The International Monetary Fund’s growth forecast for India in 2021 is 12.5 percent compared to a negative 8.8 percent in 2020 and will settle at 6.9 percent in 2022. India’s growth prospects in the midst of a Covid-19 pandemic compared to China seems better. Since there are more mutations on a daily basis now and a huge surge in the number of positive cases, we need to have a strong assessment of the trade-off between lockdown, economic activity, and livelihood. Economic activities need to be quickly adapted to the pandemic.
Strong containment measures like testing, vaccination, etc, need to be fast-tracked and quicker progress in vaccination may raise the growth forecast. Vaccine production needs to be ramped up considerably to provide mass access and stop export controls.
The most worrying factor at present is rising poverty globally as well as in India for the first time in the last 20 years due to disruption by the pandemic. The number of people below the poverty line (BPL) increased to 50 million in India and 95 million globally. A two-decade-long trend of poverty reduction has reversed. As per the World Bank’s estimates, global poverty is expected to rise to 150 million by the end of 2021 depending on overall economic contraction. Extreme poverty, which is defined as living on less than $1.90 a day, is likely to affect between 9.1 percent and 9.4 percent of the world population.
There is an urgent need for targeted and localised lockdowns only. Revenue expenditure needs to be increased in India to target income support measures, which is extremely important now to maintain livelihood and contain poverty. Growth is expected in certain sectors whereas poverty is a reality. As per the IMF’s forecast, there will be a 9 percent hit to per capita income from 2020 to 2022.
In India, a little bit of complacency due to fewer Covid positive cases during January to March and not highlighting to the public the spread of the United Kingdom, Brazil, and South Africa mutant virus variants has resulted in the present situation. There is evidence in history that a hundred years ago during the 1918 Spanish Flu pandemic a similar more dangerous second wave was witnessed due to similar complacency at that point of time. It is time to implement the learnings from history.
Therefore, the needs of the hour are – all steps to be taken to control infection, strict containment in localities having a large number of positive cases, following Covid appropriate behaviors, no crowding, increasing the vaccination drive, and strengthening the hospital infrastructure such as providing more number of hospital beds and ensuring the supply of oxygen. These are the panacea needed urgently to bring the economy back on track for higher growth.
According to the second advance estimates, 2020-21 is expected to suffer a GDP contraction of 7.96 percent. The weekly moving average of daily new cases has increased 14 times since February 11, when it started rising again after declining for five months. The effects of any significant economic disruption, if it were to happen, will not be limited to the first quarter itself. It can have a cascading effect through both demand and supply channels. If supply chains get hit and inflation starts rising — it has already been on an upward trajectory — purchasing power and therefore the demand is bound to be squeezed. Similarly, any cutback in economic activity, especially in sectors that are being forced to do so because of social distancing requirements, will adversely affect incomes and hence demand.
Many migrant workers, who returned to cities for work after months of staying home from a curfew-style lockdown, are now crowding trains and buses to return to their native towns and villages yet again. The paranoia, fear of another nation-wide lockdown being imposed, and the horrifying experiences in memory for those who suffered last summer, is making more workers anxious, uncertain about their own well-being, which may subsequently impact labour-intensive businesses and construction work (where most migrant workers tend to find employment) for months ahead.
However, there is hope for economic recovery and stabilization. Because, unlike the first wave, we have vaccines this time. It is reasonable to expect that the pace of new infections will slow down as vaccinations pick up. Whether or not India’s favourable GDP revisions undergo a downgrade will depend on how fast vaccinations pick up, which will determine the time it will take to flatten the second wave. Fiscal support through an institutional mechanism – for instance through the creation of special-purpose vehicles, is required to support stages of vaccine production; its distribution through a decentralised supply-chain process for all demographic groups, and a fund to provide money to those in the private sector who can produce vaccines on a large scale.
