Telangana State Federation of Textile Associations president Ammanabolu Prakash has expressed disappointment over the absence of measures to support traders. “Traders play a pivotal role… pay a variety of taxes to the State and Central governments but the Finance Minister has disappointed them by not granting concessions or allocating funds to [help] compete with global market,” the Federation president Ammanabolu Prakash said. Likewise, the textile sector was looking up to the Budget for incentives but nothing has been done in this direction, he said in a statement on Monday. He, however, appreciated the Budget’s approach to develop agriculture, infrastructure and education sectors and not tax the other sectors unduly. The thrust on rural development would yield positive results in the long run.
Federation of Indian Export Organisations (FIEO) Regional Chairman A.Sakthivel welcomed the broad thrust of Budget even while expressing concern on the proposal of excise duty on branded readymade garments and made up, articles of textiles, whose retail sale price is above Rs.1,000. Dr. Sakthivel, in a release, complimented the Finance Minister for allocating Rs.3,350 crore for textile industry, which includes Rs.140 crore for amended TUF and Rs.300 crore for development of mega clusters.
SOURCE: The Hindu
The Southern India Mills' Association (SIMA) has hailed the Union Budget 2016-17, saying it has come out with nine thrust areas to enable the country to achieve a sustained growth rate despite a global economic slowdown. In a press release, SIMA Chairman M. Senthilkumar thanked the government for continuing optional Cenvat route on cotton textiles which was the main demand of the Association. He also expressed his gratitude to the government for allocating Rs.1480 crores for Technology Upgradation Fund Scheme. He said that additional funds would be required to meet the pending subsidies since September 2014. Senthilkumar also welcomed the reduction of basic customs duty on MMF from 5 per cent to 2.5 per cent though the Association has demanded for total withdrawal. He has stated that reduction in customs duty on MMF would marginally improve the competitiveness of the MMF and their blended textile manufacturers in the country.
Senthilkumar said the government could have avoided imposing 2 per cent central excise duty without Cenvat credit facility or 12.5 per cent central excise duty with Cenvat credit facility on branded ready-made garments and made-ups materials priced above Rs.1000. According to the SIMA chief, since the Central government is expected to implement GST soon, it could have avoided levy of central excise duty on such items. He has stated that the tariff value of ready-made garments/ made-ups for the purpose of levying central excise duty has been increased from 30 per cent to 60 per cent of the MRP which would marginally increase the cost for the consumers. However, he thanked the government for exempting non-branded textile items below the value of Rs.1000 from the purview of excise duty which would benefit the people below the poverty line.
Prices of branded garments are set to go up by "2 to 5 per cent" with the Union government levying excise duty on ready-made products of Rs 1,000 or more in the Budget 2016-17. While presenting the Budget, Union Finance Minister Arun Jaitley said, "I propose to change the excise duty on branded readymade garments and made up articles of textiles with a retail sale price of Rs 1,000 and above from 'Nil without input tax credit or 6 per cent/12.5 per cent with input tax credit' to '2 per cent without input tax credit or 12.5 per cent with input tax credit'." The garment industry in Punjab described the levy as "most deplorable" step and said that prices of readymade garments will go up in the range of 2 to 5 per cent.
Condemning the government for bringing small and medium enterprises engaged in garment manufacturing under the ambit of indirect tax, industry questioned the rationale behind the move when the Centre was pushing for bringing Goods and Service Tax (GST) from next fiscal. "Prices of readymade garments will go up in the range of 2 to 5 per cent depending upon the retail price of the product," Ajit Lakra, Head Textile, Federation of Industry and Commercial Organisation said today. "We strongly condemn this move of the Finance Minister as it will hurt small and medium size industries which are manufacturing garments for big brands," Lakra, a Ludhiana-based garment maker said.
Echoging views, Sandeep Jain, Executive Director, Monte Carlo Fashion also dubbed the levy of excise duty as "negative move" for the garment industry. "When the consumer sentiments are already low, the levy of excide duty will further hit the demand for items priced more than Rs 1,000," he further said. Industry also said that price rise would hit customers who mostly purchase garments between price range of Rs 1,000 to Rs 2,500. "Rather than imposing tax, the government should have announced some liberal steps for the promotion of labour intensive industry and employment generation," said Lakra. "It will be small and medium scale garment makers who will have to face complexities pertaining to excise duty laws. This move came when the government is pushing for GST and it is quite unfortunate," Lakra said. Punjab is one of the biggest makers of readymade garments in the country.
SOURCE: The Economic Times
The Clothing Manufacturers Association of India (CMAI) has urged finance minister Arun Jaitley to withdraw the proposed excise duty on branded readymade garments and continue the optional duty regime that applies currently, until GST is introduced. In the Union Budget 2016-17 presented in Parliament today, the finance minister proposed to increase the excise duty on branded readymade garments and made up articles of textiles of retail sale price of Rs 1,000 or more from nil to 2 per cent (without CENVAT credit) or from 6 per cent/12.5 per cent to 12.5 per cent (with CENVAT credit). “The imposition (of the duty) is all the more surprising when the finance minister rightly emphasized in his speech the importance of job creation and the 'Make in India' thrust. Textile is the highest employer after agriculture, and hence it is indeed ironical that new taxes are being levied on such an industry,” said CMAI president Rahul Mehta in a statement. The apparel industry is going through a rough patch, with the onslaught of online companies with their high discounting, and the somewhat sluggish sentiments of the market. In such a situation, the imposition of duty will worsen the situation, said Mehta.
