken advance payments with commitments to supply cotton yarn but have dishonoured their commitment to supply cotton yarn and if yarn being supplied is of sub-standard quality. Lack of cotton yarn's simply means decline in value added textile exports.
The exporters also lamented that whenever the value added garments and home textile industry takes off with its full potential, some adverse thing happens. Pakistan should learn from the experience and policies of Bangladesh to enhance exports whereby the Bangladesh Government supported the Value Added Apparel Sector while in Pakistan the Government instead of encouraging the value added sector is supporting the spinning sector. The Manifesto of the PTI Government led by Imran Khan Prime Minister to create millions of employment can turned to reality by supporting the Value Added Garment Sector which only holds such potential being highly labour intensive.
He articulated on one hand Government wants to enhance the exports while on other hand appropriate measures have not been taken to provide cotton yarn.
Source: The Business Recorder
After a month of Vietnam signing a free trade agreement (FTA) with the United Kingdom, bilateral trade witnessed a 78.57 per cent year-on-year (YoY) increase, according to the former’s general customs department (GCD), which recently reported that despite the hitches due to the pandemic, trading between both sides outstripped $657 million in January.
Vietnam's exports to the United Kingdom reached $598 million, 84.61 per cent more than the same month last year. Imports from there to Vietnam reached over $59.3 million, a 34.3 per cent YoY increase. Products included metal, pesticide and textile materials, a Vietnamese newspaper reported.
Last year, export-import turnover between the two countries reached $5.64 billion, in which Vietnam's exports reached $4.95 billion, resulting in a trade surplus of $4.27 billion. The United Kingdom continued to be Vietnam's third-biggest trade partner in Europe, behind Germany and the Netherlands.
Source: Fibre2Fashion News
A number of big British companies are interested to invest in Bangladesh to benefit from the country's large consumer base, said British High Commissioner Robert Chatterton Dickson.
"Since British companies are seriously looking to invest here, we are trying to help them," Dickson told The Daily Star during a recent interview at his residence in Baridhara, Dhaka.
Some of the best British companies, such as Standard Chartered, Unilever, HSBC and British American Tobacco, have been operating in Bangladesh for years, mainly because of the vast consumer base.
Bangladesh's current population stands at nearly 170 million with a per capita income of about $2,000, making it a market with good business potential for British companies.
"British companies could see the rapid economic growth, the population growth, and the consumer base. The middle-income class is coming up here," he said.
The firms are interested to invest in finance, education, healthcare and other high-end services such as fintech, energy and catering.
Some British universities have expressed their interest to set up campuses in Bangladesh as they assume the country's people can now afford quality education, he said.
The UK is a vital market for Bangladesh as it is the country's second largest export destination in Europe after Germany, and the third largest overall after the US and Germany.
Bangladesh mainly ships $4 billion worth of textile, garments and vegetables a year to the UK and mostly imports machinery.
"I am very keen to start fresh negotiations with Bangladesh to make the country a better trading partner for the UK. Business between the two countries can only grow despite the Brexit," said the British envoy.
Apart from business ties, the UK and Bangladesh have a historical relationship.
During the first-ever trade dialogue between the two countries on February 16, the UK reaffirmed its commitment to continue the Generalised System of Preferences (GSP) for Bangladesh after its graduation from the group of least-developed countries in 2026.
The UK, like the EU, will continue to provide the GSP for Bangladesh under the Everything But Arms (EBA) scheme.
The EU previously said that it would provide Bangladesh with the GSP facility up to 2027 to help the country address any post-graduation challenges.
Bangladesh has appealed to the World Trade Organisation and the United Nations for an extension of its GSP tenure with developed and developing countries beyond 2027.
Dickson said the issue could be discussed in future as the British government is currently working to extend its GSP facilities until 2027 following the UK's departure from the European Union.
The envoy also highlighted some of the challenges Bangladesh faces in attracting foreign direct investment (FDI).
First, Bangladesh needs to improve its rank on the global Ease of Doing Business Index by removing the various barriers to trade and investment.
The perception about corruption also needs to be removed to attract more British FDI, he said.
In some cases, tax offices take arbitrary decisions about foreign companies. Many foreign investors and diplomats are also calling for further improvement in the law and order situation to attract more FDI, he added.
Both countries witnessed historic events that took place this year as Brexit took effect while Bangladesh made progress to secure its graduation from the club of LDCs.
So, changes in the trade regime took place on both ends. The UK is now independent in taking trade decisions, including those related to tariffs, as it severed its ties with the EU.