The surging debt burden is leading to increased debt servicing. In addition, there is rising inflation and lower economic growth. Comparative growth figures of China and India are higher than other regions like Euro zones. The current global and Indian trends point toward an urgent need for policy support with a mid-term framework to ensure more support mechanisms. This may lead to a higher deficit. Once the pandemic is over the deficit can be reduced and interest rate easing can be done. Actions are needed in this direction.
During the pandemic as massive digitalization happened, cautious digitalization is suggested otherwise it may end up reducing jobs. Moreover, many jobs are unlikely to return. There are requirements for additional resources to be spent on learning losses to children for future growth prospects. So increasing spending by 0.5 percent of GDP on education is a viable option.
In a situation like this, India’s economic policy response to both, the crisis at hand and the crisis to come, may benefit from an urgent “3-6-9 month” action plan. A plan, whose execution and implementation would need to be scaled on a war footing and for which urgent fiscal support shall need to be prioritised, if the government is serious about addressing the catastrophic impact of a surging pandemic.
Covid-19 may be a breather for the environment as the impact of climate change on economic growth is 4 percent lower. To maintain this trend, there is a requirement of $600 billion investment on green growth globally. In addition, implementation of carbon pricing in all sectors is needed, followed by optimization of energy consumption.
Source: The Financial Express
Engineering exporters body EEPC on Sunday said imposition of restrictions by states to contain rising coronavirus cases could affect the exports and the worst impacted would be MSMEs. The Engineering Export Promotion Council (EEPC) said while recovery in the last few months of the fiscal year offers a ray of hope for the sector, the rising number of COVID-19 cases poses a downward risk.
"In order to contain the virus spread, many states have imposed restrictions. This could affect exports and the worst impacted would be MSMEs (micro, small and medium enterprises).
"The government therefore needs to expedite vaccination to lessen the impact of the pandemic," the council said in a statement.
It also said that buoyed by rising global demand and increased economic activities, exports of 32 out of 33 engineering goods categories such as iron and steel, non-ferrous metal products, industrial machinery and office equipment recorded positive growth in March, signalling good times for exporters reeling under loss for the past one year due to pandemic.
The US continued to be on the top of the list of major export destinations as engineering exports to America rose to USD 1,152.82 million in March 2021 as compared to USD 917.02 million in the year-ago period, it said adding exports to the US fell down in cumulative terms during 2020-21.
Similarly, exports to China, India's second largest export destination, jumped to USD 553.06 million in March. The UAE retained its third position of largest export destination.
"Region wise, the European Union (EU) ranked as the numero uno destination leaving North America behind with a share of 18.5 per cent of total engineering goods exports in 2020-21. India's exports to North America ranked second with 18 per cent share while ASEAN region accounted for 15.4 per cent," it added.
Source: The Economic Times
In Coimbatore, temporary check posts were erected in more than 30 places to prevent people loitering out without any purpose. Police warned and let off those coming out of their house without valid reason.
A senior police official said that except for stray incidents of disobedience by the civic society, the lockdown day passed off peacefully. There was hardly any vehicle movement on the arterial Avinashi Road and Tiruchy Road. In the neighbouring Tirupur district too, people preferred to stay indoors. But, the closure of all hotels and eateries forced workers staying in mansions to starve without regular food.
Apart from setting up check posts on Dharapuram Road, Avinashi Road, Kangeyam Road and Palladam Road, police also took up patrolling in residential areas and advised those found outside to go back into their houses. More than 500 police personnel were involved in checks in the city limits and flyovers were blocked with barricades.
Though the knitwear firms were allowed to operate even on the lockdown day, most of them did not function due to issues in movement of workers. “Only a minimum number of firms with an in-house staying facility for workers operated. A majority of other units, which rely on workers coming from faraway places, were forced to remain shut. Already, the textile firms have incurred heavy loss due to cancellation of night shift due to restrictions,” said V Muthurathinam, a textile manufacturer.
