The United States is one of India''s export market and remains one of the top sources of foreign direct investment (FDI) in the South Asian nation, said US Consul General in Chennai Judith Ravin said on Wednesday. "Over more than a decade, Indian firms have expanded to the US by taking advantage of a large, open market with business-friendly investor policies. We have seen a significant growth in our bilateral trade and investment relationship over the years but there is more potential than ever, Ravin said. Speaking here at a seminar ''Accessing the US Market'' organised by the Coimbatore chapter of Indian Chamber of Commerce and Industry, she reiterated America''s strong ties with Coimbatore, a tier-two industrial, education, and healthcare hub of the State of Tamil Nadu. During her interaction with the members of the Chamber, she said she and her team were here to build on that potential in partnership with the business community in the textile city. Some of the topics discussed at the seminar included types of business establishments in the United States, how to register a company there, and regulatory and tax considerations. In his address, president of the Chamber C Balasubramanian said the trade body was serving the cause of business and industry for over nine decades with 1,660 members representing various segments. These industries work in areas such as pump-sets, automobile components, textiles, machines, jewellery, education, and healthcare and Coimbatore is a city driven by private enterprises with over 50,000 small and medium-sized enterprises, he said.
Source: Outlook India
August number contrasts sharp pick-up seen in daily e-way bill generation Goods and services tax (GST) collection moderated in August to Rs 1.12 trillion as against Rs 1.16 trillion in July, but exceeded the Rs 1-trillion mark for the second month as economic activity gained pace with a decline in Covid-19 cases, official data released on Wednesday showed. Robust revenues should help the government increase expenditure to ensure economic revival. However, experts cautioned against reading too much into the recovery as GST collections dipped sequentially, core sector growth fell short of expectation in July, and the purchasing managers’ index (PMI) for manufacturing also fell. The latest GST numbers pertain to transactions made in July. The collection in August is 30 per cent higher than last year and a 14 per cent higher than in 2019-20. The GST number for July was slightly overestimated as around Rs 5,000 crore of arrears from June was accounted for in the month, and this could partially explain the drop in August. However, the August GST number contrasts the sharp pick-up seen in the daily e-way bill generation in July, which posted a 17 per cent sequential growth. E-way bill generation, which indicates supply in the economy, recovered to an average of 2.1 million compared to 1.8 million in June. Revenue from domestic transactions (including import of services) was 27 per cent higher year-on-year in the month. GST collections reached a high of Rs 1.41 trillion in April, but was dragged down by the second wave of the pandemic and fell below Rs 1 trillion for the first time in eight months in June, as large parts of the country faced localised lockdowns. “With the easing out of restrictions, GST collections for July and August have again crossed Rs 1 trillion, which clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections,” said the Ministry of Finance in a press statement. The robust GST revenues are likely to continue in the coming months, it added. However, Aditi Nayar, chief economist, ICRA Ratings, said the sequential dip in GST collections, lower-than-expected core sector growth, and moderation in manufacturing PMI for August suggest that some caution is warranted regarding the strength of the recovery in the current quarter. “We expect GDP growth in the ongoing quarter to range between 7.8-8.8 per cent, with the absolute level of GDP to continue to trail the pre-pandemic level as the services sector struggles to catch up with the rest of the economy,” Nayar said. She added that the GST collections remained healthy and will help to ease the cash flows of the Centre and the states. The economy posted a growth of 20.1 per cent in the GDP in the first quarter of the fiscal on a low base of the last year. MS Mani, senior director, Deloitte India, said most key manufacturing states have shown an increase of 25 per cent to 35 per cent in collections compared to the same period last year, indicating that the recovery may be faster in the current year. States like Tamil Nadu, Maharashtra, and Karnataka have seen collections grow over 30 per cent YoY.However, key segments of GST collection yielded less in August compared to July. For instance, central GST collection stood at Rs 20,522 crore against Rs 22,197 crore in July. State GST mop-up was Rs 26,605 crore as against Rs 28,541 crore the previous month. However, compensation cess collection was Rs 8,646 crore compared to Rs 7,790 crore in July. In August, the government settled Rs 23,043 crore to CGST and Rs 19,139 crore to SGST from IGST as regular settlement. In addition, the government also did an ad hoc IGST settlement in the ratio of 50:50 between the Centre and states. The total revenue of Centre and states after regular and ad-hoc settlements in August was Rs 55,565 crore for CGST and Rs 57,744 crore for SGST. The government has seen robust GST collections thanks to strict enforcement through closer monitoring of fake billing, deep data analytics using data from multiple sources including GST, income tax and Customs IT systems. Easier compliance also encouraged filing of returns.
