The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 24 DECEMBER, 2021

NATIONAL

INTERNATIONAL

Shri Piyush Goyal held talks with Australian Trade Minister to expedite the bilateral Comprehensive Economic Cooperation Agreement (CECA) negotiations

Union Minister for Commerce and Industry, Food and Consumer Affairs and Textiles, Shri Piyush Goyal and Mr. Dan Tehan MP, Minister for Trade, Tourism and Investment, Australia held talks this week to expedite the bilateral Comprehensive Economic Cooperation Agreement (CECA) negotiations. During the video conference on 21 December 2021, the Ministers appreciated the progress made in various rounds of talks between the chief negotiators of both sides and discussed the way forward for an early conclusion of interim agreement. In this regard, both the Ministers appreciated that bilateral trade talks have been very progressive and both the ministers have decided to deepen the engagement and directed the officials to speed up the negotiations to pave the way for a comprehensive agreement. The Ministers agreed they look forward to a balanced trade agreement that benefits both the economies and their people, and that reflects their shared commitment to a rulesbased international trading system.

Source: PIB

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Ministry proposes fixed timeline for NCLT, extended look-back period in IBC

The government has sought public comments on the proposal by January 13 In a move to plug gaps in the Insolvency and Bankruptcy Code (IBC), the ministry of corporate affairs (MCA) has proposed robust norms against avoidance transactions, wrongful trading, and inordinate delays via changes to look-back period and fixed timelines for the tribunals to reject or approve plans, among other measures. The MCA has proposed that the IBC should provide the adjudicating authority with 30 days for approving or rejecting a resolution plan under Section 31. If a decision is not made on the resolution plan within that period, the adjudicating authority will record reasons in writing for the same, the ministry has proposed. The government has sought public comments on the proposal by January 13. The Centre is of the view that delays erode the value of the corporate debtor and disincentivise potential resolution applicants from participating in the process. “Such delays go against the objective of the Code to provide value-maximising outcomes for stakeholders,” the MCA said. The two-year look-back period -- which starts from the date of the admission of the insolvency application -- is suggested to be extended to the date when the corporate insolvency resolution application is filed. Experts said this move would help ensure that no one takes advantage of the timelines prescribed in the IBC. “The resolution professional’s rights were curtailed in approaching the NCLT, despite clear evidence of wrongdoing and manipulation because the look-back period was shorter. The government must have realised this needed to be fixed,” said Manoj Kumar, partner, Corporate Professionals. The look-back period refers to the time that a resolution professional, following the NCLT’s permission, can investigate for any fraudulent transaction or wrongdoing. The MCA has also proposed that a voluntary liquidation need not require the nod of adjudicating authority. Instead, this could be done by a special resolution or members’ resolution, and approval of creditors representing two-thirds in value of the debt. “The liquidator may be required to make a public announcement of the closure of the process, and intimate concerned authorities, such as the Insolvency and Bankruptcy Board of India (IBBI) and the registrar.” “While voluntary liquidation matters could be closed in one or two hearings, they are not a priority of the tribunals. It could take from several months to a couple of years for a voluntary liquidation to be approved,” said Anshul Jain, partner, PwC India. As for avoidance transactions, the ministry has suggested that an explanation may be added to the Code to clarify that proceedings for avoidance of transactions and wrongful trading can continue even after the approval of a resolution plan. “Various aspects of the process need to be closed within a fixed timeline to prevent corporate debtors or perpetrators from exploiting the purpose of the IBC regulations. The learning from the cases gone into the IBC is that there is a need for financial institutions to improve funding mechanisms for companies not showing obvious signs of distress,” said Srinivasa Rao, partner & leader – Risk Advisory Services, Nangia Andersen. In another step that can pave the way for automatic admissions, the ministry has said that financial creditors may be required to submit only information utility (IU)-authenticated records to establish default for the purpose of admission of a Section 7 CIRP (corporate insolvency resolution process) application by financial creditors. The idea is to make the admission process quicker as the NCLT will only be required to consider IU-authenticated records as evidence of default for Section 7 applications. The corporate affairs ministry has also proposed changes to the IBC fund, so that it can support part of the expenses of resource-strapped insolvency proceedings, such as payment towards workmen’s dues or for carrying forward avoidance proceedings. A detailed framework for contribution to and utilisation of the IBC fund will be prescribed by the government, since the present structure, it is felt, provides limited ways of utilising the amount contributed. “The fund could also be used to provide interim finance as often operations during CIRP suffer due to lack of reasonably priced interim finance,” said Bikash Jhawar, partner, Saraf & Partners.

