Piyush Goyal, the new textiles minister, has set an ambitious target of scaling up the industry’s capacity by 10 times, The Times of India reports. Why it's important: It's amid indications that the government is planning more steps to boost investment and employment in the sector. The size of the textiles industry is estimated at around $140 billion (over Rs 10 lakh crore), with apparel accounting for over half the share. Textiles’ share in India’s GDP is estimated at around 2.3% and is the largest employer, employing about 45 million workers. Goyal wants the team of officers in the ministry to prepare a detailed action plan for each segment — ranging from fibres and garments to handloom and handicraft — along with the deadline. Man-made fibre along with technical textiles and handloom has been identified as key thrust areas.
Source: Money Control
State direction of resources is back and it lacks strategic coherence. One of Narendra Modi’s first promises when elected India’s Prime Minister in 2014 was to revive its manufacturing sector. India had been de-industrializing since the early part of the century and policymakers correctly argued that only mass manufacturing could create enough jobs for a workforce growing by a million young people a month. In his first major speech as Prime Minister, Modi invited the world to help: “I want to appeal all the people world over, ‘Come, make in India,’ ‘Come, manufacture in India.’ Sell in any country of the world but manufacture here." The ‘Make in India’ slogan quickly developed into a full-fledged government programme, complete with a snazzy symbol—a striding lion made out of meshed gears. Government officials spoke at length about increasing foreign direct investment and improving the business climate to attract multinational companies. Careful targeting of the World Bank’s Ease of Doing Business indicators raised the country 79 positions in the five years after Modi took office. And, after all that, in 2019 the share of manufacturing in India’s gross domestic product stood at a 20-year low. Most foreign investment has poured into service sectors such as retail, software and telecommunications. ‘Make in India’ has failed. Now, exactly 30 years after India turned away from central planning and liberated the private sector, the government is again handing out subsidies and licences while putting up tariff walls. Modi shut down the 1950s-era Planning Commission. Yet, bureaucrats in New Delhi are back to picking winners and directing state funding to favoured sectors. They’re doing so through new ‘production-linked incentive’ schemes, in which companies receive extra funding from the state for five years in return for expanding manufacturing in India. Such incentives were originally meant to support domestic mobile-phone production. Following energetic lobbying, the government began extending them blindly to all sorts of sectors, from batteries to food processing to textiles to specialty steel. Money is apparently no worry. A government that has held off on income support during the covid pandemic has budgeted roughly $27 billion for these industrial subsidies. However, the only thing worse than socialism with central planning is industrial policy with no planning at all. There’s no logical coherence to the sectors chosen. Is the scheme supposed to supercharge job growth? Then why not focus on labourintensive sectors such as apparel? Is India aiming for economic independence from China? Then subsidies should be limited to sectors where China dominates supply chains, as part of a broader, China-focused trade policy that partners with the United States, Australia and others. Is the goal to invest in cutting-edge sectors? Then the government should explain why bureaucrats would do a better job than the flood of private equity that’s pouring into India. Instead, all the major problems of India’s socialist-era past are returning, cunningly disguised. Excessive closeness between bureaucrats and the beneficiaries of industrial policy? India’s top civil servant recently called for an “institutional mechanism" that provides “hand-holding" for companies. Endlessly shifting targets? Companies that just began receiving subsidies are already asking the government to relax their production quotas. It took decades for India to put its old, inward-looking and uncompetitive manufacturers out of business. Now the government is giving cash to new, inward-looking and uncompetitive companies to produce for the domestic market. Meanwhile, it’s hardwiring into the economy the kind of connections between industrial capital and policymakers that are nearly impossible to disentangle. The government’s defenders point out that its investor-friendly reforms weren’t answered; nobody came to ‘Make in India’. And, they ask, hasn’t China profited handsomely from subsidizing its own manufacturing sector? Such arguments miss the point. Modi’s manufacturing push never went much further than gaming the World Bank’s indicators. No investor believes structural reforms, particularly to the legal system, have gone deep enough. India has a large workforce but few skilled workers. To top it all off, the rupee is overvalued. Rather than work at solving these interconnected and complex problems, politicians in New Delhi have decided to paper over them with taxpayer money. Perhaps picking winners has worked for China. What Indians know for certain is that it did not work here after decades of trying. India’s haphazard foray into industrial policy [looks set] to fail, just as ‘Make in India’ did. And it’s likely to cost the country billions along the way. Mihir Sharma is a Bloomberg Opinion columnist. He is a senior fellow at the Observer Research Foundation in New Delhi.