At the same time, Bangladesh is set to lose its preferential access to the UK market due to graduation in 2026.
But despite the changes to the business landscape in both countries, bilateral trade between the two will continue to grow, said Dickson, who has been serving as the British high commissioner in Dhaka since March 2019.
The diplomat lauded the Accord, an inspection and monitoring platform formed by major European retailers and brands to ensure compliance in the apparel industry, for its wonderful job in bringing safety to the sector following the collapse of the Rana Plaza building.
"However, Bangladesh still needs to do more in terms of workers' rights and safety," he said.
Apart from apparel, Bangladesh can export a wider range of goods to the UK such as bicycles, frozen food, and pharmaceuticals.
He also praised the improvement in security at the Hazrat Shahjalal International Airport in Dhaka compared to a few years ago as the government has addressed several issues, particularly in the cargo village areas.
Source: The Daily Star
Japan's economy expanded at a slower-than-initially-reported pace in October-December, with firms tightening spending on plant and equipment and sharply cutting inventories as the coronavirus pandemic hit demand.
The slower growth was mainly due to a sharper contraction in private inventories and capital expenditure expanding less than previously thought in the fourth quarter, even as exports remained solid.
Separate data showed household spending was hit by a bigger annual drop in January than in the prior month, a sign the COVID-19 pandemic was keeping consumers cautious about shopping.
The economy grew an annualised 11.7% in October-December, weaker than the preliminary reading of 12.7% annualised growth to mark the second straight quarter of growth, Cabinet Office data showed Tuesday.
The reading, which was weaker than economists' median forecast for a 12.8% gain, translates into a real quarter-on-quarter expansion of 2.8% from October-December, versus a preliminary 3.0% gain.
Capital spending grew 4.3% from the previous quarter, lower than a preliminary 4.5% rise, but outpacing the median forecast for a 4.1% increase.
Private inventories, including raw materials and manufactured products, subtracted 0.6 percentage point from revised growth domestic product growth (GDP), worse than a negative preliminary contribution of 0.4 percentage point.
"Although vaccination started in Japan, it will take time to yield its impact, so the economy is forecast to go though some ups and downs," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
"We expect the economy will pick up from the second quarter but it will be difficult to regain soon what it will lose in the first quarter."
Private consumption, which accounts for more than half of GDP, rose 2.2% from the previous three months, matching the preliminary reading.
Net exports - or exports minus imports - added 1.1 percentage point to revised GDP growth, while domestic demand lifted it by 1.8 percentage point, weaker than a preliminary contribution of 2.0 percentage point.
The worse-than-expected GDP revision comes after exports and factory output picked up in January, signalling a stronger recovery in global demand following last year's deep coronavirus slump.
Household spending, however, fell 6.1% in January compared with the same month a year earlier, official data showed on Tuesday, worse than the 2.1% drop expected by economists in a Reuters poll.
Some analysts are worried that a cold spell in corporate investment and household spending could last longer than expected, boding ill for demand and threatening to leave the world's third-largest economy without a domestic growth driver.
The Bank of Japan will conduct a review of its policy tools next week to make them more "effective and sustainable" as the pandemic forces it to keep its radical stimulus programme in place longer than originally expected.
Source: The Business Standard
Seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17% in Bangladesh and 8%in India, a World Bank report said on Tuesday.
It said that strengthening the Bangladesh-Bhutan-India-Nepal motor vehicles agreement (MVA) could transform regional transportation in eastern South Asia and bring significant economic gains to Bangladesh and India.
Removing all border frictions to the movement of trucks between Bangladesh and India could deliver enormous economic benefits to both countries.
The report said that bilateral trade accounts for only about 10% of Bangladesh’s trade and a mere 1% of India’s trade. Whereas , in East Asian and Sub-Saharan African economies, intraregional trade accounts for 50% and 22% of total trade, respectively.
In fact, it is about 15–20% less expensive for a company in India to trade with a company in Brazil or Germany than with a company in Bangladesh, the report said. High tariffs, para-tariffs, and nontariff barriers also serve as major trade barriers. Simple average tariffs in Bangladesh and India are more than twice the world average, it said.
The report recommends key policy actions countries should take to strengthen the MVA. These include harmonising driver’s licensing and visa regimes, establishing an efficient regional transit regime, rationalising and digitising trade and transport document and liberalising the selection of trade routes.