He recalled that introduction of duty on finished products, while sustaining the exemption for upstream products, was an experiment implemented a few years back by the previous government and withdrawn subsequently when the disastrous consequences were understood. “Repeating that experiment is the last thing the industry needed, especially when the entire textiles and clothing industry in the country is already going through a crisis because of demand recession both in the domestic and export markets.”
He pointed out that the very task of collecting the duty from the highly dispersed and mostly tiny units in the garment sector would be a formidable one for the government, especially when the rest of the value chain remains exempted and therefore traceability will be a serious issue. The large number of small and tiny units in the sector will also find it impossible to follow the procedures involved. The result will be that evaders will prosper and compliant units will suffer. He added that the revenue for government from this decision will be negligible, whereas the problems that it would create for the industry will be huge. It is also crucial to note here that a lot of exporters are hoping to offset their slowdown in global markets by making an entry in the domestic sector. The efforts of these exporters would again hit a roadblock due to the imposition of the duty, Mehta felt.
The Union Government’s budget has evoked mixed responses from leaders and exporters in the textile industry in Coimbatore and Tirupur districts. Members of the Southern India Mills Association (SIMA) welcomed certain announcements in the budget that took note of their requirements and incorporated them in the budget.“The government’s allocation of Rs 1,480 crore for the Technology Upgradation Fund (TUF) Scheme is inadequate and additional funds are needed to meet pending subsidies since September 2014. The government should give Rs 3,000 crore for this financial year,” Senthil Kumar,the chairman of SIMA, said.
Senthilkumar welcomed the reduction of basic customs duty on Man-made Fibre (MMF) from 5 per cent to 2.5 per cent. The reduction in customs duty on MMF would marginally improve its competitiveness. The government could have avoided imposing a 2 per cent central excise duty without CENVAT credit (excise duty and service tax paid on raw material, fuel etc, for manufacturing of goods that is deducted from the excise duty payable on the goods manufactured) facility or 12.5 per cent central excise duty with CENVAT credit facility on branded ready-made garments and textiles priced above Rs 1,000. A Sakthivel, president Tirupur Exporters Association, said that the focus on infrastructure and initiatives to promoting ease of doing business will improve the economy as well as reduce the transaction cost. Sakthivel thanked Finance Minister Arun Jaitley for allocating Rs 3,350 crore to the textile industry. Sakthivel expressed his concern on excise duties on branded readymade garments and made- up textiles as according to him, it will adversely affect growth of the industry.
Even as trade bodies here welcomed several aspects of the 2016-17 Union budget, industrial bodies of the small and micro units are not much impressed as many of their long-pending demands have not been conceded. The president of the Tamil Nadu Association of Cottage and Micro Enterprises (TACT) J James regretted the absence of any mention of establishing a Public Sector Unit and an industrial estate for micro units in the Coimbatore region, which he said is a long-pending demand.
SOURCE: The New Indian Express
The Confederation of Indian Textile Industry (CITI) has welcomed the Union Budget, saying it focuses on employment opportunities and skill, which makes textile industry a significant contributor to job provider and supporting skill development jointly with NSDC. In a press release, it said the textile industry welcomes the new initiatives for job creation where the government will absorb 8.33 per cent of EPF amount for a period of 3 years for incremental workers who are on the rolls of company. CITI hailed that the present regime of optional Excise Duty, remains unchanged for Spinning, Weaving and Processing, and for accepting Industry recommendation to integrate Textile Value Chain on introduction of GST. However, levy of Excise Duty on branded garments seems inconsistent and premature when GST introduction is not too far away. It said that while the garment industry is poised to provide employment, the global markets are not performing well and exports are falling, which would obviously increase reliance on domestic market. This reintroduction of levy of Excise Duty on branded garments that is at the end of the Textile value chain could have been postponed till the integration with GST covering the full Textile Value Chain. Naishadh Parikh, Chairman, CITI said, “Reduction in Customs Duty from 5 per cent to 2.5 per cent on specified fibres and yarns is a welcome step and should succeed in reduction in the cost of such fibres and yarns for Spinners and Weavers.”
Basic customs duty on import of specified Fabrics to manufacture garments for export will now be allowed to import fabric at 1 per cent of the FOB Value of exports at zero rate of Customs Duty in the preceding financial year. "Trust, above imports are restricted to MMF fabrics where Indian fabric manufacturers are yet to catch up with their peers. As far as cotton fabrics are concerned, Indian manufacturers are at par. The concession is against the spirit of Advance License provision and we hope that it is temporary and will reduce in scope and period. The move to reduce Customs Duty on specified fibers and yarns would certainly improve India's competitiveness and need for such special import concession can be done away with,” Parikh added.
Welcoming the broad thrust of the Budget which realises the headwinds faced by Indian exporters in the global markets, EEPC India Chairman TS Bhasin today said emphasis on rail and road by increased investment along with better port connectivity should help the foreign trade in the long run. Ease of doing business for the SMEs as also in the procedures for Advance Licence and Duty Free Import Authorization Schemes retrospectively should help the engineering manufacturer exporters importing steel. Bhasin said changes in customs rates on certain inputs to reduce costs and improve competitiveness of industry in sectors like Information technology hardware, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair are positive for the exporters.
The EEPC India also welcomed the proposed changes in the Customs Act to provide for deferred payment of customs duties for importers and exporters with proven track record. Customs Single Window Project to be implemented at major ports and airports starting from beginning of next financial year. This should also help the foreign trade. However, Bhasin said while no big relief measures are found in the Budget for the distressed export sector and the Finance Minister is betting high on the domestic demand and consumption, the exporters need priorities of the government for the crucial need of foreign exchange for the country and the employment potential in a number of sectors like engineering. New cess would send the manufacturing cost soaring, he said, adding the Revenue department should work closely with the Commerce Ministry along with the Reserve Bank of India to unveil some specific packages for the exporters.