Source: Live Mint
India has to be faster in areas like blockchain and Industry 4.0 than the current pace, said Amitabh Rajan, Chairman of the Reserve Bank of India Services Board, at the BFSI Leadership Summit, organised by YourStory and EnterpriseStory on July 16. Watch the BFSI Leadership Summit 2021 theme ‘Banking On The Future’ here. Rajan heads the central bank’s designated arm that conducts examinations and interviews for recruitments at the Reserve Bank of India (RBI). He alluded to the crypto-currency case that came up before the Supreme Court of India in March 2020. The three-judge bench worked hard to understand the concept, and lifted the 2018 RBI ban on crypto exchanges and startups. “But in a country, fiscal and monetary have to ultimately be policy decisions,” Rajan asserted. In the aftermath of the 2008-09 global financial crisis, many of the 20th century assumptions around market—that it is free, creative, can run and reform on its own, and that governments should not interfere at all—stand invalidated, he noted. “We talk of regulations, and one of the lessons learnt after 2008 is that the world has to be better regulated,” he said. Rajan also cited the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, and its reports on blockchains and virtual assets, as a guide for nations to gauge the problems and prospects of regulations. “Now, the countries have to pick them, and work with a sense of urgency,” he added. “The sooner it happens, the better it will be.” Productivity of enterprises is vital The RBI Services Board Chairman said India’s banking, financial services, and insurance industry also stands to benefit immensely from the fourth industrial revolution, or Industry 4.0. As developed countries are intensely recasting economies around Industry 4.0, India’s approach should be to imbibe, innovate, and work with a sense of urgency. “If we miss the bus, we will not just be lagging behind, but the entire edifice will be in difficulty.” he warned. “The fourth industrial revolution has not only developed, but is growing in a geometric progression.” This demands the entire management system as well as government policy to get adjusted to the new normal. “That thinking process is still going on, and could go on forever.” Rajan invoked American economist William Jack Baumol, whose article ‘Entrepreneurship: Productive, Unproductive, and Destructive’ was published in the Journal of Political Economy in 1990. The title of Baumol’s article is relevant to India in today’s setting, he said. “Now, recall the whole scenario of Indian enterprises, where a lot of good is coming, but there is also a lot that is not very productive,” he said. The quality of enterprises has to contribute to sustainable development of the country in technology and finance, he added. “It is important to highlight that the India of 2021 is not the India of 2008.” As far as technology and finance are concerned, the 21st century started in 2008—not in 2000-01, Rajan said. It was an epistemic year, in which the old was more or less over— and the new was born. “The global financial crisis surfaced, spread wide, deepened, with several consequences. But a situation was created for innovations in management and finance to take place,” Amitabh Rajan, Chairman of the RBI Services Board. Learning from global economies The RBI Services Board Chairman weighed in on how the United States of America (US), the European Union (EU), and the United Kingdom (UK) are solving their problems. The important learning is that regulations have to be strengthened. “They can be strengthened through reforms in the working of the agency system,” Rajan said. The state is the biggest controller, but it cannot carry out the expert functions through proper market interventions. “There has to be a regulatory approach that will take care of the market, which will shape and allow the market to grow while also seeing the wider public interests,” Rajan explained. For the BFSI industry, the public choice theory from new institutional economics (NIE) is vital, he said. “It is sufficient to say that the autonomy function in the boards of institutions—whether regulators, governments, or even corporates—is extremely important. He reiterated that India has a long-term fiscal policy, budget management, and the fiscal responsibility act. “The latter is very well drafted,” Rajan said, adding that a lot still needs to be done in this direction. “If the fiscal policies are not pro-people and not flexible, the entire set of approaches will become anti-people. We have to maintain public interest as a priority amidst any type of pressure, but still give autonomy to financial institutions to frame policies,” Rajan emphasised. Researchers in the EU have pointed out that there is a need to look into the laws of fiscal responsibility, he said, citing lessons from three countries where financial advisory councils (FAC) are operational. While Germany established the FAC as early as 1961, the UK focuses strongly on budget management. “They not only advise, but monitor publicly,” Rajan noted. And, France is the third country, which took lessons from Germany and the UK to make fiscal policy easier for the monetary policy framework. Even in India, there has to be an increased harmony between fiscal and monetary policies that can work synergistically and take a stance that is thoughtful, and with academic and professional depth, said Rajan at the BFSI Leadership Summit on June 16.
Source: Your Story
Union Finance Minister Nirmala Sitharaman July 16 participated in the roundtable organized by the US-India Business Council on "Maximizing India's Sustainable and Inclusive Growth as Global Destination for U.S. Investment.” A finance ministry release said the conference was conducted through video conferencing which witnessed the participation of prominent foreign investors like General Electric, Baxter Healthcare USA, Brambles, Marsh and McLennan Companies, and PepsiCo, amongst others. The roundtable provided the investors with an opportunity to engage with the finance minister and other senior officials of the Government of India, the release said. The areas of discussion included Life Sciences, Green Energy, Infrastructure, Insurance, Defense, Security, Manufacturing, Renewable Energy, Power, Pharmaceuticals, Textiles and Hospitality, and Digital Economy. Sitharaman acknowledged the efforts of the CEOs of top 40 American companies for creating a global task force to mobilize resources for India during the second COVID wave. She also mentioned that India and the U.S. have also set an ambitious target of achieving $500 billion in two-way trade. Sitharaman spoke about stimulus packages announced recently which is tailored to meet the basic requirement of investors. She also informed the investors about India's consistent and continuous wide-ranging reforms which make the country an attractive destination for foreign investment and how India continues to rise as a global economic powerhouse. She mentioned this year's budget initiative pertaining to the International Financial Services Centre at GIFT City, where the government is committed to developing it into a globally competitive hub for innovation and financial activities to serve the Indian economy and the region as a whole. In her concluding remarks, Sitharaman spoke about going ahead with an overall vision to build a self-reliant modern India. The finance minister stated that the nation is committed to a long-term relationship with U.S. investors. She spoke about "Consistent and continuous productive reforms that make India an investor-friendly destination; vibrant and pulsating financial markets; enormous investments underway in the infrastructure sector; Covid and its aftermath demonstrating Indian economy's resilience; and tremendous potential of innovation and R&D."
