For the unversed, Viscose staple fibers (VSF) or artificial cotton fibers are natural and biodegradable. These fibers are obtained from wood pulp and cotton pulp The government on Monday removed anti-dumping duty on Viscose Staple Fibre (VSF). Union Minister Smriti Irani said the decision was taken after a thorough investigation initiated in February this year. This decision will give fillip to the MMF sector. Irani tweeted,
"Pathbreaking decision by GOI to remove Anti-dumping Duty on Viscose Staple Fibre (VSF). Decision taken after thorough investigation initiated in Feb’21 will give fillip to the MMF sector. My best wishes to the Textiles Industry as a new chapter begins in India’s MMF growth story." Pathbreaking decision by GOI to remove Anti-dumping Duty on Viscose Staple Fibre (VSF). Decision taken after thorough investigation initiated in Feb’21 will give fillip to the MMF sector. My best wishes to the Textiles Industry as a new chapter begins in India’s MMF growth story. — Smriti Z Irani (@smritiirani) August 2, 2021 For the unversed, Viscose staple fibers (VSF) or artificial cotton fibers are natural and biodegradable. These fibers are obtained from wood pulp and cotton pulp, which share the characteristics of cotton fibers. These are versatile and easily bendable fibers and have a wide range of application in apparels, home textiles, home furnishings, dress materials, and woven & knitwear.
Source: Times now News
The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 provides for a prepackaged insolvency resolution mechanism for micro, small and medium enterprises (MSMEs). The Rajya Sabha on Tuesday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 following a brief discussion amid ruckus created by Opposition parties over the Pegasus snooping row and other issues. The Lok Sabha had passed the bill on July 28. The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 provides for a prepackaged insolvency resolution mechanism for micro, small and medium enterprises (MSMEs). After moving the bill for consideration, Finance Minister Nirmala Sitharaman said "this bill has been brought keeping in mind the situation in which MSMEs require a lot of help post the pandemic we are increasing the threshold and coming up with a pre-pack." "There was this feeling that there could be a lot more surge of insolvencies among the MSMEs but there is no surge in the insolvencies of MSMEs the options available for the MSMEs are not very many by this, there will be a better way in which these MSMEs can seek to have a solution. "It is less costly. It is hybrid in nature. The debtor will still be in control and the creditors will be working together and, therefore, it is actually going to cut the cost and speed up the process because the whole thing will be over in 120 days," she said. She urged all members in the House to consider and pass the bill. After a brief debate, Sitharaman in her reply said, "I will ensure we are also working to fill the vacancies in the (NCLT) benches. So, I do not want you to worry about vacancies and causing any further delay." Addressing a query of Amar Patnaik (BJD), she said, "The process can be initiated only with the consent of 66 per cent of unregulated financial creditors and consent of special majority of shareholders. Also, civil and criminal liability is attached to any act of wilful misinformation or omission of information." "Insolvency professional is tasked with clear duty to report mismanagement on fraudulent practices," the finance minister added. She opined that pre-package is flexible, cost effective, time-bound and therefore very suitable for MSMEs. Supporting the bill, Patnaik initiated the debate and said,"I welcome the bill in its entirety, I foresee the problems that will come in the implementation of the bill. Number one is the valuation of the company the base resolution plan and no Swiss challenge or any such arrangement should go below it. Otherwise, it should automatically be referred to the CIRP (Corporate Insolvency Resolution Process)." He also expressed concern about minority stakeholders' interest in the pre-pack. "Currently, there are about 50 per cent vacancies in the NCLTs of the country," he added. Others who participated in the debate included Banda Prakash (TRS), M Thambidurai, K Ravindra Kumar (TDP) and V Vijaysai Reddy (YSRCP). After a brief debate by few members, the bill was moved for passage in the House. It was passed with voice vote amid the din by the Opposition. The bill seeks to replace the IBC Amendment Ordinance, 2021 promulgated in April which introduced pre-packs as an insolvency resolution mechanism for micro, small and medium enterprises (MSMEs) with defaults up to Rs 1 crore. The proposed amendments will enable the government to notify the threshold of a default not exceeding Rs 1 crore for initiation of the pre-packaged resolution process. The government has already prescribed the threshold of Rs 10 lakh for this purpose. The bill proposes a new chapter in the IB Code to facilitate the pre-packaged insolvency resolution process for corporate persons that are MSMEs. As per the statement of objects and reasons of the bill, it seeks to specify a minimum threshold of not more than Rs 1 crore for initiating the pre-packaged insolvency resolution process as well as provisions for disposal of simultaneous applications for initiation of the insolvency resolution process and pre-packaged insolvency resolution process, pending against the same corporate debtor. There would be a penalty for fraudulent or malicious initiation of the pre-packaged insolvency resolution process, or with intent to defraud persons, and for fraudulent management of the corporate debtor during the process.