Other western districts, including Salem, Erode and The Nilgiris too wore a deserted look as commercial establishments remained shut and there was hardly any vehicle on roads due to the lockdown.
Source: DT-Next
Covid impact on MSMEs: Traders’ body Confederation of All India Traders (CAIT) has urged the government to defer as many as 11 compliances under Goods and Services Tax (GST) and 15 compliances under the Income Tax Act by three months in the wake of Covid crisis in the country. The confederation, which represents around 8 crore traders across 40,000 trade associations in India, requested Finance Minister Nirmala Sitharaman in a communication to postpone these compliances that traders have to comply with in April. “Non-compliance of these stipulations will attract huge penalties on traders across the country,” CAIT said.
“In these tough times when all the state governments are taking strict precautionary measures such as complete curfew, night curfew, 72-hour lockdown, complete lockdown, containment zones, etc., in order to restrict the spread of Covid-19 in their states, it will not be possible to comply with all these statutory compliances in time,” CAIT National President BC Bhartia and Secretary General Praveen Khandelwal said in a statement.
Returns including GSTR-3B, GSTR-1, GSTR-4, CMP-08, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, and GSTR-8 have been due in April along with the due date for issue of TDS certificate for tax deducted under section 194-IA, IB, and 194M, a quarterly statement in respect of foreign remittances in form 15CC, furnishing form 3BB, form 24G, challan-cum-statement in respect of tax deducted under section 194-IA, etc., of the Income Tax Act, according to CAIT.
“For Delhi, the daily business loss due to lockdown is likely to be around Rs 600 crore while for overall India, the daily loss could be around Rs 30,000 crore taking into account full lockdown, partial lockdown, night curfews, and other forms of restrictions,” Khandelwal had told Financial Express Online earlier this week.
The government, on Saturday, had announced relief for taxpayers, tax consultants and other stakeholders, by extending the deadline for payments under the Direct Tax Vivad Se Vishwas Act, 2020 and some compliances under the Income Tax Act by two months till June 30. These included, “Time limit for passing of any order for assessment or reassessment under the Income-tax Act, 1961 the time limit for which is provided under section 153 or section 153B thereof; Time limit for passing an order consequent to direction of DRP under sub-section (13) of section 144C of the Act; Time limit for issuance of notice under section 148 of the Act for reopening the assessment where income has escaped assessment; and Time Limit for sending intimation of processing of Equalisation Levy under sub-section (1) of section 168 of the Finance Act 2016,” according to the Finance Ministry statement.
India has been witnessing a surge in Covid cases since mid-February amid the second wave of the pandemic. The country, facing a shortage of critical life-saving supplies such as medical oxygen, reported 3,49,691 new cases, 2,767 deaths, and 2,17,113 discharges in the last 24 hours, as per Union Health Ministry. India’s total number of Covid cases jumped to 1,69,60,172, while active cases surpassed the 26-lakh mark, as per the ministry’s data.
Source: The Financial Express
Already running in losses due to cancellation or holding back of orders, Ludhiana industrialists have decided not to suspend production, but to end multiple shifts for now, so that they could at least retain labour, which otherwise might return to their native states amid all the uncertainty about a possible lockdown.
Ashok Poplay, executive member of Bahadurke Textile and Knitwear Association, said, “The lockdowns in different states are resulting in huge cancellation of orders. Ideally, we should have suspended our production, but we are forced to carry on with it as we know that if we suspend production, our workers will go idle and might return to their home states even if we pay them wages till the production resumes.”
“And once they go back, they will return after months and our entire season will be jeopardised. Already there is lot of panic among workers on account of possible lockdowns and increase in Covid-19 cases. Only we know how we are managing to hold them back,” he said. Poplay said, “The markets where there is no lockdown yet too are reporting huge drop in sales and we do not know where to dispose of our stocks. Moreover, the silence maintained by the government on what is going to be the future course of action has further made the matters worse. As of now, we can do nothing except for bearing the losses and investing our money with no surety of return.”