Source: India West
The overseas direct investment of domestic companies more than doubled to $2.80 billion in June this year, according to RBI data The overseas direct investment of domestic companies more than doubled to USD 2.80 billion in June this year, according to RBI data. India Inc had invested USD 1.39 billion in overseas ventures in the year-ago month. However, on a month-on-month basis, the investment was lower by over 58 per cent from USD 6.71 billion in May 2021, as per the RBI data on outward investments by Indian firms. Of the total investment during June 2021, USD 1.17 billion was in the form of issuance of guarantee, USD 1.21 billion was given as loan, while the equity investment stood at USD 426.84 million. Among the major investors included Tata Steel USD 1 billion in a wholly owned subsidiary in Singapore; Wipro USD 787.5 million in a wholly owned unit in the US; and Tata Power USD 131.25 million in a fully owned unit in Mauritius. Reliance Industries invested USD 56 million in agriculture and mining based WOS in Singapore; Interglobe Enterprises invested USD 51.5 million in a joint venture in the UK; ONGC Videsh Ltd USD 48.31 million in a JV in Mozambique and Paharpur Cooling Towers USD 48 million in a wholly owned subsidiary in Singapore. Among others were Tata Communications' USD 50 million in WOS in Singapore; ONGC Videsh invested USD 48.70 million in a JV in Russia; and WNS Global Services invested USD 45 million in a JV in the Netherlands. The RBI said the data is provisional and subject to change on online based reporting by the authorised dealer banks.
Source: Business Standard
It is true the LAC is not clearly agreed upon but talks to resolve it have been going on and on since the 1980s. This marathon exposes Communist China’s strategy vis-a-vis India. Chinese Foreign Minister Wang Yi waxed eloquent following talks with his Indian counterpart S Jaishankar in Dushanbe, claiming the two countries are “partners, not enemies” and Sino-Indian relations should be guided by “mutual respect”. He added for good measure that border disputes should not affect bilateral ties, while conveniently blaming India for the crisis at the Line of Actual Control. He offered advice too—India should take a long-term view from emergency to normal border management. His words must be taken with a pinch of salt, which was what Jaishankar did, making it clear that LAC tensions will affect bilateral ties. Going by Beijing’s behaviour, one can safely assume it means exactly the opposite of what it says. It is true the LAC is not clearly agreed upon but talks to resolve it have been going on and on since the 1980s. This marathon exposes Communist China’s strategy vis-a-vis India. It views Delhi with suspicion for various reasons, prominent being its patronage of the Dalai Lama, increasing proximity to the US and its economic potential. Add to this the fact that India is the only country in Asia that could stand up to the Dragon with its nuclear and military capabilities. What incentive does Beijing have to solve the LAC issue for good? As of now, none. It can tie India down at the borders to deter it from extending its influence elsewhere. Besides, trade with India is booming. China’s exports and imports with India grew sharply to $57.48 billion in the first half of this fiscal alone, not to speak of the overall trade deficit. In other words, it is not even paying the economic cost for its belligerence. India has banned Chinese apps and sought to keep Beijing away from the telecom sector. Further restrictions on non-essential trade may bring some economic pain but must be considered. This doesn’t mean confrontation. The need of the hour is to promote local manufacturing, generate jobs and revive the economy while staying firm on the borders. India’s foreign policy is one of Middle Path—neither confrontation nor self-abnegation. It is not pacifism. China must realise the same for which Delhi must mean what it says.