SOURCE: The Economic Times
The government will give more support to exporters in a move to boost falling overseas shipments. "The duty drawback scheme has been widened and deepened to include more products and countries. The government will continue to take measures to support the export sector," Finance Minister Arun Jaitley said in the Budget for 2016-17. India's exports in January fell 13.6% from a year earlier to $21.07 billion - declining for the 14th consecutive month. The minister proposed to amend the Customs Act to provide for deferred payment of customs duties for importers and exporters with proven track record and to increase the limitation period from one year to two year in cases not involving fraud, suppression of facts and willful mis-statement. The government also plans to extend the facility of direct port delivery to more importers. Last year, the government took a series of measures to boost exports including the Interest Equalization Scheme to provide cheaper credit to exporters for five years, expanding support to various products under the Merchandise Exports from India Scheme (MEIS) and a revision of the duty drawback rates for exporters.
SOURCE: The Economic Times
The Union Budget 2016-17 was expected to take the current indirect tax regime a step closer to the proposed Goods and Service Tax (GST). It was widely expected that the government would introduce key amendments in the current tax regime itself in consonance with Make in India and easy of doing business campaigns of the Modi Government that would lead to overall sectorial growth. Key expectations in indirect tax domain included proposals to encourage manufacture in India by broadening scope of input services to enable free flow of credits, proposals towards ease of doing business like moderation of the penal interest of 30%, clarifications on the scope of intermediary services, etc and measures to align the current tax regime closer to GST by pruning exemptions and rationalisation of tax rates. The indirect tax proposals contained in the budget seeks to garner additional revenue of R20,670-crore. The basic rate of service tax, excise duty and customs duty have not been changed, however, small steps have been taken by introduction of new cesses, selective increase in duty rates of specified goods to achieve the envisaged additional revenues.
First of all, effective June 1,2016, Krishi Kalyan Cess @0.5% has been sought to be levied as service tax on all or any taxable services for improvement of agriculture or any related purpose. Accordingly, effective rate of service tax has been increased to 15% from the present rate of 14.5%. Secondly, infra cess ranging from 1% to 4% has been sought to be imposed on specified motor vehicles as an anti-Pollution initiative. However, 13 cesses levied by various ministries involving low revenues are proposed to be abolished. In a move towards speedy ‘dispute resolution’, ‘ease of doing business in India’ and provide certainty in taxation, 11 new benches of the indirect tax tribunals across India have been proposed to be created along with a one-time proposal to resolve the cases pending before Commissioner (Appeals) under Dispute Resolution Scheme, 2016. To facilitate certainty on the classification of right to use of radio-frequency spectrum as a ‘service’ or ‘goods’, it has been clarified that assignments of such rights by Government and its subsequent transfer is a service and not sale of intangible goods. On the compliance front, the Finance Minister has sought to address few long pending demands of industry. Interest rates on delayed payment of duty/tax across all indirect taxes are being rationalized and made uniform at 15%, except in case of Service Tax collected but not deposited by the assessee.
SOURCE: The Financial Express
From ancient times, the number ‘nine’ has been associated with a mystic connotation worldwide. Arun Jaitley, it seems, was hoping for some divine intervention when he presented his third Union Budget for 2016-17. The Budget seems to be high on purpose and focusses on transforming India against nine distinct pillars. The pillar relating to a boost for growth and employment generation perhaps attracted the most welcome proposals. A reduced corporate tax regime of 25% has been proposed for manufacturing firms which are incorporated on or after March 1, 2016 and avail no deductions. For firms with a turnover of under Rs 5 crore for the year ended March 31, 2015, a marginal rate cut of 1% is also proposed. To promote start-ups generating employment that have been set up between April 2016 and March 2019, a 100% deduction of profits is proposed for three out of five years. However, all of this comes with the phasing out of various incentives — limiting accelerated depreciation to 40% from April 1, 2017, limiting R&D deduction to 150% from April 2017 and to 100% by April 2020, among others. To promote research and innovation, a special patent regime with a 10% tax rate in respect of royalty/income arising from patents developed and registered in India has been proposed. The investor community has also been rewarded with an announcement of reduction in the period of holding of shares in unlisted firms from three to two years to qualify as long-term.
In a welcome move, the POEM rules have been deferred by a year, while GAAR continues to be effective from April 1, 2017. A pass-through status accorded to securitisation trusts and trusts of asset reconstruction companies will give a boost to firms which play a vital role in resolution of mounting bad debts of the corporate sector. With a view to mobilise agriculture and the rural economy, the rich class has been asked to shell out additional taxes in the form of bearing an additional tax of 10% (imposed on individuals, HUFs and firms) on earning a dividend income in excess of Rs 10 lakh.
Some of the most laudable proposals concern reduction of litigation and providing certainty in taxation. A limited-period compliance window has been introduced for domestic taxpayers to declare undisclosed income and clear past tax aggressions by paying a tax of 45% of such undisclosed income. Reiterating this government’s commitment to provide a stable and predictable taxation regime, the FM proposed a one-time dispute resolution scheme for existing indirect transfer cases, wherein taxpayers can choose to pay tax liability without interest and penalty, if they withdraw the existing appeal/arbitration.