Narinder Mittal, general secretary of Ludhiana Business Forums, said, “The situation is getting bad to worse for the garment industry.
On a daily basis, new states are joining the list of imposing curbs, including lockdown, giving us a big blow. Already with two major markets of Delhi and Maharashtra under lockdown, another big garment consumer state Rajasthan too has now imposed lockdown for a fortnight.”
“Given such high cancellations, the need of the hour is to shut down production for a fortnight, but we can not take this risk as once the labour is gone, we know fact that they will not return for months. So the best we could do right now is ending the overtime and operate only one shift of eight hours to keep our workers engaged,” he said.
Narinder Bhamra, president of Fasteners Manufacturers Association of India, said, “Cancellations and orders on hold combined with continued production despite no sales have led to blockage of huge amount of our capital in finished goods. If this trend continues for two-three weeks, the situation will be beyond our control as we will be left with no funds to buy raw material or even manage our expenses.”
“We do not know how to solve this situation as this is unprecedented. Last year lockdown was pan India and if we were closed, our dealers and buyers were also closed, but now its altogether a different story,” Bhamra added.
Source: The Times of India
ICE cotton futures nudged up on Thursday to their highest since mid-March, as worries over dry weather in the main growing state of Texas offset pressure from a dip in weekly exports.
The cotton contract for July was up 0.55 cent, or 0.65 %, to 85.38 cents per lb by 12:37 EDT (1637 GMT). It traded within a range of 84.48 and 85.79 cents a lb. The contract hit its highest level since March 18 earlier in the session. “We don’t have a lot of cotton right now, and that’s the reason export sales are not as robust as they have been over the last 20-24 weeks,” said Louis Barbera, partner and analyst at VLM Commodities Ltd, adding that the current pace of exports is unsustainable.
Source: The Business Recorder
Before the COVID–19 pandemic, the dressing gown market transformed a bunch. With the increasing number of online consumers, there is a heightening tendency among them to decide on more casual clothes and some are turning off from the intention of buying clothes that can merely be worn once or twice. We used to notice the usage of gowns at marriages in western countries.
Nevertheless, clothes are not being used simply in weddings but also in day-to-day life. In the marriages that took place during this epidemic, most of the brides are getting married by wearing alternative dresses instead of dressing gowns.
Surprisingly, the demand for dressing gowns in January-February 2021 has boosted significantly due to the demand of American buyers, which is a relatively satisfactory statement for the garments manufacturing country at this critical momentum.
The country imported US$ 80 million worth of dressing gowns in Jan-Feb. ’2021 duration, by showing 1.88 percent progress on a Y-o-Y basis. About 60 percent of this entire value was endorsed by China and Vietnam jointly. Nowadays, the leading exporters of dressing gowns to the United States are China, Vietnam, Colombia, Turkey, India, and Bangladesh. Among them, China is the vastest exporter of dressing gowns.
China has exported the dressing Gown of $ 35.84 million in January-February of this year, giving rise to 7.59 percent of the annual upswing. Which has tremendously boosted from the analysis of the previous year.
On the other hand, Vietnam was dominated as its shipment of the commodity declined massively by 40 percent to the US $ 12.77 million in the review period.
Following in line were Cambodia, Turkey, and India with a shipment value of US $ 9 million, the US $ 4.12 million, and the US $ 4.86 million. Respectively these three nations upped their respective exports of the dressing gown to the USA by 77.23 percent, 52.34 percent, and 8.54 percent on a Y-o-Y basis.
Bangladesh has significantly turned on tapping the dressing gown market of the USA and it has demonstrated 157.60 percent annual progress of its shipment in the Jan-Feb ’2021period, valuing the US$ 4.33 million, while it was the US $ 1.68 million in Jan-Feb. ’2020.
How can Bangladesh move towards the first row among the dressing gown exporter countries?