Source: Business Standard
The district health department has ordered a probe into the incident. The Aam Aadmi Party on Wednesday submitted a memorandum to the health department alleging that a textile factory in Surat carried out a Covid-19 vaccination drive for migrant workers after charging Rs 100 from each of them. The district health department has ordered a probe into the incident. According to Jagdish Katheriya, Leader of Opposition in Kamrej Taluka Panchayat, he received an information that migrant labourers working in different factories in Pipodara GIDC have to pay Rs 100 to get the vaccination from a centre in a closed textile factory. “The migrant workers were standing outside a textile factory nearby the temple in the GIDC. There were five people including two medical professionals, inside the room where Covaxin jabs were being administered. We started recording a video of the labourers who were out of the centre and paying Rs 100. Some of them told us that they had paid Rs 100 and also submitted a copy of their Aadhaar cards,” the AAP leader told The Indian Express. “We went to the vaccination centre and asked the people there why they were charging for vaccines from the textile workers. Without giving answers they misbehaved with us and later shut their centre and went away. We also asked them whether they had received any permission from the district health department, to which they denied,” he added. On Wednesday afternoon, Katheriya handed over a memorandum to District Development Officer D S Gadhvi and Chief Health Officer Hasmukh Chaudhary, demanding a probe into the incident. The AAP leaders have shared the video on social media. D S Gadhvi said, “We have received the complaint and have ordered an inquiry into the incident. We will find out from where they had obtained those Covaxin doses and whether they possess any permission from the health department or not. If any irregularities are found, we will take legal actions.” He added, “Generally the vaccine doses are given at government health centres for free, while private hospitals do charge for inoculation. Some private company owners also take vaccines for their workers.” Dr. Hasmukh Chaudhary said, “We have not supplied vaccines to Pipodara GIDC centre. Even the health officers seen in the video are not our employees. In the probe, we will try to find out who had given them permission to start the vaccination drive.”
Source: Indian Express
The key benefit of the scheme is that it gives rebates on Customs and Central Excise chargeable on any imported or excisable materials used in the manufacture of goods meant for export The Duty Drawback Scheme (DBK) is a key programme to help exporters offset some of the costs accrued during the export process, particularly in supply or value chain. The key benefit of the scheme is that it gives rebates on Customs and Central Excise chargeable on any imported or excisable materials used in the manufacture of goods meant for export. The scheme, administered by the Department of Revenue, has two primary components: All Industry Rate (AIR) and Brand Rate. One way to grant the duty drawback is to check the rates specified in the Schedule of All Industry Rate of Drawback, usually announced on June 1 or three months after the budget. If the product is not mentioned in the AIR schedule or the exporter claims it is inadequate, the exporter can claim duty drawback by applying for Brand Rate fixation.