SOURCE: The Financial Express
Thailand’s Indorama Ventures Public Co. Ltd. (IVL) and India’s Dhunseri Petrochem Ltd. (Dhunseri) have agreed to enter into an equal joint venture to manufacture and sell polyester (PET) resins for Indian domestic markets and for exports. Dhunseri will purchase a 50-percent stake in the 216,000 tonne Micro Polypet Pvt. Ltd. (MicroPet), a company owned by Indorama Ventures in the North Indian State, Haryana. IVL in turn will acquire a 50-percent stake in a carved out entity, called Haldia, of Dhunseri, with an effective capacity of 480,000 tonnes PET manufacturing located in the eastern state of West Bengal. The JV is subject to regulatory approvals and expected to complete in H2 2016.
PET usage per head is just 0.6 KG per annum in India compared to 2.6 KG per annum in China and 10.9 KG per annum in the United States. This joint venture is a win-win for both producers with 700,000 tonne/annum of combined capacity in the strongest growth market having a population in excess of a billion people, as well as having favorable trade agreements with logistically advantaged countries in the region. The joint venture will gain significant synergy benefits being the sole producer of PET Resin in North and East India and with both sites being effectively integrated with third party PTA suppliers, which will bring savings in SG&A and procurement. IVL’s global market reach and high utilization rates are expected to supplement Haldia’s location benefit at Eastern India’s largest port while MicroPet enjoys a strong location advantage in the high-demand territory of North India.
Aloke Lohia, group CEO and founder of IVL, said, “This joint venture will allow us to gain the highest benefits by covering a larger geographical area of the fast-growing India market with a complementary and experienced partner. India has a well-educated and booming middle class that will embrace the modern, hygienic lifestyle offered by PET packaging.” C. K. Dhanuka, chairman of Dhunseri, said, “Dhunseri believes that coming years will bring opportunities for expansion in the Petrochem sector and this joint venture will bring scale benefits to all stakeholders. The Indian JV between both the organizations will benefit from IVL’s global presence and technological leadership.”
SOURCE: The Textile World
The Indian government's ambitious programme of regulatory reform aimed at making it easier to do business, represents a great deal of effort to create a more business-friendly environment, particularly in Delhi and Mumbai, the World Bank Group said in a flagship report titled Doing Business 2016 - Measuring Regulatory Quality and Efficiency. The programme was launched in 2014.
One important focus is to make starting a business easier. In May 2015 the government adopted amendments to the Companies Act that eliminated the minimum capital requirement. Now Indian entrepreneurs no longer need to deposit Rs 100,000 - equivalent to 111 per cent of income per capita - in order to start a local limited liability company. The amendments also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary step and five days. Several other initiatives to simplify the start-up process were still ongoing on June 1, 2015, the cutoff date for this year's data collection. These include developing a single application form for new firms and introducing online registration for tax identification numbers, the report said.
Another focus is to make the process for getting a new electricity connection simpler and faster. Toward that end the utility in Delhi eliminated an internal wiring inspection by the Electrical Inspectorate - and now instead of two inspections for the same purpose, there is only one. The utility also combined the external connection works and the final switching on of electricity in one procedure. The utility in Mumbai reduced the procedures and time for connecting to electricity by improving internal work processes and coordination. It combined several steps into one procedure - the inspection and installation of the meter, the external connection works and the final connection. Now companies can get connected to the grid, and get on with their business, 14 days sooner than before.
Improvements have also been initiated in other areas measured by Doing Business. To make dealing with construction permits easier, for example, a single-window system for processing building permit applications is being started in Mumbai - with the promise of greatly reducing the associated bureaucratic burden once fully implemented. And online systems for filing and paying taxes are being further improved to simplify tax compliance. According to the report, fostering an environment more supportive of private sector activity will take time. But if the efforts are sustained over the next several years, they could lead to substantial benefits for Indian entrepreneurs along with potential gains in economic growth and job creation.
Growth in the eight core sectors jumped to a three-month high of 2.9% in January due to sharp pick-up in coal, cement and electricity generation. The eight core industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - comprising nearly 38% of India's total industrial production had grown at 2.3% in January last year. In October 2015, the sectors had witnessed a growth of 3.2%. Coal, cement and electricity generation grew by 9.1%, 9% and 6%, respectively, during the month under review from 0.9%, 0.2% and 3.3% in January 2015. Refinery production too grew by 4.8% from 4.7% last year. However crude oil, natural gas and steel recorded dipped last month, according to the data released by the Ministry of Commerce and Industry on Monday. The cumulative growth of core sectors in April-January period of 2015-16 came in at 2%, lower than 5.3% in the 10 months of the previous financial year. Further in January this year, growth of fertiliser production declined by 6.2% in the month under review from 7.1% in the same month last year.
SOURCE: The DNA
Although Vietnam was ranked among the top ten in apparel exports to the European Union in 2015, it was outperformed by one of its neighboring countries. The Vietnam Textile & Apparel Association (VITAS) reported in its statistics on Tuesday last week that Vietnam was in sixth place in apparel export market share, but was ranked below Cambodia, raising surprise among experts. In the EU region, China led the board with 36.9 percent, followed by Bangladesh, Turkey, India, Cambodia, and Vietnam, with 16.89, 11.62, 6.33, 3.64, and 3.45 percent respectively, according to the statistics.
Despite a 5.01 percent increase in export turnover and a 3.21 percent rise in total goods exported in comparison with 2014, Vietnam’s shipments only occupied 3.45 percent of the textile market share in the EU last year, according to the statistics. While the average unit price of Cambodian garments and textiles was lower than that of 2014, Cambodia’s market share was 3.64 percent in the EU, 0.19 percent higher than Vietnam’s. In 2015, the EU imported US$3.11 billion worth of apparel from Vietnam, and products from Cambodia accounted for $3.27 billion. In Jan-Feb this year, Vietnam’s total garment and textile export turnover topped $3.6 billion, 12.4 percent higher than the same period in 2015. Despite this, most Vietnamese exporters said their unit price tended to level off while some even had to lower their rate by 0.5 to one percent.