There is a massive opportunity for Bangladesh to take hold of the leading position in the dressing gown market. Bangladesh is working in the RMG sector for more than 35 years and has gathered a lot of familiarities to cope-up with the modern progression. So, by attaining evolution Bangladesh can come to be the top exporter country in this market too. It will be easy to take hold of this gigantic chance by assuming SWOT analysis.
Strength of Bangladesh’s RMG sector:
Weakness of Bangladesh’s RMG sector:
Opportunities for Bangladesh’s RMG sector:
Threats for Bangladesh’s RMG sector:
Source: Textile Today
The recent data by the Pakistan Bureau of Statistics reveals that the Pakistani textile exports have grown 30.4 percent, Year-on-Year in March 2021 compared to the same month in 2020. Similarly, the exports grew 9.8 percent Month-on-Month (MoM) compared to February 2021.
The exports in March were valued at $1.35 billion, showing an upward trend in the sector. According to the data released, the segment-wise value and non-value-added exports registered a rebound of 31.4 percent YoY and 18.9 percent YoY, respectively.
Even though the non-value-added segment saw a boost in exports, which saw a 4.8 percent decline from the preceding month, and cotton cloth increased 23.4 percent, MoM.
According to AKD securities, the main reason behind the jump is the fact that “Local manufacturers have intensified efforts in capturing US textile imports from China after order cancellation from Xinjiang due to human rights violation”.
That is because 80 percent of the Chinese textile industry got their cotton from the Xinjiang province. According to the reports in the international media, the embargo has been placed because of the concern over the alleged use of Muslim minority Uyghurs being used as labor force in cotton production.
While China faces this conundrum, the rest of regional competitors, especially India, for cotton export are also out of the game because of the severity of the ongoing pandemic in the countries.
According to the analysis, the readymade garments and bed wear registered a solid rebound of 22.9%YoY and 43.7%YoY respectively while knitwear outperformed the segment with a growth of 49.6/7.5% YoY/MoM despite PKR appreciation.
Usually, as the local currency appreciates, the products become expensive for the foreign buyers, and as a result, the buyers look for alternatives in the other markets. However, this time as mentioned, it has not been the case. This can again be attributed to “other major exporting regions in Asia experiencing the severity of the third wave of Covid-19 and are undergoing mass lockdowns.”
For the current fiscal year till March, that is, 9MFY21, the textile exports registered an increase of 9% compared to the same period in 9MFY20, while the value-added sector specifically seeing an increase of 15 percent YoY.
Cotton Prices
According to the AKD analysis, the international cotton prices decreased 1.87 percent MoM in March 2021, signally a return to December 2020 low prices, after hitting the 2-year highest in February 2021.
Domestic prices have soared to PkR12,518/40kg or 10.37% increase MoM showing a trend contradictory to global cotton prices but had started to decrease in the last week of Mar’21.
AKD analysts added, “the removal of import duty on cotton yarn till June 2021 will provide a breather to the downstream textile industry as Pakistan’s cotton crop output falls to an estimated 8.9 million bales for FY21 from 13.2 million bales in FY20, a reduction of 34%.”
The key factors of the cotton prices in the future would be the crop quality and the impact of lockdown caused by the increasing COVID-19 cases in the third wave of the virus.
Source: Global Village Space
The federal government has announced Rs 10 billion package for cotton growers under which they will be given subsidies on fertilizers, seeds and pesticides. This was stated by Pakistan Central Cotton Committee Vice-President Dr Muhammad Ali Talpur here. He said that the package would help revive the cash crop. He said that funds had been released to the provinces and all the provinces would provide subsidy to the cotton growers as per their discretion and procedure.
According to the details, Rs 5 billion had been released for cotton growers in Punjab, Rs 127 million in Khyber Pakhtunkhwa, Rs 430 million in Balochistan and Rs 2.7 billion in Sindh. Under the DAP subsidy, the farmers would get a subsidy of Rs 1,500 per bag.