Source: New Indian Express
The Budget made an important statement of intent in several of these areas (public investment, asset sales, privatisation of two public sector banks). Now execution is vital, as is deepening and broadening the reform agenda. That is the best gift we can give ourselves, on the 30th anniversary of the 1991 reforms. Three decades after the 1991 reforms, India’s growth imperative remains every bit as urgent, to help recover lost jobs, ameliorate scarred incomes and sustain elevated public debt incurred from the pandemic. The question is where will that growth come from? There is a reflexive consensus among analysts that consumption and private investment will step up to the plate. Consumption, after all, was the flagbearer of growth for much of the last decade. Why won’t it just pick up from where it left off? To understand why, one needs to analyse India’s growth dynamics this millennium. Recall, growth had been powered by the Siamese twins of exports and investment in the first decade. But by 2012, that story had petered out. Exports began to slow and a combination of investment overcapacity and implementation bottlenecks meant the economy was beset with a “twin balance sheet” problem: corporates left with unsustainable debt and banks laden with high NPAs. Unwittingly, this set the stage for the next era of growth. As banks were licking their wounds from infrastructure and large-corporate NPAs, they turned their attention to the one segment of the economy that had been under-saturated: households. What began was a multi-year retail credit boom, spurring the rapid proliferation of Non-Bank Financial Companies (NBFCs). On their part, households welcomed access to cheaper, institutionalised sources of credit. For a young, aspirational population, this was a means to smooth consumption over lifetimes. But under the radar, household income perceptions began a secular fall from 2012. Disposable income/GDP fell by 2 percentage points over the decade pre-Covid, even as private consumption/GDP rose by 4 percentage points. Essentially, consumption was being financed by households running down savings and running up debt. Debt-fuelled growth works in the good times, but as the economy began to slow from 2017-18, and income perceptions continued to soften, it was a matter of time before households became cautious. Unsurprisingly, retrenchment in consumer goods began in early 2018, and broadened out by 2019. Tighter lending standards after the NBFC shock in late 2018 accentuated these trends but incipient balance sheet pressures had predated the shock. Against this backdrop, it’s hard to envision a sharp and sustained consumption revival, once pent-up demand is exhausted. The pandemic has inevitably accentuated household balance sheet pressures, soberly reflected in successive RBI Consumer Confidence Surveys. Households express visible caution about future spending, particularly on discretionary goods, understandable given heightened income and job uncertainty. It’s therefore unsurprising that consumption was the slowest to recover to pre-pandemic levels on the demand side. Instead, the revival last year was led by government capex and exports – themes to which we return below. If private consumption is unlikely to lead growth, can private investment fill the gap? While SME balance sheets are likely to take a long time to recover, some good news is that large corporates have aggressively deleveraged in recent years. However, the binding constraint on new investment for these firms has shifted from leverage to demand. Manufacturing utilisation rates had fallen below 70% for three consecutive quarters pre-pandemic. Private investment is endogenous: It first needs demand to fire and utilisation to rise. Where could that demand come from? In our view, exports and public investment. The global economy is witnessing its strongest growth in 80 years. Near-term concerns about the Delta variant notwithstanding, global growth is expected to remain much above trend for the next 6-8 quarters on reopenings and vaccinations. This bodes well for the external sector given the strong elasticity we find between global growth and India’s exports. Unsurprisingly, manufacturing exports are already 20% above pre-pandemic levels. But one growth driver may not be enough to crowd in private investment and create jobs. Sustained public investment will therefore need to supplement exports. The government has clearly embarked on this strategy with central capex growing 75% in the second half of last year, driving the recovery. But this needs to continue. Both the Centre and states have budgeted 30% growth in capex for 2021-22, and pulling this off will be key to the revival. Physical and social infrastructure