How the scheme works
AIRs are notified by the government in the form of a drawback schedule based on the average quantity and value of inputs and duties (both Customs & Central Excise) borne by export products. The rates are essentially an average based on the assessment of average incidence. These AIRs are recommended by a drawback committee. indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. All claims of duty drawback are filed with reference to the tariff items and description of goods given in the schedule. In the case of Brand Rate fixation, an exporter is eligible to apply either where the export product has not been listed in the duty drawback schedule or if the exporter considers that AIR of duty drawback does not fully neutralise the duties suffered by his export product. Exporters are fully compensated for customs, central excise duties and service tax actually incurred by them. To use the Brand Rate route, the entity concerned has to submit an application to the Directorate of Drawback within 30 days of the first shipment, with copies to the relevant authorities. The commissioner-drawback will fix the rate after verification. The documentation requirement is high here, as the manufacturer has to show the quantity of inputs and services used, along with evidence of payment of duties. How to availrefunds under the scheme? Despite the government having simplified the DBK procedure over the years, it still remains complicated for a novice exporter. First, an exporter has to file the shipping bill in an electronic data interchange (EDI) for the export. Here, the exporter has to keep in mind that the electronic shipping bill itself will be treated as the claim for drawback and there is no need to file separate drawback claims. All ports with EDI can process these claims except in respect of DBK claims relating to cases of reexport of imported goods under Section 74 of the Customs Act, 1962. Sribash Dasmohapatra, Executive Director, Plastics Export Promotion Council, talks about a typical standard operating procedure for claiming refunds under DBK: “In the EDI system, exporters are required to open their accounts with a bank that is either nominated by a customs house or has core banking facility to transfer funds through NEFT/ RTGS. This has to be done to enable direct credit of drawback amount to their accounts, obviating the need for issue of cheques. The exporters are required to indicate their account numbers in the declaration form called Annex B, along with the details of the bank through which the export proceeds are to be realised. After the realisation of payment, proof of realisation is to be submitted to the Customs authority.”
Key Points to Remember
Is the process seamless or cumbersome for a novice exporter? According to Dasmohapatra, claiming a drawback is an easy process compared with other schemes. As an improper filing can lead to claim rejections, there are certain factors an exporter must keep in mind. Mentioning wrong bank details or not updating account details, for instance, can lead to an inadvertent delay of DBK. Similarly, mentioning the incorrect serial number of the drawback claim in the shipping bill will also lead to a delay in DBK. In sum, errors in filling may lead to delay in getting a DBK claim. So exporters must be careful if they want to get their refunds on time.
Source : Economic Times
The index for manufacturing fell to 52.3 in the month from 55.3 in July, forcing companies to pause their hiring efforts Factory activity lost momentum in August as Covid-induced curbs and rising input costs weighed on demand, forcing firms to put hiring on hold, showed a private survey on Wednesday, a day after the GDP data showed robust manufacturing growth in the June quarter. IHS Markit purchasing managers’ index (PMI) for manufacturing fell to 52.3 in the month from 55.3 in July. A reading above 50 indicates expansion and one below that shows contraction. PMI was 48.1 in June. Employment levels were broadly stagnant in August as companies had sufficient staff to cope with current requirements and confidence remained subdued. “Uncertainty regarding growth prospects, spare capacity and efforts to keep a lid on expenses led to a hiring freeze in August, following the first upturn in employment for 16 months in July,” said Pollyanna De Lima, economics associate director at IHS Markit. Business confidence was dampened by concerns surrounding the damaging impact of Covid-19 on demand and firms’ finances. However, with order books still expanding and businesses retaining optimistic growth projections, stock-building efforts continued and additional materials were bought. Some firms suggested that favourable market conditions and fruitful advertising boosted demand for their goods. Others noted that sales fell due to the pandemic. The August data pointed to back-to-back increases in new export orders, but here, too, growth lost momentum. The pace of expansion was only marginal. Indian manufacturers signalled another monthly rise in cost burdens, thereby taking the current stretch of inflation to 13 months. The rate of increase softened, but remained elevated by historical standards. Manufacturers passed a part of the additional cost burden on to clients by hiking fees. The rate of inflation quickened to a three-month high, but was below that seen for input costs. Barclays chief India economist Rahul Bajoria said the second consecutive print above 50 suggests the economy is holding forth. “The details show that the moderation in headline PMI reflected declines in the new export orders and output components, but stocks of finished goods and inventories continue to indicate some space for production gains in the coming months,” he said.