Source: New Indian Express
The study has been authored by Amit Basole and others. This report documents the impact of one year of Covid-19 in India, on jobs, incomes, inequality, and poverty. It also examines the effectiveness of policy measures that have thus far been undertaken to offer relief and support. Finally, it offers some policy suggestions for the near- and medium-term future. When the pandemic hit, the Indian economy was already in the most prolonged slowdown in recent decades. On top of this, there were legacy problems such as a slow rate of job creation and lack of political commitment to improving working conditions which trapped a large section of the workforce without access to any employment security or social protection. Our analysis shows that the pandemic has further increased informality and led to a severe decline in earnings for the majority of workers resulting in a sudden increase in poverty. Women and younger workers have been disproportionately affected. Households have coped by reducing food intake, borrowing, and selling assets. Government relief has helped avoid the most severe forms of distress, but the reach of support measures is incomplete, leaving out some of the most vulnerable workers and households. We find that additional government support is urgently needed now for two reasons — compensating for the losses sustained during the first year and anticipating the impact of the second wave. Our main data sources are the Consumer Pyramids Household Survey from the Centre for Monitoring the Indian Economy, the Azim Premji University Covid-19 Livelihoods Phone Survey (CLIPS) and the India Working Survey (IWS) (see Appendix of the report for details). We also draw on a large number of other Covid impact surveys conducted by Civil Society Organisations and researchers. In this Executive Summary, unless otherwise indicated, all estimates are from CMIE-CPHS. Most data pertain to the period between March 2020 and December 2020. We compare these months to pre-Covid periods as appropriate. At the time of writing, the country is in the throes of a second wave of infections and renewed restrictions on mobility. Hence findings presented here must be regarded as provisional. Neither the short-term impact nor the longer-term effects are fully clear. But this analysis can form the basis for policy action as we find ourselves in the midst of the most severe humanitarian crisis in recent memory.
Key findings
Source: Hindustan Times
An Indian company—Sewtech Fashion Ltd, a sister concern of India's largest apparel maker Shahi Exports Pvt Ltd—has agreed to invest $9.26 million in Chattogram Export Processing Zone. The foreign company will establish a readymade garments manufacturing industry and will annually produce 3.36 million pieces of ladies, kids and men's woven tops. The company expects to create job opportunities for 3,393 Bangladeshi nationals. Mohammad Faruque Alam, member (engineering) of Bangladesh Export Processing Zones Authority (BEPZA), and Balagi Pavadai, director of Sewtech Fashion Ltd, signed an agreement in this regard at the Bepza Complex in Dhaka today. Nafisa Banu, member (finance) of Bepza; Md Zakir Hossain Chowdhury, secretary, and Md Tanvir Hossain, general manager (investment promotion), among others, were also present.
Source: The Daily Star
The norms under the Emergency Credit Line Guarantee Scheme (ECLGS), especially on 10% additional loans, should be relaxed to facilitate greater lending to those units that don’t want to go for a loan recast, Shanmugham said. Firms in Tirupur, India’s largest garment hub, are operating with only about 60% of their usual workforce. In Surat, which houses some 6,000 diamond-cutting units, about 4,00,000 migrant workers and artisans or 40% of the industry’s labour force, haven’t yet returned to work since Holi. Fabric production in Surat, also a textiles hub, has crashed by a fourth to three crore metres a day. Leather units in Chennai face up to 20% drop in labour participation. Export hubs of key labour-intensive industries, already struggling to cope with a liquidity squeeze, are facing a shortage of workers, as most migrant labourers keep away just when orders from crucial western markets start to pour in. The shortage — in the range of 20% to 40% of the usual workforce — threatens to derail the recent growth momentum and impair exporters’ ability to honour supply commitments on time amid a fast depletion of inventory. Exporters of textiles, garments, leather products and gem and jewellery from hubs, such as Tirupur, Chennai, Mumbai and Surat, that FE spoke to said fears of a possible third Covid wave and consequent lockdown in states have kept most migrant workers at bay and even discouraged some overseas buyers from getting into fresh contracts. In some cases (mainly in garments), buyers in the US and the EU are insisting on firm commitment by Indian suppliers on timely delivery, well before the crucial Christmas season, the exporters said. Unsurprisingly, MSMEs are hit harder than large entities. The Tirupur garment cluster — with 1,000-odd units, mostly MSMEs — employs around 6,00,000 people. About a half of them are migrant labourers. Even many local workers couldn’t join work until recently, as public transportation wasn’t allowed during lockdowns imposed by the state to contain second wave. Raja M Shanmugham, managing director of Warshaw International and president of the Tirupur Exporters’ Association, suggested that states be prudent while imposing restrictions and there should be predictability in policy prescriptions. Large-scale vaccinations must be undertaken in key industrial areas and credit flow to MSMEs need to be substantially bolstered, he said. The norms under the Emergency Credit Line Guarantee Scheme (ECLGS), especially on 10% additional loans, should be relaxed to facilitate greater lending to those units that don’t want to go for a loan recast, Shanmugham said. Of course, labour participation is improving with the easing of localised lockdown curbs but is still way off the normal levels, the exporters said. This will prevent exporters, at least temporarily, to fully take advantage of the rebound in demand in key export markets. Importantly, having shot up sharply in April and May, growth in the country’s shipments of garments and leather products lost pace in June and remained much lower than a 48% jump in overall merchandise exports. While exports of garments grew 25% in June, those of leather products rose 33%. However, gem and jewellery export grew 81% in June but it was driven by a massive base effect. Dinesh Navadiya, chairman of the Gems and Jewellery Export Promotion Council (Gujarat region), said the absence of nearly 4,00,000 migrant artisans and workers in the diamond hub of Surat has weighed down production by up to 20% across units. Many exporters in the hub are struggling to deliver on time, he added. About 90% of the world’s rough diamonds are being cut and polished in Surat. The 6,000 diamond-cutting-andpolishing units in the city employ about one million people. Similarly, power loom weavers in Surat are forced to operate in only one shift due to lower worker participation. “We are experiencing a 30-35% shortage in the workforce. Weaving is a highly labour-intensive industry,” said Mayur Golwala, president of Sachin Industrial Estate, which houses hundreds of weaving units near Surat. Golwala, also the secretary of the Federation of Gujarat Weavers Association, said that the labour shortage has driven down fabric production to just above three crore meters from about 4 crore meter fabric per day. Nearly two million people are working in different segments of the textile industry in Surat, which includes composite mills, spinning and weaving units, processing houses and about 400 textile trading markets. Every segment of the textile value chain in Surat is short of labour forces, Golwala pointed out.