SOURCE: The Tuoitrenews
The International Apparel Sourcing Show (Apparelsourcing) to be held in Toronto, as it is Canada’s hub for fashion as well as its largest city with a population of more than 6 million (GTA). It is the fifth largest city in North America as well. This show will allow Canada to have a better trade platform for the apparel industry and find more and better ways to source their products. The expo will be working with CCCT, or China Chamber of Commerce for Import and Export of Textile and Apparel. Canada’s retailers will be able to connect with major manufacturers of apparel and textile around the world, without leaving the country. Many countries will be represented, including, of course, China, as well as Bangladesh, Mexico, the United States, India, Vietnam, Taiwan, Indonesia, Mauritius, Guatemala, Colombia, Jordan, Honduras, Myanmar, Burma, and Peru. This expo will not only feature international textile producers, but also offer a series of seminars on trade and textiles, from the Trans-Pacific Partnership to how to choose the best overseas producers to work with.
CCCT is interested in this event in the interests of promoting a global trade of apparel and textiles. It is the largest Chamber of Commerce in the industry, with more than 12,000 companies belonging to it. CCCT represents more than 70% of the exports of garments and textiles each year. They sponsor all sorts of global apparel and textile shows in many different countries. J.P. Communications, Inc. is in charge of a network of B2B, or business to business, sourcing platforms, the most expansive in the United States. They help the members of their networks find manufacturers and wholesalers worldwide. Canada is getting its first trade show for apparel and textile sourcing this year which will run from August 22nd to August 24th, at the International Centre in Toronto.
Twelve Tunisian companies operating in the textile and clothing sector took part in the exhibition “Collection Premiere Moscow 2016” held from February 23 to 26. Supervised by CEPEX, these companies represent the sectors of jeans and ready-to-wear and display their products in a national stand with an area of 117 m2. A preset B2B contact program was organized for the members of the Tunisian delegation with renowned Russian import and distribution companies. The participation in CPM Moscow 2016 was the opportunity to meet Russian textile and clothing clients and to better understand and grasp the specifics of this market. It also allowed exploring new opportunities for export and partnerships Tunisia‘s ambassador in Moscow took the opportunity to visit Tunisia ’s pavilion and meet with the representatives of Tunisian exhibiting companies. CPM MOSCOW 2016 truly a noteworthy Trade Show, Fair and Exhibition which will cover the topics of apparel, clothing, fashion, textile industry, Women’s wear, men’s wear, men’s clothing, knitwear and leather and a lot more. It is likely to attract 16,000 guests. 25th Collection Premiere Moscow 2016 is organized biannual. The Russian market has great potential; it is dominated by increasing imports with an average growth rate of 7 to 9% in recent years.
SOURCE: The African Manager
Swedish multinational retail-clothing major H&M's global production head Helena Helmersson has welcomed the cooperation set between the company and the Indonesian government to boost the clothing industry in the country. "We see an opportunity Indonesia to lead in the clothing industry," Helmersson said at the Presidential Office in Jakarta last week, the Indonesian media has reported. Earlier, Trade Minister Thomas Tri Kasih Lembong announced H&M would intensify cooperation in Indonesia. "The cooperation is related to the Negative Investment List revision," Lembong said.
According to Lembong, the expansion of the H&M production capacity was not only to meet demands from Indonesian market, but also from other countries. H&M would also open new stores in Indonesia. Lembong added that the annual value of H&M supplies to Indonesia had reached up to $400 million. "Ninety eight percent of the products were exported," Lembong revealed. The expansion of the production capacity was one of commitments to be realized by the government and the Sweden-based clothing producer. Lembong said that the government would also team up with the company in terms of clothing designs.
Swedish Ambassador to Indonesia Johanna Brismar Skoog said that H&M had been one of companies that absorbed significant numbers of workers. Skoog said that Swedish companies, such as IKEA, had managed to absorb about 20,000 Indonesian workers, one newspaper report said.
IMF Managing Director Christine Lagarde has called for bold, broad and accelerated policy actions to boost global economic recovery in the face of strong headwinds. In a statement at the conclusion of the Group of 20 (G20) Finance Ministers and Central Bank Governors Meeting in Shanghai, Lagarde said, “This G20 met at a moment when uncertainty and increasing downside pressures could put at risk the global economic recovery. In response, G20 members expressed a strong sense of urgency to implement the policy actions needed to contain risks and strengthen growth.” She said the IMF recognised the many challenges facing the global economy at present: volatile markets and capital flows; economic transition and tightening financial conditions in many countries; the large drop in commodity prices, including oil; and escalated geopolitical tensions, including the large number of refugees in some regions.
Lagarde welcomed the G20's agreement to do more to achieve a common objectives for global growth. That means using all available policy tools that includes a broad-based response at the national level as a first step. In advanced economies, this requires a mix of mutually reinforcing demand and supply policies, including continued accommodative monetary policy and supportive fiscal policies--making the best possible use of fiscal space (for example, through infrastructure spending). In emerging economies, it requires reducing vulnerabilities and rebuilding resilience--strengthening fiscal buffers and diversifying growth models in commodity-exporting countries, for example, she said. The second step that is need, are bold multilateral actions. This requires following through on past G20 commitments and, in particular, renewed momentum this year to deliver on the goal of achieving 2 per cent additional growth by 2018. She said reinvigorated structural reforms are a critical element of the necessary policy package, and she welcomed the G20's commitment to enhance this agenda by formulating a set of principles to guide prioritization. The IMF is pleased to support this effort, Lagarde said.