Source: Business Standard
SDR is an alternate reserve currency floated by the IMF, which the member countries can freely exchange between themselves The International Monetary Fund (IMF) has sharply increased its allocation of Special Drawing Rights (SDR) to India, in line with the country's existing quota in the fund. SDR is an alternate reserve currency floated by the IMF, which the member countries can freely exchange between themselves instead of relying on currency of any one particular country. A statement by the RBI said on Wednesday that the IMF has increased India's SDR quota to 12.57 billion, which is equivalent to $17.86 billion at the latest exchange rate, on August 23;
Source: Business Standard
Chief Minister Shivraj Singh Chouhan has said that Madhya Pradesh has huge potential for investment in the textile sector. Work is being done to make the State a textile hub, which will provide employment opportunities to a large number of people. The Chairman of Sagar Group, Sudhir Kumar Agrawal, met Chief Minister Shri Chouhan at Mantralaya on Wednesday and discussed about investment in the State. Agrawal informed that in the field of textiles, an investment of Rs 1000 crore has been made by Sagar Group in the State, in which about 4000 people have got direct employment. Sagar Group is about to come up soon with a Multi Specialty Hospital on Hoshangabad Road in Bhopal, which will provide employment to about 1000 people. The group is working in the textile sector, food processing sector, real estate and education sector in the state. Chief Minister Chouhan assured that every necessary facility and cooperation would be provided by the Government to the investors and industries.
Source: Daily pioneer
'The decline and the subsequent recovery was not reflecting anything about the fundamentals of the economy. It is only reflecting the economic restrictions that were placed or removed', said CEA If the third Covid wave is muted, there’s likely to be a growth in consumption like in the January-March quarter, chief economic adviser Krishnamurthy Subramanian said in a conversation with Shrimi Choudhary. He pointed out that if there was no second wave and mobility indicators had continued to rise the way they did in Q4, the numbers would have been far higher. Edited excerpts: Demand is still subdued at 55.8 per cent of GDP against 56.9 per cent a year ago and 59.2 per cent in Q4 of FY21. When do you expect demand recovery in the economy?
Source: Business Standard
Mohapatra will succeed Prakash Chandra Mody, a 1982-batch Indian revenue services officer, who retired in May. JB Mohapatra has been appointed as the chairman of the Central Board of Direct Taxes, the finance ministry said in a notification Wednesday. Mohapatra had been officiating as the chairman of the Board since June this year. Mohapatra will succeed Prakash Chandra Mody, a 1982-batch Indian revenue services officer, who retired in May. The Appointments Committee of the Cabinet has approved the appointment JB Mohapatra was a member of the board before he was given the responsibility of officiating as the Chairman, CBDT for a period of three months, in May. Mohapatra, a 1984 batch Indian revenue services officer, was appointed as member in the board mid May, along with Rashmi Saxena Sahni and Anuja Sarangi.
Source: Economic Times
FICCI Kerala State Council Co-Chair Deepak Aswani says Kerala, as a state that provides a lot of support and assistance, has a lot to offer to startups. The Kerala government will take all possible steps to promote entrepreneurship and is committed to provide all possible assistance to startups, Director of State Industries and Commerce Department S Harikishore has said. Harikishore was speaking at a webinar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) - Kerala State Council on Monday to promote entrepreneurship with the objective of increasing employment opportunities and achieving socio-economic growth in the post-COVID period. He said more change is expected in the MSME sector as small and medium enterprises do not need a licence for three years. "There are about 1.5 lakh MSME units in Kerala and all assistance will be given to them. Currently, there are many schemes in place but many fail to utilise it. The government will take all possible steps to promote entrepreneurship and is committed to provide all possible assistance to startups. More changes are expected in the sector as small and medium enterprises do not need a licence for three years," he said during the webinar. "There are eight schemes that provide financial assistance to enterprises. Subsidies were also available in the service sector," he said in a release. FICCI Kerala State Council Co-Chair Deepak Aswani said as a state that provides a lot of support and assistance to startups, Kerala has a lot of positive elements. "Kerala has a lot of potential in the areas of food processing, textiles, and agro industry. However, we need immediate steps to increase women entrepreneurship," he said. Gurcharan Cheema, Senior Vice President and Regional Head, Amway India; Damodar Avanur, former president of the Kerala State Small Industries Association; John Kuriakos, Managing Director of Dentcare Dental Lab; Central MSME Assistant Director UC Lachitamol; and others participated in the webinar.