Source: The International News
The government is set to withdraw ban on import of all types of yarn from Nepal following a request from the neighbouring country to facilitate bilateral trade.
The National Board of Revenue (NBR) has decided in principle to lift the ban to allow yarn export by the landlocked Himalayan nation through Banglabandha port in Tentulia of Panchagarh.
Officials said the customs would open up the land port for Nepalese yarn exporters hopefully by next June through issuing orders.
Kathmandu has been urging Dhaka since 2017 to remove the ban, claiming that it was causing heavy financial losses to Nepal's yarn manufacturers.
However, the Bangladesh Textile Mills Association (BTMA) strongly opposed the decision, saying that the facility might be abused by third country as there is no such spinning mill in Nepal to export yarn to Bangladesh.
Talking to the FE, NBR second secretary (customs international trade and agreement) Akter Hossen said they made the decision considering bilateral relations with the South Asian neighbour. He said commerce ministry also requested the revenue board to consider Nepal's proposal on yarn import.
The NBR's effort to take opinion of the stakeholders in this regard faced a blow due to theCovid-19 pandemic, he added.
According to customs officials, stakeholders' consultation is not mandatory in this case as the NBR and the ministry are fully empowered to make such decision.
Earlier of April 07, 2019, Mr Hossen said, the NBR allowed import of acrylic yarn from Nepal for a year.
However, no consignment of acrylic yarn was exported during the period from Nepal, he added.
The landlocked neighbour proposed to withdraw the ban during multiple bilateral meetings.
Officials said the government decided to relax the ban to expedite negotiations of the upcoming preferential trade agreement (PTA) between the two countries.
In 2002, Bangladesh imposed restrictions on yarn import through land ports to safeguard the local cotton yarn industry.
However, the ban was lifted within years only for Benapole land port and the ban remains in place for Banglabandha port.
Currently, two of the land ports-Banglabandha and Fulbari (Siliguri of West Bengal in India)-are being used for bilateral trade between Nepal and Bangladesh.
BTMA president Mohammad Ali Khokon said there is no testing or infrastructure facilities at the Banglabandha port to examine yarn import.
There is also no laboratory at the port for measuring the quality of yarn (yarn count), he added.
"The facility might be abused by third-country exporters who would take the advantage of exporting other products under the guise of yarn," Mr Khokon mentioned.
In the past four years, Nepal could not provide details of their spinning mills, capacity and other relevant queries of Bangladesh relating to yarn export, he added.
BTMA secretary general Mansoor Ahmed said it would not be cost-effective as import cost would be higher through Banglabandha than that of Benapole.
Customs officials said allowing yarn import is not directly related with PTA, but it apparently seems that Nepal considers it as a burgeoning issue as PTA would facilitate Bangladesh.
Mr Hossen said the customs wing is collecting data from field offices to revise the negative list of import products through land ports.
"An SRO will be issued with the fresh list of negative products in June at the time of (unveiling) the national budget for fiscal year 2021-22," he said.
He said the prime minister is willing to maintain good bilateral ties with regional small countries like Nepal and Bhutan.
As per her instruction, the NBR is considering relaxation of trade measures with the countries.
Bangladesh has positive trade balance with Nepal.
Nepal is the major export market for Runner motorcycle, Hatil furniture and Rahimafrooz battery.
According to a report of the Kathmandu Post, Nepal exports polyester and viscose blend yarn worth over Rs8.0 billion annually.
Of the total export figures, half is exported to Turkey.
India, Hong Kong and some Southeast Asian countries, including Vietnam, are the other major importers of Nepali yarn.
Source: The Financial Express
Bananas grow off a trunk-like structure called the pseudostem. After the harvest, this section of the plant is usually discarded since it will never grow again. Growing bananas is a particularly wasteful form of agriculture compared to other fruit crops because only 12% of the plant is used, with the rest ending up in the landfill.