spending can simultaneously create jobs, crowd-in private investment and improve the economy’s competitiveness. All told, exports and public investment will need to create a growth and jobs bridge until private investment and consumption recover. What about medium-term prospects? There has been justifiable concern about falling investment rates over the last decade. Reviving investment is undoubtedly crucial, but our empirical work finds that a slowdown in total factor productivity (TFP) growth has also shaved off 250 bps from potential growth since its peak before the global financial crisis. What drives TFP? Empirically, we find it is correlated with open trade, public investment and a healthy financial sector. All this leads to a natural, and synergistic, set of interventions. In the near term, stepping up the pace of vaccinations is undoubtedly the most effective stimulus. But boosting growth and jobs in a post-pandemic world must then entail (i) strong and sustained public investment (financial by asset sales to keep fiscal dynamics anchored); (ii) reforming the financial system and strengthening resolution mechanisms (IBC) to enable creative destruction and finance investment; and (iii) cultivating an open trade environment conducive to export-led, job-creating growth. The Budget made an important statement of intent in several of these areas (public investment, asset sales, privatisation of two public sector banks). Now execution is vital, as is deepening and broadening the reform agenda. That is the best gift we can give ourselves, on the 30th anniversary of the 1991 reforms.
Source: Economic Times
In a written reply to the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary gave details of the total tax evasion detected in GST in the last 3 years. In 2019-20, 10,657 cases of evasion, involving Rs 40,853.27 crore were detected. Recovery was Rs 18,464 crore. GST officers have detected tax evasion of Rs 7,421 crore in the April-June period of the current fiscal, Parliament was informed on Tuesday. In a written reply to the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary gave details of the total tax evasion detected in GST in the last 3 years. In 2019-20, 10,657 cases of evasion, involving Rs 40,853.27 crore were detected. Recovery was Rs 18,464 crore. In 2020-21, Rs 49,384 crore worth GST evasion was detected in 12,596 cases. Recovery stood at Rs 12,235 crore. In the current fiscal up to June, 1,580 cases of Goods and Services Tax evasion involving Rs 7,421.27 crore were detected, and Rs 1,920 crore recovered in April-June 2021 Chaudhary said the GST interface for the taxpayers is on a digital platform and softwarebased to be used for payment of tax and to comply with the requirements of law and procedure by taxpayers. "However, tax evaders are known to commit fraud even on electronic platforms by way of misrepresentation of facts like furnishing of fake credentials at the time of registration; by indulging in raising a fake invoice to avail under Input Tax Credits; misdeclaration of classification etc," he said. Besides, the evasion may be committed intentionally and at times non-payment of tax may happen due to human error. However, no evasion of tax has been reported due to a failure in the CBIC back-end system, Chaudhary added. The minister further said to prevent tax evasion, various validations have been built in the GSTN/CBIC system to weed out tax evaders. This includes the introduction of Aadhaar authentication for processing of new registration applications, provisions to suspend/cancel the registration of taxpayers, bulk suspension of registration by GSTN based on business intelligence, bulk cancellation of registration of taxpayers who failed to file GSTR3B returns for six or more consecutive months and blocking of ITC credit. In reply to a separate question, Chaudhary said in 2020-21 fiscal, 7,268 cases of input tax credit (ITC) fraud was detected by Central GST officers, involving an amount of Rs 31,233 crore.
Source: Economic Times
Outstanding multilateral government debt amounted to $57.7 billion as of March 2021 compared to $48.3 billion as of March 2020, translating net fresh borrowing of $9.4 billion during the fiscal. In addition the government bilateral borrowing amounted $2.5 billion and another $209 million from the IMF. Indian government's overseas borrowing rose to a decade record last fiscal as the state leaned on multilateral agencies to fight the Covid19 pandemic. Last fiscal the government shed the aversion to raising funds overseas in extraordinary circumstances to raise $9.4 billion. A bulk of these borrowings were for COVID and development related projects and estimated to have funded about 3 to 4 per cent of the revised fiscal deficit for the year.