Source: Your story
Seven months into a new administration, companies want the White House to drop tariffs on Chinese goods and provide clarity about a critical trade relationship. More than seven months into the Biden administration, American businesses say they are growing increasingly frustrated by the White House’s approach to China, with confrontational policies imposed during the Trump era still in place and President Biden offering little clarity about economic engagement with the world’s second-largest economy. The relationship between the two economic superpowers remains deeply fractured. American import duties still exist on roughly $360 billion worth of Chinese goods, and almost all of the exemptions that shielded more than 2,000 products from those tariffs have expired. A thicket of export controls and bans are still in place, leaving U.S. technology giants such as Qualcomm, Intel and Google in the lurch over how to approach the Chinese market and offering little hope that the decoupling of the world’s two largest economies will be reversed anytime soon. To the dismay of some American business leaders, Mr. Biden has amplified some of the Trump administration’s punitive moves. In July, the Biden administration expanded the list of Chinese officials under sanctions by the United States for their role in undermining Hong Kong’s democratic institutions. In June, the president issued an executive order adding more Chinese companies to a prohibition on American investments in Chinese firms that have links to the country’s military or that sell surveillance technology used to repress dissent or religious minorities. Yet Mr. Biden and his top advisers have yet to elucidate how they view economic relations with Beijing, saying they will make the administration’s approach known once a broad review of China trade policy concludes. But the review has stretched on for months with no public timeline for its conclusion. As a result, businesses are lobbying heavily for the tariffs to be removed, which would make it easier for them to rely on factories in China instead of making investments in the United States or elsewhere. And they want assurances that they can do business with a financially important market. “There has been frustration for the business community at the lack of concrete China economic policy,” said Charles Freeman, the senior vice president for Asia at the U.S. Chamber of Commerce. “It’s not as if this crowd came in without any experience or any preconceived thinking about China.” The future of the U.S. trade relationship with China is one of the biggest global economic questions confronting Mr. Biden and his advisers. China has thrown huge resources behind its economic ambitions and plans to dominate cutting-edge industries like artificial intelligence and robotics by providing government subsidies to Chinese firms and using other tactics, including espionage. While the Trump administration signed an initial trade deal with China that included purchase commitments for agricultural and other goods, the agreement failed to address a number of major concerns, including China’s state-owned enterprises and industrial subsidies. During his White House bid, Mr. Biden assailed President Donald J. Trump over his trade war and promised to enlist allies to counter China over its trade practices. Since taking office, Mr. Biden has resolved a longstanding trade spat with the European Union and persuaded European officials to adopt a more assertive trade policy toward China this year. And he has pitched his infrastructure plan as a way to counter Beijing, saying it would “put us in a position to win the global competition with China in the upcoming years.” But the administration has said little about whether it intends to restart economic talks and address outstanding issues, including tariffs. At times, officials have offered somewhat discordant views. Treasury Secretary Janet L. Yellen told The New York Times this summer that tariffs had harmed American consumers, but she has also warned that Chinese subsidies for exporters pose a challenge for the United States. The United States trade representative, Katherine Tai, has described the tariffs as providing leverage. Asked on Wednesday about the administration’s review of the tariffs, Jen Psaki, the White House press secretary, said, “I don’t have any timeline for you on when that review will be completed.” Business impatience with the administration’s approach is mounting. Corporate leaders say they need clarity about whether American companies will be able to do business with China, which is one of the biggest and fastest-growing markets. Business groups say their members are being put at a competitive disadvantage by the tariffs, which have raised costs for American importers. “We should be doing everything we can to increase China’s use and dependence on American technology products,” Patrick Gelsinger, the chief executive of Intel, said in an interview last week. The administration is “struggling to lay out a framework for how they have a policy-driven engagement with China,” he said. “To me, just saying, ‘Let’s be tough on China,’ that’s not a policy, that’s a campaign slogan,” he added. “It’s time to get to the real work of having a real policy of trade relationships and engagement around business exports and technology with China.” In early August, a group of influential U.S. business groups sent a letter to Ms. Yellen and Ms. Tai urging the administration to restart trade talks with China and cut tariffs on imported Chinese goods. “The main kind of dilemma that companies face right now is just uncertainty,” said Craig Allen, the president of the U.S.