Source: Financial Express
Sri Lanka has cut back on imports of farm chemicals, cars and even its staple spice turmeric as its foreign-exchange reserves dwindle, hindering its ability to repay a mountain of debt as the South Asian island nation struggles to recover from the pandemic. Toothbrush handles, Venetian blinds, strawberries, vinegar, wet wipes and sugar are among the hundreds of foreign-made goods that were banned or made subject to special licensing requirements meant to chip away at a trade deficit that has been deepening the country's financial quandary for years. Shortages are pushing prices higher for many consumer goods, from bread to construction materials to gasoline, triggering protests among Sri Lankans fed up with the prolonged crisis. Thusitha Vipulanayake ran out of motorcycles to sell in August. Usually able to sell at least 30 a month, and a dozen motorized trishaws, he now gets by selling bottled, locally grown turmeric paste and LED light bulbs. "This is something we never expected," Vipulanayake said as he sat at his empty motorcycle showroom along a road outside the capital Colombo. Sri Lanka was in trouble before the pandemic struck, laying low a tourism industry that is a vital source of foreign exchange earnings. It normally provides jobs for more than 3 million people and accounts for about 5% of GDP. Visitors already were staying away after deadly suicide bombings on Easter Day 2019 killed more than 250 people. But efforts to revive the industry are falling flat as the country endures another wave of covid-19 infections. Now, the country's foreign-exchange reserves have dwindled to barely enough to pay for three months of imports at a time when big repayments of its foreign debts are falling due, straining its financial system. The petroleum minister, Udaya Gammapilla, recently said the country lacked enough cash to pay for oil imports. To conserve precious foreign exchange, the government has limited U.S. dollar transactions. Despite the limits imposed last year, imports still outpace the country's exports of tea, rubber, seafood and garments. "The condition of the economy is in dire straits, there is no doubt about it" said Muttukrishna Sarvananthan, head of the economic research group Point Pedro Institute of Development. Sri Lanka needs to make foreign debt payments totaling $3.7 billion this year, having paid $1.3 billion so far. That's in addition to local debt, according to the central bank. Its currency has been gradually weakening against other major currencies, making such repayments more costly in local terms. Fitch Ratings has downgraded Sri Lanka to its CCC category, indicating a real possibility of default. It says the country's foreign debt obligation will balloon to $29 billion over the next five years. And it is facing the possible loss of preferential trade status for its garment exports to Europe, after criticism over an terrorism law that critics say violates human rights. To help rebuild its reserves, Sri Lanka obtained a $1.5 billion swap facility from China earlier this year. A $400 million swap from India will be available by August, according to the Central Bank. Officials say they hope to attract more foreign investment and avoid seeking help from the International Monetary Fund, which tends to impose strict policy conditions on its borrowers. The government's decision in April to ban the use of agricultural chemicals, ordering farmers to switch to organic farming, was aimed at saving $400 million a year on imports. But Sri Lankan farmers rely heavily on such chemicals. Some said they are using cow dung, poultry litter and compost to make up for the loss of fertilizer, but the sudden switch is hurting yields. "The leaders of the country could have done better in making decisions," farmer Pathmasiri Kumara said he worked in his field in Welimada, a village in the central hills of this tropical island country. "These problems come when you don't come and see the farmers and make decisions sitting on swiveling chairs." "Look at this potato plant. It's not growing the way it should because there is no fertilizer," Kumara said. "It's a very sad situation. This is our main crop and if we don't get chemical fertilizer we will be losing our income for the entire year, at least by half." The pressure is on garment makers, as well, as the European Union reviews its favorable tariff treatment for Sri Lankan products under the GSP, or generalized system of preferences. It eliminates import duties on a large share of Sri Lanka's products, such as textiles, tea and fish, an advantage worth some $360 million annually, according to the EU. A decision is not due until next year. But the impact of losing the concessions would be "quite severe," said Sirimal Abeyratne, professor of economics at the University of Colombo. About 20% of Sri Lanka's total exports are to EU countries. Another 10% go to the United Kingdom, which may follow the EU's lead if it suspends its GSP status, said Abeyratne. In the meantime, Sri Lankans are chafing at the import restrictions that are slowing activity in various industries. Metlal Weerasuriya waited five months to buy a toilet for his home. "I went to many retail and wholesale shops. They had run out of stocks and there was a waiting list to get one," said Weerasuriya, a journalist. Finally, he tracked down one advertised online. "So, it took at least five months to buy a commode and complete the bathroom, "he said. Vipulanayake, the motorcycle dealer, said he's relying on income from a modest rubber plantation he owns, on top of his sales of various other products, to get by. He's determined to hold onto his showroom, which is in a prime location. "I believe things will be okay and bikes will come," he said. "Maybe I'm just dreaming, since things are so uncertain."