“The G20 also emphasized the importance of an adequate and effective global financial safety net. The IMF has been tasked with analyzing this issue further and we will report back at the next G20 meeting in April. “In summary, at this meeting, the G20 recognized that while the global recovery continues, it remains too weak and uneven - and falls short of our collective ambition for strong, sustainable and balanced growth. To confront this challenge, we need action now,” the IMF chief said.
The Ready Made Garments (RMG) sector,the biggest earner of foreign currency for Bangladesh after the agricultural sector, may face an uncertainty in its exports to the US as a result of the signing of a bill opposing import of goods produced by forced labour by US President Barack Obama. Although there was no official remark on whether Bangladeshi goods would be affected by the restrictions, the US government lists garment products from Bangladesh among goods that are produced by child or forced labour. According to the new law, shipments derived from slavery will be kept out of the country that closes a legal loophole that allowed import of such goods if US demand exceeded domestic production. When contacted, Senior Commerce Secretary Hedayetullah Al Mamoon that there was no scope to include Bangladesh in the provision of forced labour or workers’ abuse, as “forced labour is completely banned by the constitution and there is no such abuse of women in the country.” However, he added that an official statement would be made after a US statement reaches the Bangladeshi government and discussions are held with authorities concerned following a review.
Meanwhile, BGMEA President Siddiqur Rahman said that there was no slavery, child labour, forced labour or abuse of RMG women workers in Bangladesh.He claimed that such allegations of forced labour were totally absent in other industrial sectors too. He added that Bangladesh is an International Labour Organisation-ratified country and follows the labour act and the ILO standards to ensure workers’ rights. Mustafizur Rahman, executive director of Centre for Policy Dialogue, also said that allegations of abuse on female workers in the RMG sector did not reflect the reality and were unjustified. Even in the 16 conditions outlined by the US government after the suspension of GSP, the Obama administration did not mention this issue of forced labour, he added. Sirajul Islam Rony, president of pro-government Bangladesh National Garment Workers-Employees League, said that any allegation about abusing women in the RMG sector was insulting for the tens of thousands of workers as they were aware of their own rights through trade unions.
After the 2013 Rana Plaza incident, the level of compliance, safety, and workers’ rights had reached such great heights that there could be no abuse of women workers in the country, Rony claimed. According to a 2014 assessment by the United States Department of Labour, the other goods produced by child or forced labour in Bangladesh are bidis, bricks, dried fish, footwear, steel furniture, glass, leather, jute textiles, matches, poultry, salt, shrimp, soap and textiles.
The China International Trade Fair for Technical Textiles and Nonwovens Cinte Techtextil China, Asia’s leading biennial trade fair for technical textile and nonwoven products, is keen on inviting the fresh participant for its new session this year. One of these new exhibitors is Johns Manville from the US, a manufacturer of insulation, roofing materials and engineered products. After exhibiting at Techtextil in Frankfurt, the company will join Cinte Techtextil for the first time. Ms Anke Weidinger, Marketing Communication said that the Chinese market showed the biggest growth potential in the last couple of years and it will remain, although slowing down a bit right now, that way in future .Johns Manville sees big opportunities for its specialty polyester spunbond and glass fibre nonwoven product range in China. The company will exhibit a broad variety of nonwovens, including chemically, mechanically and thermally bonded PET spunbond nonwovens, glass fibre wet laid mats, and glass micro fibre air filtration media. The products are suitable for a wide range of applications including luxury vinyl tiles, ceiling tiles, wall coverings, roofing, geotextiles, battery, air and liquid filtration, and windmill blades.
Also participating for the first time from America is “Coats”, a world-leading industrial thread and consumer textile crafts business with a presence in more than 70 countries. More than 450 million pairs of shoes made every year using Coats’ thread and more than 100 million car airbags are made every year and over 1 billion teabags are brewed every week using Coats’ thread. “Coats” sees much potential in the Chinese market for their products. In its Shenzhen factory alone, the company already produces six million metres of thread every day, offers 900 combinations of fibre type and makes over 230,000 SKUs. The firm has also invested resources into developing its local sales and technical support capacity to ensure it is able to service the wider Asian market. The Coats-branded products that will feature at the fair include wire and cable / fibre optics, flame retardant protective wear, automotive items including airbags, seatbelts and trims, teabag threads, feminine hygiene products, tyre cord and conductive threads.
While some exhibitors will experience Cinte Techtextil China for the first time, others are relative veterans, including Austrian company Andritz, which has exhibited at the fair for the last decade. The company’s key competencies include needlepunch, spunlace, wetlaid, spunbond, spunjet and finishing technologies, and it has its own production site in Wuxi, China. This site features assembly facilities, a service centre with roll repair workshop and a technical centre with a complete needlepunch pilot line, which makes Andritz an all-round partner for the nonwovens industry in Asia.
Also returning to the fair is Dutch firm Stahl under its Chinese branch Stahl Coatings and Fine Chemicals (Suzhou). The company is a leader in process chemicals for leather products and performance coatings, and will mainly promote its new anti-fungi LV77293 and top coatings for tarpaulins at the fair. Exhibitors are categorised in 12 product application areas which include technology and machinery, woven and knitted fabrics, nonwovens, coated textiles, composites, surface and bonding techniques, fibres and yarns, and more. Cinte Techtextil China will feature a diverse range of sourcing options from around the world when it takes place from 12-14 October at the Shanghai New International Expo Centre, in Shanghai. The fair will welcome companies from Austria, Belgium, China, France, Germany, Hong Kong, India, Indonesia, Italy, Korea, the Netherlands, New Zealand, Singapore, Switzerland, UK and the US.