-China Business Council, which organized the letter. “Will the tariffs remain in place? Are they in place in perpetuity? What is the exclusion process to request an exemption from the tariffs? Nobody knows.” Mr. Allen said his group had organized the letter because it wanted to make sure that businesses’ views, in addition to those of labor and environmental groups, would be taken into account during the Biden administration’s China review. “Many find it ironic that the Biden administration is following so closely the playbook laid down by the Trump administration on China,” he said. Other organizations that signed the letter included the U.S. Chamber of Commerce and the Business Roundtable as well as groups representing sectors of the economy with close business ties to China, such as the Pharmaceutical Research and Manufacturers of America, the Semiconductor Industry Association and the American Farm Bureau Federation. “We’re now dealing with all these other supply chain disruption issues that are costing companies millions of dollars,” said Jonathan Gold, the vice president for supply chain and customs policy at the National Retail Federation, which also signed the letter and represents a sector that has become heavily dependent on imports from China. “To have the tariffs on top of that is difficult for planning purposes.” On Tuesday, the National Association of Manufacturers sent a letter to the Biden administration urging it to “act as quickly as possible to finalize and publicize” a China strategy. Businesses of all sizes have been waiting for Mr. Biden to change course from Mr. Trump’s trade policies. Arnold Kamler, the chief executive of Kent International, a bicycle wholesaler and manufacturer, said the 25 percent tariffs on bicycle imports from China had been a major drain on the cash flow of his business, forcing him to borrow more from his bank. For the last two years, he has been passing on the cost of the additional import duties to retailers. Adding to the impatience is that a vast majority of the exclusions to the China tariffs that were granted under the Trump administration have now expired, and the Biden administration has not created a process to allow companies to seek new exclusions. Lawmakers from both parties have written to the Biden administration urging it to restart the exclusion process, and the Senate included a provision to reinstate expired exclusions and set up a process for granting new ones as part of a legislative package to bolster competitiveness with China that passed in June. The Senate provision has been met with resistance in the House, according to a House Democratic aide, so the two chambers may wind up at odds over whether to address tariff exclusions as part of a final China package. Robert E. Lighthizer, who was Mr. Trump’s trade representative and negotiated the trade deal with China, said in an interview that lobbyists were trying to weaken the executive branch’s power to impose tariffs. “People working for China and Chinese importers want to get rid of the last tool that Biden and subsequent presidents will have to deal with Chinese unfair trade practices,” Mr. Lighthizer said. Business groups are not uniformly in favor of lifting tariffs. The National Council of Textile Organizations, which represents the American textile industry, wants the administration to keep tariffs on finished apparel and home textile products from China. “We have been pretty strong in our message to the administration saying please continue this approach on getting tough on China,” said Kimberly Glas, the textile group’s president and chief executive. Any decision on rolling back tariffs could also have domestic political implications in the United States, where a tough-on-China mentality has permeated both major parties. Any steps by the Biden administration to roll back Trump-era policies toward Beijing could be seized on by political opponents seeking to paint Mr. Biden as insufficiently tough on China at a time when the country is engaged in a rapid military buildup. Scott Paul, the president of the Alliance for American Manufacturing, a trade group that represents the United Steelworkers and some domestic manufacturers, noted that concern about China on both economic and national security grounds was “one of the few issues that unites Democrats and Republicans these days.” “A dismantling of the tariffs has no upside for Joe Biden,” he said. “At a time when you’re trying to build up U.S. capacity in key industries, it would invite a flood of Chinese imports to just overwhelm that.” The Biden administration has said little about its tariff plans or how it will address China’s failure to meet its commitments under the Trump trade deal. China has not fulfilled its purchase commitments, according to Chad P. Bown, a senior fellow at the Peterson Institute for International Economics who has tracked China’s purchases of U.S. goods. But Chinese economists contend that Beijing has been sincere in wanting to meet its promises, and that the pandemic has affected demand in China. When asked about the administration’s review of China trade policy, Ms. Tai has responded by saying she was aware that “time is of the essence.” However, she has refrained from offering a preview of what steps the administration may seek to take. “In terms of how we need to approach this trade relationship,” Ms. Tai said at a virtual event last week, “we need to approach it with deliberation.”