Source: Arkansas Online
Different investment related information indicate that Ethiopia is being considered a promising place for investment. The investment information providers assured that the country is a strategic destination for multinational investors following its diversified investment opportunities and various investment incentives by the government. The Ethiopian government provides various investment incentives to local and multinational investors. This includes capital incentives, industrial raw material supply, construction and laboratory as well as effective transportation service provisions. The Ethiopian government is aggressively working towards increasing transport, electric power, and telecom, among other infrastructures access. Agriculture, textile and apparel, leather and leather products, pharmaceuticals, agroprocessing, ICT, power generation, mining, tourism, among others are the strategic sectors for investment as identified by the government. Ethiopia's natural and various riches such as vast arable land, favorable climate, diverse agro-ecological zones that make it possible to grow almost everything, cheapest electricity per kilo watt hours, and trained and affordable human power combine to make it an incredible hub for investment. The country has 74.3 million hectares of arable land. Out of this, over 3-million-hectares of land has been made available for investment. Ethiopia offers one of the largest and most diverse agricultural investment opportunities in the continent. The inauguration of numerous industrial parks across the country is also the other strategic opportunity to attract potential investors. The industrial parks are both government and private owned. Facilities in industrial parks include One-Stop Service, dedicated power sub-station, waste treatment facilities, commercial buildings and housing facilities, health stations, fire brigade, and 24/7 security service. Currently, the country has given due priority to realize smooth transitions to industrialization through promoting the private sector engagements and privatizing many of the state-owned businesses. The new home-grown economic reform aspires to address foreign exchange challenges and sought to generate tangible revenue by boosting export volume. The economic reform strengthens multinational investors to join investment in the country. Different investment incentives have been offered by the home grown economic reform policy so as to attain well established economic growth. Experts applaud having a well-organized homegrown economic policy will have a significant role in realizing Ethiopia's sustainable development by ensuring rapid economic growth. According to the recent World Bank Report, Ethiopia tops East Africa in attracting FDI, with almost half of the inflows to the East African region. The existing suitable development policies, the government's special attention to the sector, competitive and trainable labor force are among the major factors that enabled the country to become successful in attracting FDI. As one of the largest recipients of FDI in Africa, Ethiopia has attracted several global brands highlighting competitive investment opportunities. Ethiopian Investment Commission (EIC) Public Relations Directorate Director Henok Solomon told The Ethiopian Herald that the country has attracted 2.05 billion USD Foreign Direct Investments (FDI) within nine months of the recently passed Ethiopian budget year. This FDI inflow has been registered amid the Covid-19, global inflation, and internal stability challenges on the investment sector. Currently, EIC is undertaking massive investment reforms. The new investment proclamation had been ratified by the Council of Ministers during the past budget year. Improving ease of doing business, expanding employment opportunities, promoting FDI inflow, providing standardized infrastructural facilities, among others are the major priorities of the commission, the director said. More importantly, as to him, the commission has done successful activities regarding motivating multinational investors to join investment in industrial parks and facilitating all the necessary preconditions timely. It is pleased to satisfy the need of investors at anytime and anywhere. The number of multinational investors joining investment in the country is increasing year after year following the government's measures to promote investment. Various international level known manufacturing industries and other local companies are eyeing joining investment in various Industrial Parks throughout the country. According to him, during the 2020/21 Ethiopian budget year, 132 new giant investors from European and other countries have already licensed and commenced production in the country. 12 local manufacturing investment projects have joined investment in industrial parks following the government's efforts to support domestic investment. The industrial parks have generated 129 million USD only from leather and leather products. Regarding job opportunities creation, 58,631 new jobs had been created by the industrial parks. Currently, 237 multinational and local projects have commenced operation and manufacturing by the reported Ethiopian budget year. For instance, the 600 million USD giant cement factory, the Lemi Green Building Materials Company operated and run by Ethiopians and British investors had been licensed by the same Ethiopian budget year. An Indonesian company with over 100 million USD has joined investment on machinery and spare parts manufacturing. Out of the total multinational investment projects, 58 percent are licensed in manufacturing, 37 percent in the service sectors, and the rest 5 percent in agriculture, he noted. The director further elucidated that investors are coming largely to Ethiopia following the promising investment environment and various investment reforms being undertaken by the government.The entrance of globally competitive multinational companies demonstrates the effective implementation of investment policies and strategies in the country. In addition, the commission has launched latest technology based FDI tracking tool and grievance handling systems platforms to help stimulate multinational investment. Adding he said that all the investment projects are environmentally friendly and ensured zero pollution to the environment. The industrial parks are installed through waste water treatment plant to protect the environment and ensure healthy investment in the country. Accordingly, despite the above promising progresses some sort of instability here and there, the COVID-19 pandemic, deficit of foreign exchange, lack of effective investment land holding services, among others are the major challenges the sector is facing, he mentioned.