Source: Economic Times
In a report titled 'Turning Around the Power Distribution Sector', Niti Aayog said the performance of state-owned discoms is also determined by the ability of the respective State Electricity Regulatory Commissions (SERC) to revise tariff frequently and adequately Government think tank Niti Aayog has pitched for greater operational and financial autonomy for state-owned discoms, saying for a state-owned utility to succeed, there should be a clear separation between utility and state. In a report titled 'Turning Around the Power Distribution Sector', Niti Aayog said the performance of state-owned discoms is also determined by the ability of the respective State Electricity Regulatory Commissions (SERC) to revise tariff frequently and adequately. "...For a state-owned utility to succeed, there should be a clear separation between utility and state. The utility should have operational and financial autonomy. Good corporate governance practices, including the use of independent directors, can help ensure such separation," it suggested. It pointed out that there can be a variety of distribution franchisees, from models that are essentially outsourcing revenue collection to taking care of all distribution functions in a defined area. "In rural areas, private investors might not find it attractive to become licensees, but a franchisee model might be attractive," it said. Noting that discoms have a monopoly in their area of functioning, the think tank suggested that delicensing distribution can introduce competition and enable retail choice for customers. "This reform can be challenging and should be accompanied with careful market design. "The feasibility of competition will depend on the size of the market, the nature of the demand, the efficiency of the incumbent and potential for growth," the report noted. Niti Aayog observed that public private partnership (PPP) models can be useful in loss-making areas, where commercial operation might not be feasible without support in the form of Viability Gap Funding (VGF) from the government. Niti Aayog, however, pointed out that even though now India has achieved universal access to electricity, power distribution continues to be the weakest link in the supply chain of the power sector. "Most distribution utilities are making major losses as a consequence of expensive long-term power purchase agreements, poor infrastructure, and inefficient operations, among others. "These losses, in turn, prevent them from making the investments required to improve the quality of the power supply and to prepare for the wider penetration of renewable energy," it said. According to Niti Aayog, the distribution utilities' inability to pay power generators endangers the financial health of the generators and their lenders, causing a negative domino effect on the economy. The government think tank suggested that discoms should optimise their power purchase by procuring from the markets as suitable, and they should be rewarded for efficiency gains from the use of the market. Elaborating further, Niti Aayog said most power distribution companies (or discoms) incur losses every year-the total loss is estimated to be Rs 90,000 crore in FY 2021. "Due to these accumulated losses, discoms are unable to pay for generators on time - as of March 2021 an amount of Rs 67,917 crore was overdue," it said. Niti Aayog also pointed out that many states provide subsidised and sometimes free electricity for agriculture. "This can lead to leakages and high losses for discoms," it said, adding that some states, with large agricultural consumer bases such as Rajasthan, Andhra Pradesh, Gujarat, Karnataka, and Maharashtra, have reduced leakages by separating feeders for agricultural use from non-agricultural use. It also suggested that discoms can significantly decrease their power procurement costs by encouraging the use of solar pumps for agriculture. It observed that discoms have locked themselves into long-term, expensive power purchase agreements (PPAs). "As long as the markets continue to provide low-cost power, discoms should not sign new expensive long-term thermal PPA," it opined. According to the government think tank, discoms should use time of day (ToD) tariffs to incentivise changes in demand patterns. "Dynamic tariffs, enabled by advanced metering and a smart grid, can reduce the discoms' power purchase costs and help manage peak loads," it said. Releasing the report, Niti Aayog Vice Chairman Rajiv Kumar said a healthy and efficient distribution sector is essential for improving the ease of doing business, and for improving ease of life. The report is co-authored by Niti Aayog, RMI and RMIIndia. According to an official statement, Niti Aayog member V K Saraswat said that this report presents policymakers with a menu of reform options to put the distribution sector on the track of efficiency and profitability. Most power distribution companies (discoms) in India incur losses every year- total losses are estimated to be as high as Rs 90,000 crore in FY2021, as per the statement. Due to these accumulated losses, discoms are unable to pay generators on time, make investments required to ensure high-quality power, or prepare for greater use of variable renewable energy, it added. Highlighting the need for addressing current challenges, Clay Stranger, Managing Director, RMI said, "A robust and long-lasting solution to the woes of the discoms requires changes in policy as well as organisational, managerial, and technological reforms.