China, which has the world's second-largest economy, entered the list of the top ten trade partners of Azerbaijan. The country’s investment in the economy of Azerbaijan has reached $300 million since 2002, said Yu Chunchi, Chinese Ambassador Adviser in Azerbaijan. Azerbaijan and China opened a new page in their relations after President Ilham Aliyev visited China in December 2015. During the visit, several meetings, negotiations were held and 10 documents were signed. Cooperation issues almost in all spheres were discussed. The two countries voiced intention to protect mutual interests and deepen fruitful cooperation, providing stable and safe conditions for the successful and sustainable development. Chunchi believes that energy industry, particularly alternative energy sources, as well as tourism and agriculture are the main areas of cooperation between China and Azerbaijan. At the same time, China supports all efforts of Azerbaijan on the development of the non-oil sector, said the diplomat. Chunchi further noted the reasonability of the agricultural sector development, adding that Azerbaijan and China have the potential for development of cooperation in such areas as cotton growing and livestock.
Cooperation with China is of significant importance in terms of development of seed farming, cotton processing and seed cleaning in Azerbaijan. China, some 300 million people of which are involved in cotton production in the country's 24 provinces, attaches great importance to Azerbaijan's climate and soil capabilities for seed farming and cotton breeding. Touching upon the New Silk Road, Chunchi said it creates additional opportunities for cooperation between the two countries. As for the Trans-Caspian transport corridor, China welcomes such transportation of goods across Azerbaijan. Trans Caspian route shortens the time and distance between China and Europe. When the route will be connected with the Baku-Tbilisi-Kars railway, a cargo train launched from China will be able to reach Europe in less than 14 days which will be the most competitive route in terms of transport time.
Relations between Azerbaijan and China have a long history. Because of its advantageous geographical situation, Azerbaijan was a natural crossing point on the way from East to West and North to South and was one of the main trade, transport and cultural centers on the Great Silk Road. China is a huge opportunity and a priority market for Azerbaijan. More than 50 agreements were signed between the two countries so far. The Azerbaijani State Customs Committee reports that the trade turnover with China reached $565.1 million last year, while its unit weight in the total trade turnover of Azerbaijan amounted to 2.74 percent. In late 2015, China ranked ninth in the list of the largest trade partners of Azerbaijan.
Turkish President Recep Tayyip Erdogan's official visit to Lima —last February— contributed to a very positive approach between both countries. Turkey and Peru to bring the trade balance to US$1.00 billion over the next five-year period for which both countries are expected to reach a Free Trade Agreement (FTA) by June 2016. Both governments intend to boost new businesses, said Turkish Ambassador to Peru Ferda Akkerman. According to Akkerman, the FTA could be signed in June, since Peru and Turkey conduct highest-level negotiations. Both dignitaries jointly committed to fulfilling this objective.
Currently, they are coming closer to the fifth negotiation round taking place on March 14th-17th. There is political willingness to move the FTA forward [...]; they must work on specific topics to protect both nations’ companies, he added. Within the framework of the President's visit, 80 Turkish entrepreneurs came and established the first contacts expected to remain in the future. Likewise, the diplomat said that countries rely on great potential to set a strategic partnership in the medium-term. In March, a Turkish business delegation is expected to arrive in Lima with the aim of establishing contacts with Peruvian counterparts, while a Peruvian delegation will travel to Turkey soon. The move is comprised in the negotiation process on textile, agriculture, metal and construction sectors. Finally, the Ambassador stated Peruvian economy remains on an upward trend and relies on a great to-be-exploited potential. Peru is also an active member of the Organization for Economic Co-operation and Development (OECD) and the G20. Likewise, Turkey is the world’s 17th and Europe’s 7th largest economy.
China’s central bank stepped up efforts to cushion its economic slowdown amid plunging stock prices and a weakening currency, cutting the amount of cash the nation’s lenders must lock away. The required reserve ratio will drop by 0.5 percentage points effective March 1, the People’s Bank of China said on its website Monday. That will take the level to 17 percent for the biggest banks, still one of the highest such ratios in the world. The move marks a return to more traditional easing after the central bank indicated in recent weeks it would spur growth by guiding interbank markets lower and injecting liquidity through open-market operations. Governor Zhou Xiaochuan highlighted scope for further action ahead of a Group of 20 meeting in Shanghai last week, saying China had “multiple policy instruments” to address growth risks. Finance Minister Lou Jiwei said at the event that China will expand its fiscal deficit to support structural reforms to the economy, which slowed to a 6.9 percent growth pace last year, the weakest since 1990. “Officials are making good on their promise at the G-20 to pull all policy levers to stabilize growth,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. The reduction “suggests that officials believe that they have succeeded in reining in capital outflows, after deferring explicit monetary easing in January over worries this could accelerate outflows.” The action will inject about 685 billion yuan ($105 billion) into the financial system, Bloomberg Intelligence estimated. The PBOC has been trying to restore stability to the nation’s currency after outflows hit a record pace in recent months. Reductions to the required reserve ratio — which will allow banks to lend more — help compensate for the departure of money.
Offshore interest-rate swaps based on China’s seven-day repurchase rate dropped late Monday across all tenors. “Blue-chip stocks may get a boost tomorrow due to their high correlation to the economy,” said Chen Jiahe, strategist at Cinda Securities Ltd. The Shanghai Composite Index has declined 24 percent this year, the worst performer among 93 global equity indexes. The central bank said it lowered the reserve ratio to guide stable and appropriate growth in credit and create appropriate monetary and financial conditions for supply-side structural reform, according to a statement on its website.