Source: All Africa
Bangladesh's success story holds lessons for India when it comes to macro-economic stability, prudent fiscal management and support policies. Tickled by a gift of mangoes from Prime Minister Sheikh Hasina to the heads of state in neighbouring countries, the Indian media dubbed the move as Bangladesh’s ‘Mango diplomacy‘. But Dhaka said that it was simply sharing its ‘happiness’ with friends during a historic year. The Golden Jubilee year of its independence, Bangladesh indeed has several reasons to celebrate. The country’s economic performance during the pandemic years was recently recognised in Bloomberg’s COVID-19 resilience ranking, where it ranked 24th out of 53 economies in the world that are worth over $200 billion. According to a World Bank report ‘Bangladesh Development Update – Moving Forward: Connectivity and Logistics to strengthen Competitiveness‘, released in April 2021, “Despite the uncertainty created by COVID-19, the outlook for Bangladesh’s economy is positive.” It assessed that Bangladesh did extremely well when the pandemic hit and it had also launched a good number of stimulus packages to keep people employed despite the shocks. From ‘basket case’ to ‘Asian Tiger’ The last few years has seen a sea change in the global image of Bangladesh. Once visualised as the epitome of poverty and hunger, its steady success of gross domestic product (GDP) growth is conspicuous as a symbol of assiduous enterprise. It is gratifying to see a South Asian nation once labelled a ‘basket case’ by Henry Kissinger being projected as a future ‘Asian tiger’ – that too, in his lifetime. Indians were dazed by IMF projections that Bangladesh’s per capita GDP in dollar terms is expected to grow 4% in 2020 to $1,888, and India’s per capita GDP is expected to decline 10.5% to $1,877. This should not have come as a surprise at all. Even prior to the COVID-19 pandemic, India’s GDP has been consistently sliding from 6.8% in 2017, to 6.53% in 2018 and to 4.04% in 2019, crashing at -7% in 2020. On the other side, in 2019, Bangladesh’s was the world’s seventh fastest growing economy, with a GDP growth that was rising steadily surpassing an 8% mark. This, in spite of fiscal pressures because of factors like donor fatigue in response to the Rohingya crisis and revenue shortfall from an outdated tax administration. The real marvel lies in the fact that even in FY’20, when economies around the world contracted as a result of pandemic lockdowns, Bangladesh managed a 5.24% growth. In FY’2021, its average per capita income stood at $2,227, higher than India’s $1,947. Prudent economic governance With macro-economic stability as its cornerstone, Bangladesh’s economy has increased by 271 times over 50 years. Concentrating on its traditional labour-intensive light manufacturing industry, Bangladesh is today the world’s second-largest clothing exporter behind China. It powered ahead with a traditional development strategy of simple exportoriented industrialisation (EOI), the economic policy that was implemented with great success by the Asian Tigers. The bulk of Bangladesh’s exports pertain to the textiles, apparel and footwear industry – which are highly labour-intensive and employ unskilled and semi-skilled labour. Bangladesh’s economic performance is also a reflection of its prudent fiscal management. The budget deficit has been restricted to 5.0% of GDP or less. Limiting public spending left space for the private sector to borrow from the financial system and invest. Fiscal prudence and export performance have been key to reducing poverty in Bangladesh. Cottage sized creative undertakings have been included in the MSME category making it cottage, micro, small, and medium sized enterprises (CMSMEs). They create 7.8 million direct employment and contribute 25% to Bangladesh’s GDP. Each category is treated differently since they each have unique characteristics. Bangladesh’s confidence in managing CMSMEs is reflected in its recent decision to finance the UNESCO approved ‘Bangabandhu Sheikh Mujibur Rahman International Prize for the Creative Economy” for outstanding initiatives that promote the engagement of young people in the creative economy. Besides MSME management, Bangladesh holds lessons for India to build specialisation in competitive exports. India’s top five export commodities jointly contribute around 40% of total exports, and are capital and technology-intensive. Micro and small industries are hurt due to inadequate access to bank credit. There has been massive deceleration in India’s labour-intensive industries, affecting export-oriented industries such as textiles, garments, leather, and gem cutting. For the majority of the micro and small enterprises, access to formal debt channels like the Emergency Credit Line Guarantee Scheme (ECLGS) remains out of reach as they rely on informal sources. For new businesses, loans and project clearances take a long time. Beyond the pandemic, for India, the economic slowdown “is almost homegrown” with disruptive initiatives like demonetisation, Goods and Services Tax (GST), tightening of ecommerce rules, to assist Indian businesses that compete with companies like Amazon and Walmart. The Confederation of All India Traders (CAIT) estimates a business loss of approximately Rs 15 lakh crore in the last two months because of localised lockdowns imposed by various states during the second COVID-19 wave. The traders’ body has appealed to PM Narendra Modi to come to the rescue of small businesses by announcing a “substantial financial package to restore business activities” hit by recurring monthly expenses, with no income to bear such cost. “We are