Source: Economic Times
The Government has undertaken several initiatives to lessen the loss of Power Distribution Companies (DISCOMs) like:
This information was given by Union Minister for Power and New and Renewable Energy, Shri R.K. Singh in a written reply in Rajya Sabha today.
Source: PIB
The Indian government yesterday removed anti-dumping duty (ADD) on viscose staple fibre (VSF). Asserting that the ‘path breaking’ decision will give a fillip to the manmade fibre (MMF) sector, former textiles minister Smriti Irani said in a tweet that it was taken after a thorough investigation initiated in February this year. Irani holds the women and child development portfolio now. Biodegradable VSF fibres are obtained from wood pulp and cotton pulp, which share the characteristics of cotton fibres. These are versatile and easily bendable and have a wide range of application in apparels, home textiles, home furnishings, dress materials, woven clothing and knitwear. Welcoming the decision, Apparel Export Promotion Council (AEPC) chairman A Sakthivel said it will prove to be a key milestone in India’s apparel history. He thanked the government for accepting AEPC request on the issue. In January this year, AEPC along with other organisations in the VSF value chain had appealed to Prime Minister Narendra Modi for removing ADD on VSF to address issues related to VSF spun yarn availability and price to prevent job losses and halting of production across the VSF textile value chain. “The decision will help the MMF segment, which both industry and government have identified as the sunrise sector for increasing the share of India in global apparel trade. With quality fabric at the right price in place, it will finally give wings to the proposed Production Linked Incentive (PLI) scheme for the MMF segment,” AEPC said in a statement. “The removal of protectionist tariffs on VSF will make the domestic VSF prices aligned with the global VSF prices making the entire Indian VSF textile value chain globally competitive. It will boost production and exports of these products,” Sakthivel added. Major VSF powerloom clusters are in Tamil Nadu, Maharashtra and Gujarat.
Source: Fibre 2 Fashion
Over 64.1 million e-way bills were generated in July, the second highest after peak of 71.2 million in April in a year, reflecting sharp recovery in business activity. According to data from goods and services tax network (GSTN), e-way bills clocked 17.4% higher in July versus June when 54.6 million were issued. E-way bills are needed for transportation of goods of more than Rs 50,000 in value. With states easing restrictions and removing lockdowns amid loosening grip of the second Covid wave, business activity has improved in July compared to previous months. July numbers, which include 24.8 million for inter-state and 39.2 million for intrastate movement of goods, are the second highest in a year since June 2020. Daily average in July is also amongst the highest in a year, at 2.06 million, second to the daily average in April at 2.37 million. In comparison, daily average in May was 1.28 million and June was 1.82 million. E-way bill generation for May and June stood at 39.9 million and 54.6 million, respectively. Experts said that rising e-way bill generation will also lead to better GST collections during August, which will get reported in September. E-way bills provide a direct correlation to purchases and transactions, and therefore demand and consumption in the economy. "With sequential spurt in e-waybill generation, and simultaneous increase in vaccination, easing out of Covid restrictions, data analytics in place, GST rate rationalisation on cards, we may see acceleration in revenue from GST in coming months," said Aditya Singhania, partner at Singhania's GST Consultancy Co.