China’s central bank has preferred a newer monetary approach in recent months. “The PBOC had signaled that it was moving away from blunt instruments like the RRR, and toward more subtle tools to manage liquidity and interbank rates,” Bloomberg Intelligence analysts Tom Orlik and Fielding Chen wrote in a note. “That adds to the surprise factor in the return of the RRR.”
The RRR cut adds to the supply of money in the economy, rather than cutting borrowing costs directly as an interest-rate reduction would. As such, it may not lead to capital outflows in the same way a rate cut could. The timing suggests the move is an effort to stabilize the stock market before officials gather for the annual session of the nation’s legislature on March 5, according to Li Liuyang, Shanghai-based chief financial market analyst at Bank of Tokyo-Mitsubishi UFJ. “The PBOC didn’t cut RRR earlier because it wanted to avoid sending too strong a signal to the market that could further weaken the yuan,” Li said. “Now that the exchange rate is largely stable, policy makers may want to put the emphasis on boosting investment.”
The National People’s Congress is scheduled to meet over the course of nearly two weeks to discuss policies for 2016 and China’s next five-year plan. Premier Li Keqiang will start the proceedings by outlining his work report, which looks back at the past year and outlines plans on everything from economic growth to health and education policies.
Fiscal policy support will likely be reflected in increased investment and social spending, tax cuts and reforms, and increased quasi-fiscal spending on infrastructure, strategic industries, and social welfare, UBS Group AG economists led by Wang Tao wrote in a recent note. Infrastructure projects such as railways, subways, pipelines, water projects, environmental and new-energy projects will continue to be boosted, they wrote. That’s where central government fiscal support comes in, to help provincial authorities relocate laid-off workers. That in turn may mean more debt. Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong, said the central bank needs to walk a fine line.“Today’s move shows that, while they shy away from cutting benchmark interest rates, they are willing to use the relatively high-profile instrument of a RRR cut,” Kuijs said. “It remains to be seen what the effect on the FX market is. However, this move suggests that, in the end, supporting growth takes priority over other considerations.”
SOURCE: The Market Pulse
Bangladeshi Prime Minister Sheikh Hasina Sunday inaugurated the development activities of 10 more economic zones in the country through a video conference from a function in Dhaka's Bangabandhu International Conference Centre (BICC) on Sunday, the Bangladesh media has reported. They are Mirersarai Economic Zone, Sabrang Tourism Park, Srihatta Economic Zone, Mongla Economic Zone, AK Khan Economic Zone, Abdul Monem Economic Zone, Meghna Economic Zone, Meghna Industrial Economic Zone, Bay Economic Zone and Amra Economic Zone. She also sought cooperation of the local people to set up the zones fast for building a prosperous Bangladesh and said her government plans to set up 100 economic zones across the country. "I would like to urge local people to extend cooperation so that the investors could build the [economic] zones in a faster pace and 'beautiful atmosphere', and that would help establish a hunger and poverty-free prosperous Bangladesh," she said.
With the economic zones, the PM said, the living standard of the people would improve as those will generate employment, alleviate poverty and infuse dynamism into the economy. "We don't want to do business, rather we want to create scope for the businesspeople as we want [rapid] development of the country," the PM said. She also called upon local and foreign entrepreneurs to come forward to invest in the country's economic zones. Hasina assured investors of all kinds of support for setting up more such zones here so that Bangladesh becomes a higher middle income country by 2021. The PM urged all concerned to keep environmental issues in mind while setting up mills and factories in the economic zones. "You will have to remain alert so that industry wastes are not dumped in the river or farmlands ... you will have to set up ETP or STP, wherever they are necessary," she said.
Foreign Direct Investment (FDI) is good for the economy of the US. That's what new report that details the employment impact of FDI in the US, says. The report, prepared by the International Trade Administration's Office of Trade and Economic Analysis, was released by US Under Secretary of Commerce for International Trade Stefan M. Selig. It attributes 12 million jobs – 8.5 per cent of the total American labour force – to FDI. "This landmark study is the first of its kind to estimate the larger impact that attracting foreign investment into the United States has on our economy," said Under Secretary Selig. "This report reinforces the critical role that attracting foreign direct investment into the US plays in the lives of US workers, and supports President Obama's commitment to expand FDI through the Select USA initiative."
The report builds on official Bureau of Economic Analysis data, which states that 6.1 million people were directly employed by foreign-owned firms in 2013, the latest year this data is available. It uses the United States Applied General Equilibrium (USAGE) model to estimate the total number of jobs – including jobs in foreign firms' supply and distribution chains, jobs stimulated by increased incomes and jobs generated by the economic benefits of technology spillovers. These indirect jobs total an additional 5.9 million jobs attributable to FDI.
The report examines two channels through which indirect jobs are attributable to FDI. First, the report finds that 2.4 million indirect jobs are attributable to the economic activity generated by FDI in the US. These include jobs in supply and distribution chains related to foreign-owned enterprises and jobs stimulated by increased incomes. Second, the report estimates the number of jobs attributable to productivity growth associated with FDI. These jobs include opportunities spurred on by the economic benefits of technology spillovers. Technology spillover occurs, for example, when a US firm hires an executive from a foreign company and the executive implements new processes from a previous employer that improves productivity. Productivity growth from technology spillovers in the manufacturing sector alone accounts for 3.5 million US jobs. "FDI continues to be a key economic driver for the US. This report reinforces the significance of FDI in US economy and highlights that for every direct job attributable to FDI an additional job is indirectly attributable," Selig said.