To bring value to that waste, Ugandan startup TexFad is turning it into high-quality, sustainable textile products. The startup extracts the fiber from the banana tree’s trunk used to make environmentally friendly products like carpets, textiles, and biodegradable hair extensions.
The Process
First, the banana tree trunks are split in half with machetes and fed through a cutting machine. The machine turns these trunks into long, leathery fibers that are hung to dry before being processed and turned into high-quality eco-friendly products.
Kimani Muturi, the founder of TexFad, said his company is testing out several uses of banana fibers – producing various items such as carpets and market-testing eco-friendly hair extension products. “The hair extensions we are making are highly biodegradable. After using, our ladies will go and bury them in the soil, and they will become manure for their vegetables,” he explained to Reuters.
Goals And Expectations
Muturi envisions the material replacing some synthetic fibers and making paper products such as banknotes among a range of possible applications. For now, TexFad is exploring ways to soften banana fibers so that they can be used to make clothing.
The startup expects to produce 2,400 carpets by the end of this year and plans to begin delivering its products to the UK, US, and Canada by June.
Other Products Made From Banana Waste
TexFad isn’t the only company to turn banana waste into eco-friendly products. Last year, Australian researchers developed a method that transforms banana Agri-waste from the banana industry into non-toxic, biodegradable, and recyclable bioplastic packaging material.
Others include a Brazilian university student Rafaella de Bona Gonçalves, who developed biodegradable banana fiber tampons for homeless women in 2019. Her invention earned her a distinguished award – the 2019 German “iF Design Talent Award.”
Source: The Intelligent Living
Textile firms remain in the grip of smuggling cartels, a situation that has made it difficult to attract fresh investment to revive the sector, industry players have warned.
Players in the textile industry say operating environment is making it difficult for shareholders and new investors to direct investment in reviving and expanding operations.
As such, sector players have called for more Government’s intervention to deal with the smuggling cartels as well as provide fiscal incentives to help revive the industry.
They say the interventions being sought would create significant employment, taking advantage of opportunities arising from the Africa Continental Free Trade Area.
Zimbabwe Textile Manufacturers Association (ZITMA) chairman, Mr Admire Masenda said: “Smuggling continues to rob the nation of millions of dollars of potential revenue.
“These activities are depriving the country of the much needed taxes and are costing the sector jobs.”
Zimbabwe is a landlocked country surrounded by five countries, namely South Africa, Mozambique, Zambia, Namibia and Botswana.
These countries provide a direct link to seaports through which goods are imported into and exported from Zimbabwe by sea including those to other countries transit through.
Zimbabwe has designated 16 ports of entry along the borderline with neighbouring countries through which goods should be imported or exported.
However, more than 30 undesignated crossing points along the same borderline have been identified since there are no physical and geographical barriers between Zimbabwe and its neighbours.
A huge volume of goods such as clothing, footwear, fuel, restricted or controlled goods, electrical items, alcoholic beverages, motor vehicles, wildlife, minerals, tobacco products and many others are smuggled into or out of the country using both the designated and undesignated crossing points resulting in substantial loss of revenue to the Government.
Mr Masenda said the textile sector has potential to create jobs, given that it used to employ 40 000 people, but the employment levels have gone down to 5 000 people due to the unfair competition from smuggled products.
In addition to dumping of cheaper foreign textiles in the market, high operating costs and interest rates, together with out-of-date equipment and unreliable infrastructure have also been cited as major challenges facing the industry.
Zimbabwe is a major producer of cotton, but 80 percent of the processed fibre is expected due to subdued capacity utilisation of the textile industry.
Zimbabwe is in the process of buying drones worth US$2 million to be used at all ports of entry to reduce smuggling, while plans are at an advanced stage to place a CCTV camera system at border posts.
Source: The Herald
The Philippine garment exporters may have to drop as much as $600 million worth of orders if the strict lockdown protocols that force shipment delays continue to slow down business activities.