Source: Economic Times
The MSME ministry's cluster development programme of 1998, further revamped in October 2007, plays a vital role in transforming certain districts into specialised manufacturing centres. Manufacturing accounts for 21% of the total non-agricultural employment in India but manufacturing hubs are concentrated in a few regions like the western and south-eastern coast, with a few pockets in the north. The cluster development programme initiated by the micro, small and medium enterprise (MSME) ministry in 1998, and further revamped in October 2007, plays a vital role in transforming certain districts into specialised manufacturing centres. The Economic Census data allow us to look at specialised industries and the employment they generate across India. For example, 42% of non-farm jobs in Surat are in the manufacture of textiles, gems and jewellery. Apparels and textiles manufacturing account for 30% of non-farm jobs in Tiruppur and 20% in Ludhiana. Similarly, 47% of the nonfarm jobs in Firozabad are in the manufacture of non-metallic mineral products such as cement, ceramics and glass. But despite this push afforded by the cluster development programme, manufacturing in India has shown a declining trend since 2011. Creating more of these specialised manufacturing hubs can lead to broad-based job creation as well as economic benefits. It is also important to note here that millions of workers in the manufacturing sector are grappling with low wages and lack of job security. Contractual employment has been on the rise since the 2000s, thereby excluding a vast workforce from the benefits enshrined in labour laws. Any attempt at reviving manufacturing employment needs to be cognisant of these trends.
Source: India Spend
The government has set an export target of $31.20 billion and services $7.5 billion, while the total exports will remain in the range of $38.70 billion to $40 billion. In a joint press conference with spokesperson to the Prime Minister Shahbaz Gill, the Adviser on Commerce and Investment Abdul Razak Dawood said that in 2020/21, the total exports of the country reached $25.30 billion, whereas the exports of services stood at $6 billion, which is an all-time high. “The major factors contributing to the increase of exports were realistic exchange rate, streamlining of [the] sales tax refunds from [the] FBR [Federal Board of Revenue], competitive energy rates and tariff rationalisation,” he said,”. Dawood said that last year the information technology sector remained the most impressive with 47 per cent growth and, for the first time, IT exports crossed the $2 billion-mark. The textile sector again proved to be a major contributor in total exports, he said, adding that instead of exporting raw material of textile goods, the performance of the valueadded sector was very encouraging. During the last fiscal year, knitwear exports went up 37 per cent, home textiles 29 per cent and readymade garments increased 19 per cent, whereas the exports of yarn showed a nominal decline. This year the exports of textile goods were projected in the range of $20 billion and $21 billion, the adviser said, adding that the share of raw materials increased substantially, whereas the import of consumption-based products decreased substantially. To reduce reliance on textiles, the government is diversifying its exports basket, he said, adding that in motorcycle manufacturing, Pakistan achieved an economy of scale from where it can export motorcycles to other countries. “Altas Honda received export orders of 10,000 motorcycles and Honda is planning to shift two to three motorcycle component manufacturing plants to Pakistan,” he said. Dawood said that from next year Pakistan will start exporting mobile phones and the government had already received 21 applications for setting up mobile phones manufacturing plants. He alleged that he was misquoted by the media on the Samsung issue. “Six months back, Samsung despite my insistence refused to set up an assembly plant of mobile phones but once other market players set up manufacturing plants, Samsung also decided to join the bandwagon and they’re setting up a plant in a joint venture with the Lucky Group. Earlier, Shahbaz Gill said that Prime Minister Imran Khan has decided to meet the exporters fortnightly to ensure that the increasing momentum in exports will not get disturbed and their problems will be addressed promptly. He admitted the fact that cartels are still very strong in the country and the government is still unable to break their monopoly. Regarding sugar prices, Gill said that in the international market sugar prices increased 56 per cent in just one year and that’s why the import of sweetener is no longer a solution. However, the spike in the sugar prices helped the farmers extract better prices for their crop from the sugar mill-owners, which is good for the economy. The spokesperson for the prime minister said food inflation can only be controlled by reducing the demand-supply gap.
Source: Bolnews
The US Department of Treasury in December 2020 labeled Vietnam a currency manipulator, claiming that Vietnam intentionally undervalued its currency in order to gain an export advantage. However, in April this year, after months of investigations into Vietnam’s currency practices, the Treasury Department dropped the designation, despite maintaining that the country still met the manipulator label’s criteria under a 2015 law. On July 19, 2021, the State Bank of Vietnam (SBV) reached an agreement with the US regarding Vietnam’s currency practices, in which Vietnam pledged not to deliberately engage in any competitive devaluation of the Vietnamese dong, as well as be more transparent about its monetary policy and exchange rates. The SBV has reiterated that it did not use the exchange rate to create an unfair advantage in international trade, but rather “to promote macroeconomic stability and to control inflation.” Based on the agreement, the US Trade Representative (USTR) later issued a formal determination, deciding that it will not take any trade-restrictive measures such as countervailing duties against Vietnam. The USTR’s announcement last week was warmly received by Vietnam officials. It not only signals positive implications for bilateral trade relations and investment environment between the two countries but also reflects the subsequent international trade policies of the new US government under the Biden administration in the IndoPacific region.