Source: N Y Times
Factory activity in China slowed down in August as export demand weakened, according to a survey. The monthly purchasing managers' index (PMI) of the National Bureau of Statistics and the China Federation of Logistics & Purchasing declined to 50.1 in August from July's 50.4 on a scale of 100 on which numbers above 50 show rising activity. A sub-measure of new exports fell by a full point to 46.7 in August from the previous month. In a report on the latest manufacturing figures, researchers at the Chinese investment bank CICC said they expected “the slowdown in demand will continue," a global newswire reported. Government officials warned demand for Chinese exports is likely to weaken in the second half of the year as factory and consumer activity dampened due to flooding in July and tighter anti-coronavirus controls, the news agency added.
Source: Fibre 2 Fashion
Vietnam Briefing explores the Vietnam – Bangladesh trade relationship and examines key strengths powering both these export-led countries. We further highlight trade between both countries, their growing relations, and how they have benefitted from the US-China trade war. Vietnam and Bangladesh are both economic powerhouses that have been growing their GDP significantly thanks to an export-led growth model. Bangladesh has had one of the fastest-growing economies in Asia for years. The country averaged close to 7 percent growth over the past decade, achieving an 8.1 percent growth rate in 2019. Per capita income reached nearly $2,000 last year, growing more than three-fold since 2006. Vietnam has been the same, averaging close to 7 percent growth and achieving a 7 percent growth rate in 2019. Per capita income reached US$7,900 in 2019. Its middle class has been growing, contributing to increased consumption and retail sales. In some sense, they are even competitors as Vietnam surpassed Bangladesh to become the second-largest garment exporter as per the World Trade Organization in 2020. Vietnam – Bangladesh relations Yet Vietnam and Bangladesh remain close partners and established ties in February 1973. In 2013 the two nations celebrated the 40th anniversary of the establishment of diplomatic ties. In 2018, former Vietnamese President Tran Dai Quang during a three-day visit to Bangladesh said “Vietnam and Bangladesh enjoy an excellent traditional friendship on the basis of historical similarities and the shared values of independence, peace, cooperation, and development.” Vietnam and Bangladesh are striving to double bilateral trade to US$2 billion by 2021. Both countries have identified 11 priority areas including agricultural trade and pharmaceutical exports from Bangladesh to Vietnam. Trade between Vietnam and Bangladesh has grown since the first Joint Trade Committee meeting in 2015. Both Vietnam and Bangladesh have large and young populations which means a significant labor pool that businesses can use. Both countries also benefit from geographical advantages. Bangladesh is located between China and India and touches ASEAN, it also has access to the Bay of Bengal, allowing ships access to trade into the country. Vietnam in contrast has a long coastline exposing it to the East Asian trade corridor. It has ports, airports, and borders China, making it an ideal China plus one location. Vietnam – Bangladesh trade Vietnam has made several investments in Bangladesh to date: these include investments in Bangladesh’s special economic zones, ICT sector cooperation, bilateral cooperation in textile and garments sector, trade in halal products, trade in software services, direct air link, promotion of trade in jute and jute goods, banking sector cooperation and tourism sector cooperation. The main export products from Vietnam to Bangladesh include clinker, cement, steel billet, and mobile phones. In contrast, Vietnam mainly exports textile, leather, shoe materials, medicine, and sesame from Bangladesh. In terms of investment, by April 2019, Bangladesh’s total investment in Vietnam reached $1.18 million, ranking 43 out of 80 countries and territories investing in Vietnam. Meanwhile, Vietnam has one investment project in Bangladesh with a total capital of US$27,900. Bangladesh currently ranks 68 out of 72 countries and territories in which Vietnam has invested in. Future outlook Both Vietnam and