In an interview with the BusinessMirror, Foreign Buyers Association of the Philippines (Fobap) said that the garment industry may lose 30 percent to 40 percent of $1.5 billion—which is the lower end of 2021 target industry revenues—if more shipment delays persist.
This translates to potential losses of $450 million to $600 million, or roughly P22 billion to P29 billion, this year.
“If you are talking like $1.5 billion worth of orders that we received already in place for 2021…you can say 30 percent to 40 percent [will be lost]…in case this lockdown will continue,” Fobap President Robert M. Young told this newspaper.
This year, Fobap was targeting its yearend shipments to reach $1.5 billion to $2 billion, but the consequences arising from the lockdown protocols may block the industry’s goal.
Young explained that the garment manufacturers are experiencing delays of one month, even up to 45 days in some instances, in their shipments.
The Business Mirror previously reported the export industry has been reeling from the impact of shipment delays on its supply chain and revenues amid the shortage of vessels due to container imbalance.
“Of course, the materials that are incoming from Manila or the port are also delayed due to these lockdown protocols that they stop and inspect and all kinds of permits they require,” he explained.
Workers, Logistics
Adding fuel to the fire, he said, are the lack of factory workers and logistics amid the lockdown protocols.
Meanwhile, securing export permits and other necessary documentation is also a challenge given that the government agencies are operating with a skeletal workforce, he said, adding their systems are down in some events—all of which bring further delays to the process.
The Fobap official also expressed worries over the fulfillment of orders the country recently received from Myanmar as the latter struggles with a political turmoil.
In March, the industry group announced it has secured garment purchases amounting to $200 million from Hudson’s Bay, TJ Maxx, Walmart and Zeeman, even expecting orders to reach as much as $500 million by the end of second quarter.
“It’s already late given to us. However, due to these delays, we cannot perform regularly and efficiently,” Young lamented.
Adjustments In Pandemic
While no shop has folded up yet, the garment exporters have felt the crunch already.
Young said the manufacturers have been scaling down operations to minimize their cost. For instance, the industry group’s biggest member has opted to apply work-from-home setups for its office employees.
“We are just scaling down, reengineering, restructuring to maybe about 30 percent less operation,” he added.
In case buyers do not accept the delay, Young said that the manufacturers have to air freight the orders. But he said this is not a viable option in the long term, financially speaking.
“We are not willing anymore because we can’t afford the air freight. It is so expensive—that’s times 10 to times 15 the cost of the sea freight,” he said.
Young explained that air freight costs $2 per shirt, which is higher than the selling price of the product at $1.50 per piece. Air freight is costlier because it can deliver the goods within 24 hours as opposed to boat shipments which take 20 to 26 days, he added.
Fobap members are also offering their finished products at prices lower than the negotiated terms just for the buyers to still keep and sell them for another season, he said.
Reviving Textile Industry
The garment sector’s supply chain would not have been this affected if the textile industry was still up and going, Young said, adding that reviving it can mean job creations and more revenues for the country as well.
“We could have solved it [supply chain constraint] actually a long time ago if the government just listened to our suggestion that the textile industry should be revived. We do not have a textile industry. Textile is the backbone of the garment industry,” Young said, noting that the big manufacturers of cotton sheeting and commercial fabrics closed about two decades ago.
The country has to import about $500 million worth of textile every year from countries like China and Korea, he said, which takes about 30 days. Having local suppliers will help in cutting down the waiting time, he added.
“If this money is in the Philippines, can you imagine the labor generation, the revenue for the government and the economic growth engine?” he asked.
With this, Young called on the government to extend subsidies and other incentives—like Vietnam and India are doing for the sector—to revive the textile industry.
The Fobap official estimated the garment sector earned about $800 million to $900 million last year, lower than the nearly $1 billion it registered in 2019.
Source: The Business Mirror