Vietnam’s strengthening ties with the US US President Joe Biden’s Interim National Security Strategic Guidance released in March 2021 has named Vietnam, along with the US’s long-standing ally Singapore, as one among its partner nations in its defense plan in the ASEAN region. This was manifested by the official visit of US Defense Secretary Lloyd Austin to Vietnam in July 2021, in addition to Singapore and the Philippines, as the first visit to Southeast Asia by a top member of the Biden administration. These first diplomatic moves in the Asian region within the first six months after Biden’s inauguration consistently reflect Washington’s foreign policy outlook and commitment towards its presence in the Asia-Pacific region.
Vietnam – US trade According to Vietnam Customs, in the first half of 2021, the US remained Vietnam’s largest export market with a turnover of US$53.6 billion, up 37 percent compared to the same period last year. Major exports to the US included US$7.73 billion in machinery; US$7.61 billion in textile products, accounting for 49.7 percent of the total export value of textiles and garments; and US$5.76 billion in computer and electronic products.
Implications for Vietnam While the Biden administration is pushing forward multilateral trade cooperation in Southeast Asia, it will likely continue President Donald Trump’s confrontational approach towards China to counter the global economic influence of its ‘most serious competitor’. It’s widely agreed that Vietnam has economically benefitted from the US-China trade war and this is expected to continue to thrive under the current US trade policy. With most of the US’ tariffs on Chinese products remaining in place, foreign investors will be compelled to look for other locations to relocate their manufacturing production – with Vietnam emerging as an ideal China plus one destination in recent years. This manufacturing shift, however, is not only brought about by the trade war but includes factors such as geopolitics, rising labor costs in China as well as the need for diversifying input sources and supply chains amid the pandemic.
After the allegation of Vietnam’s currency manipulation, 76 US business organizations including the US Chamber of Commerce, the National Retail Federation, and the Internet Association, collectively urged the US Trade Chief to refrain from imposing punitive tariffs due to the detrimental effects of any duties on US manufacturers with operations in Vietnam. These concerns are due to the fact that global supply chains are becoming more vulnerable due to border restrictions and lockdowns under COVID-19’s impact. Given the disruption to global supply chains and the request by US business organizations such as Amazon and Google, the US government likely factored these issues when deciding not to penalize Vietnam. In addition, Vietnam’s participation in recent major free trade networks has paved the way for multiple global economic integration opportunities. The ratification of the EUVietnam free trade agreement (EVFTA), for instance, will increase the competitiveness of Vietnam’s manufacturing market. Similarly, Vietnam has also signed the UK-Vietnam FTA (UKVFTA) as the UK transitions out of the EU, and the Regional Comprehensive Economic Partnership (RCEP) promoting trade relations between ASEAN and other major economies including China, Japan, Australia, and New Zealand. The integration of Vietnam with the global economy will open more market opportunities for foreign investors including US businesses looking to manufacturing and sell to other markets.