Weak transport integration makes the border between Bangladesh and India thick. Crossing the India–Bangladesh border at Petrapole–Benapole, the most important border post between the two countries takes several days.
In contrast, the time to cross borders handling similar volumes of traffic in other regions of the world, including East Africa, is less than six hours, the report highlighted.
At present, Indian trucks are not allowed to transit through Bangladesh. As a result, the northeast of India is particularly isolated from the rest of the country and connected only through the 27-km-wide Siliguri corridor, also called the “chicken’s neck”. This leads to long and costly routes.
Goods from Agartala, for example, travel 1,600 kilometres through the Siliguri corridor to reach Kolkata Port instead of 450 kilometres through Bangladesh.
If the border were open to Indian trucks, goods from Agartala would have to travel just 200 kilometres to the Chattogram Port in Bangladesh, and the transport costs to the port would be 80% lower, the report said.
Source: The Times of India
Bangladesh’s primary export sector, the readymade garment (RMG) industry, is not expanding employment at a widespread rate. Workers are being added at the rate of hardly 1% per year.
The participation of women in the garments sector of the country is declining and the participation of men is enhancing. Nevertheless, the overall probability of employment in the garment sector is not appearing. On average, only 1 percent of workers are being added every year. The people of Rangpur and Mymensingh districts are working extensively in this sector and 18 percent of the whole workers in this sector are foreigners.
The data showed up from an analysis by an organization named the Asian Center for Development (ACD). AK Enamul Haque, Executive Director of ACD, officially published the consequences of the survey titled ‘Socio-Economic Status of Garment Workers in Bangladesh’ online on Saturday, March 7.
He said that the survey work began in February of the last year.
The survey was conducted on a random basis on 160 garment factories in Dhaka and Chittagong, of which 129 were in Dhaka and surrounding districts and the remaining 31 were in Chittagong.
The analysis was supervised on 1,119 people working in these three categories knitwear, woven, and sweaters. The outcomes of the analysis have been published based on data of workers from first grade to seventh grade in 160 factories. Earlier in 2015, ACD conducted the first survey on the garment sector.
Enamul Haque said that a total of 42 lakh 20 thousand workers are working in the garment sector now. Of these, 24 lakh 98 thousand are women and 17 lakh 22 thousand are men. 5 years back, a total of 40 lakh 1 thousand workers were working in the garment sector.
Then several women workers were 25 lakh 91 thousand and there were 14 lakh 10 thousand were men workers. 2 lakh 19 thousand workers have been expanded in the garment sector in 5 years. In other words, the number of workers in the garment sector has enhanced at an average rate of 1.7 percent every year. At this time, the growth of male inclusion in the garment sector was 4 percent. On the other hand, the number of women workers has decreased at the rate of 0.7 percent every year.
According to the survey, 18 percent of the total workforce in the garment sector in Bangladesh is foreigners.
In the case of activities, the figure is as follows: a maximum of 74 percent foreign workers are working in administration, 16 percent in technical activities, and 8 percent in merchandising. 35 percent of garment workers have a secondary pass degree.
23 percent have joined after finishing off primary school lessons, 3 percent have passed bachelor’s or graduate honors and barely 0.5 percent have entered after graduating technological schooling.
According to the survey, the garment factories in Bangladesh are mostly established in Dhaka and surrounding districts and Chittagong. Yet in the districts where the factories are located, the participation of the people in the garment factories is negligible. 89 percent of the workers come from other districts. Most workers are from Rangpur and Mymensingh districts.
Discussion on the outcomes of the analysis
Having a part in the discussion, Labor and Employment Secretary Abdus Salam said that he’s surprised to hear that 82 factories did not provide information for the survey and he doesn’t know why they didn’t give information. The secretary wants to know why people from Rangpur and Mymensingh districts are moving toward the garment sector more.
Mostafizur Rahman, Special Fellow of the Center for Policy Dialogue (CPD), said Bangladesh’s transition from Least Developed Countries (LDCs) will take place in 2026 with only six years to go. At this moment the capability of the garment sector needs to be strengthened.
Rahman said that six years back, the salary of a worker was Tk 6,820 but now it has increased to 11 thousand 402 Tk but this did not increase their purchasing power.
BGMEA President Rubana Huq said the 82 factories that did not provide information may have been inconvenienced. Nonetheless queried that why Western buyers did not increase the price of clothing during the Corona duration.
Rubana Huq said a total of 16 percent of foreign workers are working in garment factories. To reduce this percentage, work is being accomplished to increase the capability of garment workers.
Source: Textile Today