not asking for any loan waiver but the support policies from both Central and state governments, temporary relaxations in statutory compliances, and ease of restoring business,” CAIT said in a statement. Relatively, Bangladesh’s stimulus package, in proportion to its GDP, has been much higher than that of India. Even with a preference for fiscal prudence, through the pandemic, Sheikh Hasina’s government doled out generous stimulus packages and social protection schemes with utmost importance to the agriculture sector. To the SMEs, heavy industries, ready-made garment (RMG) sector and other industries, incentives were given in a phased manner. ‘Digital Bangladesh’, which aims to create a digital ecosystem through its platforms like Shujog.xyz, supports new entrepreneurs and includes them in digital finance management. With nearly two dozen COVID-19 stimulus packages the country has an overall outlay of 1.24 trillion taka, which is 4.44% of GDP. This included steps like 50 billion taka for export-oriented industries to pay the wage bill for three months, two-year loans to factory owners at 2% interest, 200 billion taka for banks to provide working capital loan facilities to CMSMEs at an interest rate of 9%; 4% to be borne by the borrower, and 5% by the government as a subsidy. The success of the stimulus package was also due to its effective management, in simultaneously assisting affected industries and in addressing the food security problem of the poor and vulnerable people. Relatively, Bangladesh’s stimulus package, in proportion to its GDP, has been much higher than that of India. Even with a preference for fiscal prudence, through the pandemic, Sheikh Hasina’s government doled out generous stimulus packages and social protection schemes with utmost importance to the agriculture sector. To the SMEs, heavy industries, ready-made garment (RMG) sector and other industries, incentives were given in a phased manner. ‘Digital Bangladesh’, which aims to create a digital ecosystem through its platforms like Shujog.xyz, supports new entrepreneurs and includes them in digital finance management. With nearly two dozen COVID-19 stimulus packages the country has an overall outlay of 1.24 trillion taka, which is 4.44% of GDP. This included steps like 50 billion taka for export-oriented industries to pay the wage bill for three months, two-year loans to factory owners at 2% interest, 200 billion taka for banks to provide working capital loan facilities to CMSMEs at an interest rate of 9%; 4% to be borne by the borrower, and 5% by the government as a subsidy. The success of the stimulus package was also due to its effective management, in simultaneously assisting affected industries and in addressing the food security problem of the poor and vulnerable people. The coronavirus pandemic affected all national economies and saw per capita incomes slip, but Bangladesh’s credit lies in applying its disaster experience of floods, cyclones etc, to handle the COVID-19 crisis. Our eastern neighbour, a nation of 168 million people, was able to fare better because of timely economic stimulus packages, judicious cash incentives, rebound in exports and strong remittance inflows. Despite its huge population, the Bangladesh model is a positive example that has aided it in becoming an outperformer in the Asian region.
Source: The Wire
Authorities Sunday began vaccinating workers from the export-oriented textile industry, the leading foreign exchange earner for Bangladesh, as the country struggles to contain a new wave of the coronavirus outbreak that has dented the economy. The vaccination program began in textile hub Gazipur, near capital Dhaka, where authorities expected to vaccinate 10,000 workers on the first day of the drive. “Vaccination program for industrial workers has started today. Bangladesh will ensure vaccination for all workers and staffs,” Gazipur administration chief Tarikul Islam told EFE. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) welcomed the move. “We already spoke to the health minister to give the workers priority as frontline people. Vaccination is better than lockdown. It is a good initiative,” BGMEA vice-president Shahidullah Azim told EFE. “All workers will get vaccinated in phases. We estimate this figure will be around four million. The duration of the program will depend on the availability of the vaccine,” he said. BGMEA member Hanifur Rahman Lotus said all workers 18 and above would be eligible for the vaccination. “We have been assured by the (health chief) of Gazipur that all 2.5 million workers of the area will be vaccinated. We expect the program will be extended in others areas soon,” he said. The textile sector contributed 81.16 percent or $31.45 billion to the national exports of $38.75 billion in the 2020-21 fiscal year, which ended in June. The sector posted 12.55 percent growth in the fiscal year, despite the Covid-19 pandemic, the data by the Bangladesh export promotion bureau showed. Bangladesh’s overall export grew by 15.1 percent during the period, the data showed. Bangladesh allowed all industrial units, including textile factories, to stay open during the recent lockdown to keep the economy rolling. The country has recorded over 17,000 deaths from Covid-19 and nearly 1.1 million cases since the pandemic in March 2020. Over 15 percent of deaths and cases came in the past two weeks, the worst phase of the pandemic when the country logged an average of 10,000 infections a day. Authorities relaxed a nationwide lockdown until July 22 for Eid-ul-Adha, the secondbiggest Muslim festival but vowed to enforce harsher restrictions after that.
Source: Laprensalatina