Bangladesh have open trade policies, a competitive labor force, and incentives for foreign businesses. Vietnam has pursued an open trade policy through several free trade agreements. The recent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU-Vietnam free trade agreement (EVFTA), and the UK-Vietnam free trade agreement (UKVFTA) are a testament to this. Vietnam has also changed domestic laws to make the country attractive to investors with foreign firms competing for local business. Several multinational firms such as Samsung, Google, Adidas, Nike, Foxconn, and H&M have moved production to Vietnam boosting Vietnam’s exports and investments. In Bangladesh, large export of apparel to the EU and the US make most of the country’s exports. The EU has allowed production from least developed countries (LDC) like Bangladesh duty-free. However, as Bangladesh’s economy improves and per capita income rises it stands to lose its LDC status. Bangladesh foreign minister also noted that Vietnam-Bangladesh bilateral trade is yet to reach its full potential and sough more investment in Bangladesh’s special economic zones and hi-tech parks. Bangladesh and Vietnam share common objectives in major multilateral international forums such as the United Nations (UN), Non-Aligned Movement (NAM), and SouthSouth Co-operation. Leaders from both countries have paid regular visits enhancing bilateral relations as well as extended their mutual co-operation in various multilateral forums. While Vietnam and Bangladesh do not have a free trade agreement, both countries have emphasized trade and the need to create the best conditions for entrepreneurs and business communities of the two countries to explore business and investment opportunities in both countries. As both Vietnam and Bangladesh look to further their economies there are ample opportunities for trade between the two countries. Both Vietnam and Bangladesh have benefitted from the US-China trade war and this is unlikely to change any time soon. In addition, as China moves up the value chain, manufacturing in the country is much more expensive than it was several years ago. And while China’s manufacturing industries, infrastructure, and supply chain is unmatched, Vietnam and Bangladesh have excelled in industries such as garment and textiles, creating opportunities. However, Vietnam is attempting to attract hi-tech investment and move up the value chain from just simple assemblies. Bangladesh is attempting to do the same by diversifying its manufacturing. Rather than just garments, it needs to move into electronics manufacturing like Vietnam and move up the value chain. Bangladesh also has China as a large trading partner and is part of the Belt and Road Initiative; this is likely to help further grow its economy. While Bangladesh has a long way to go, it’s on the way to become a middle-income country While COVID-19 has affected these plans to a certain extent, long-term goals remain on track as both countries are poised to become economic powerhouses.
Source: Vietnam Briefing
The US economy grew at an annual rate of 6.6 per cent in the second quarter of this year, slightly faster than the 6.5 per cent previously estimated, according to the second estimate released by the Bureau of Economic Analysis (BEA) that pointed to a sustained consumerled rebound from the pandemic-induced recession. In the first quarter, real gross domestic product (GDP) increased by 6.3 per cent. But concerns are rising over the delta variant’s spread and a slowdown is being anticipated. In recent weeks, , many economists have been downgrading their GDP growth estimates for this quarter, and for 2021 as a whole with delta variant cases rising throughout the United States. Goldman Sachs has cut its forecast for annual growth in the current July-September quarter from 9 per cent to 5.5 per cent, citing the effects of the delta variant. Likewise, Wells Fargo economists have downgraded their third quarter GDP forecast from an 8.8 per cent annual rate to 6.8 per cent, also because of the surge in COVID cases. Many have also reduced their outlook for the full year, thought by smaller amounts, in anticipation that the economy could re-accelerate in the final three months of this year if COVID cases ease as vaccines are increasingly administered.
Source: Fibre2Fashion