US – Vietnam trade relations remain strong for now
Despite remaining positive, however, the US is likely to keep a close eye on its trade relationship with Vietnam. The steadily growing demand for Vietnam’s manufacturing and industrial products and the widening trade deficit is likely to weigh on future decisions. Given this continuously widening bilateral trade imbalance, there is a chance that the US may act on this in the long term. On one hand, USTR while concluding that it would not impose economic sanctions on Vietnam, will on the other hand continue to monitor Vietnam’s implementation of its commitments in relation to currency valuation. Still, the relationship between Vietnam and the US is not a superficial relationship based upon temporary national interests. It is the result of the efforts for corporation and development over the past decades of both countries. Now that more bilateral trade opportunities are presenting for both countries, the US-Vietnam relation is expected to remain strong. Home Thai export group
Source: Vietnam Briefing
The country’s merchandise export fell by 11.19 per cent to US$3.47 billion in July’21 year on year, according to Export Promotion Bureau (EPB) data. Bangladesh fetched US$3.91 billion in July’20. The overall earnings also fell short of target by 6.85 per cent set for the month, according to EPB data released on Tuesday. Out of the total $ 3.47 billion export income in July’21, the RMG sector fetched $2.88 billion recording a 11.02 per cent decline compared to the corresponding month of July’20. The country earned $3.24 billion in July’20. The sector's earnings also failed to achieve the set target by 4.17 per cent. The country earned $ 1.65 billion from knitwear exports, registering a negative growth of 5.25 per cent. Bangladesh fetched $ 1.75 billion from knitwear exports in the corresponding month of July’20. Earnings from export of woven garments were $ 1.22 billion in last month, down by 17.79 per cent. The woven items earnings were $ 1.49 billion in July’20, according to EPB data. Home textile exports also recorded 1.76 per cent negative growth to $ 92.36 million during the first month of the current fiscal year. . Meanwhile, the jute sector that demonstrated positive growth throughout the last fiscal, recorded 41.29 per cent fall in July with earnings of $ 60.77 million down from $103.51 million. Earnings from agricultural products that included vegetables, fruits and dry food also witnessed negative growth of 2.88 per cent. The sector earnings stood at $98.15 million in July’21. Earnings from vegetables, however, grew by 137.69 per cent to $15.45 million during the month. Earnings from pharmaceutical exports stood at $18.35 million, marking 7.88 per cent growth. Bangladesh fetched $90.52 million from leather and leather goods exports in July last, registering a meager 0.64 per cent growth over that of July '20. Exports of frozen and live fish fell by 13.43 per cent to $36.80 million in the first month of FY '22. According to the data, plastic products witnessed 2.53 per cent growth to $10.13 million.
Source: The Financial Express
Pingnan County in the Guangxi region of China is building a textile industry cluster at an investment of ¥26.4 billion ($4.08 billion) to take advantage of its geographic location. The county has signed over 226 textile and garment projects for the upcoming cluster and will build over 100 enterprises, 37 of which are expected to begin operations by the end of this year. In the first phase of the project, 9 dyeing and printing enterprises will begin their operations. The industrial park has a capacity of treating 100,000 tons of sewage and 1,250 tons of dyeing and printing fabrics on a daily basis, according to Chinese media reports. The Pingnan County is slated to host 2021 Maritime Silk Road textile and clothing fashion conference in October this year. Guangxi is a hub for silk production in China.
Source: Fibre2fashion
Vietnam has overtaken Bangladesh as the second-biggest garment exporter, according to the latest data released by the World Trade Organization (WTO). Bangladesh had been the world’s second-largest garment exporter since 2010, according to World Trade Organization (WTO) rankings. However, Bangladesh has lost its rank to Vietnam after the latter sold $29 billion worth of apparel merchandise to the world in 2020. Meanwhile, Bangladesh’s ready-made garment exports were valued at $28 billion last year. Due to the impact of the pandemic, both Vietnam and Bangladesh suffered a decline in garment exports. However, Bangladesh posted a stronger decline. Vietnam accounted for 6.4 per cent of global garment exports last year while Bangladesh's share is 6.3 per cent. Indeed, Vietnam has received a large number of orders that were shifted away from China at the beginning of the COVID-19 outbreak. China remained the world's largest apparel exporter in 2020 with 31.6 per cent of the global total. China exported $142 billion worth of apparel merchandise last year, a decrease of 7 per cent on-year. WTO Director General Ngozi Okonjo-Iweala said that, "Trade began to recover as of mid2020, but the effects of COVID-19 have varied significantly across countries and regions. In volume terms, which strip out the effects of fluctuating prices, Asia’s merchandise trade was down by only 0.5 per cent in 2020, compared to the global decline of 5.3 per cent." Vietnam’s garment-textile export turnover reached nearly $19 billion in the first six months of 2021, an increase of over 20 per cent on-year. The positive result was attributed to early post-pandemic recovery of markets.
Source: Vietnam Net