Source: Business Standard

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Trade Talk: Interim trade deal soon ahead of India-Australia FTA

 “The ministers look forward to a balanced trade agreement that encourages benefit to both the economies and their people, and that reflects their shared commitment to a rules-based international trading system,” the ministry said. India and Australia have decided to expedite the pace of negotiations to clinch an interim trade deal, which will be followed up with a broader free trade agreement (FTA). Commerce and industry minister Piyush Goyal and Australian minister for trade, tourism and investment Dan Tehan held a virtual meeting on Tuesday and reviewed the progress made in various rounds of talks between the chief negotiators of both the sides. Earlier this year, both the countries had aimed at clinching an FTA, formally called bilateral Comprehensive Economic Cooperation Agreement, by December 2022. However, an early-harvest deal was to be clinched by this Christmas. The FTA will cover goods, services, investments, government procurement, logistics, standards and rules of origin, among others. While bilateral goods trade stood at $12.3 billion in FY21, India had a deficit of $4.2 billion with Australia, as it shipped out merchandise worth just over $4 billion. Major traded items include mineral fuels, pharmaceutical products, organic chemicals and gems & jewellery. “The ministers appreciated the progress made in various rounds of talks between the chief negotiators of both the sides and discussed the way forward for an early conclusion of interim agreement,” the commerce ministry said in a statement. Both Goyal and Tehan decided to “deepen the engagement and directed the officials to speed up the negotiations to pave the way for a comprehensive agreement”. “The ministers look forward to a balanced trade agreement that encourages benefit to both the economies and their people, and that reflects their shared commitment to a rules-based international trading system,” the ministry said. Although talks for an FTA with Australia have been going on since 2011, the reluctance of Indian industry to offer greater access in farm and dairy products and Australia’s unwillingness to further open up its services sector for the free movement of skilled Indian professionals have delayed the outcome of the negotiations. However, in the past two years, the talks have gained momentum. The negotiations with Australia are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019. Earlier this month, India and its third-largest export market, the UAE, held the last round of formal negotiations for a “mutually-beneficial” comprehensive economic partnership agreement (CEPA). New Delhi and Abu Dhabi aim to sign the deal by March 2022 after the completion of necessary ratification processes. If all goes as planned, it would be the first FTA to be signed by India in just over a decade. Balanced FTAs are expected to also enable the country to achieve sustained growth rates in exports in the coming years. Already, India has set an ambitious merchandise export target of $400 billion for FY22, against $291 billion in FY21.

Source: Financial Express

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GoM on GST rate likely to submit report by February: Bommai

The Group of Ministers (GoM) on GST rate rationalisation is likely to submit its final report by February, Karnataka chief minister Basavaraj Bommai, who heads it, said on Thursday The Group of Ministers (GoM) on GST rate rationalisation is likely to submit its final report by February, Karnataka chief minister Basavaraj Bommai, who heads it, said on Thursday. The chief minister said this while replying to a debate on the supplementary estimates worth ₹3,577 crore that was passed in the Karnataka legislative assembly on Thursday. “I have held two meetings of the GoM so far, there are opposition states also, and I’m happy to say that I’ve been able to take everybody along -- CPI, Congress, BJP and others. We’ve been successful in bringing everybody on the same platform, as everybody works for public interest,” Bommai said. He also said that he expects the revenues to go up after the rates are rationalised. At present, there are four slabs -- 5, 12, 18 and 28 -- under the GST. Noting that he is in the middle of multiple challenges, Bommai, who also holds finance portfolio, said, “There’s the post-Covid recovery that we need to focus on, then there’s the threat of a new wave, the GST compensation regime is ending and our expenditure is rising. I’m in the middle of all this.” He said the state has achieved 67 per cent of the target own-tax revenue collection by the end of November. “The achievement is 71 per cent in commercial taxes, 68 per cent in excise, 66 per cent in stamps and registration and 54 per cent in motor vehicles tax.” “Even during Covid-19, we haven’t fallen behind revenue collection.” “There are goods that have a higher tax potential. For example, on arecanut, we got ₹8 crore excess GST in just one week. Similarly, there are products that have been neglected and we are concentrating on them,” he added.

Source: Hindustan Times

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Govt working to bring changes in GST Act, public platforms to support business: Jayant Sinha

"Public platforms such as UPI and Aadhaar are very important platforms. Even then, for us to leapfrog, we have to do more in terms of public platforms," Sinha said while speaking at the Assocham e-summit on 'Non-Banking Finance Companies & Infrastructure Financing: Transforming the Financial Lending Landscape'. The government is working to bring changes in the GST Act and other public platforms so that companies can utilise data to grow big in size and scale, Jayant Sinha, Chairperson, Parliament Standing Committee on Finance, said on Thursday. "Public platforms such as UPI and Aadhaar are very important platforms. Even then, for us to leapfrog, we have to do more in terms of public platforms," Sinha said while speaking at the Assocham esummit on 'Non-Banking Finance Companies & Infrastructure Financing: Transforming the Financial Lending Landscape. When the Factoring Bill came to the Standing Committee on Finance, the government was opening up factoring to more non-banking financial companies and enabling more NBFCs to participate in that. "But even as we were doing that we were not addressing some important platform and data related issues. That is why we suggested that anything that is on GST as an invoice should automatically be gone to TReDS as well. Then it can be used on TReDS to finance receivables and so on. "So, that was the recommendation of the committee, and I am very happy to tell you it was accepted by the government," Sinha said. However, he said, any change will need statutory backing through legislation, as the GSTN (GST Network) does not enable the usage of data within GSTN for any other purpose. So, there is a need to change not only the central GST Act but all the state GSTN Acts to enable GSTN invoices to automatically get on to TReDS or other platforms, he added. TReDS is a platform that facilitates discounting of invoices for MSMEs from corporate buyers through multiple financiers. He said GST is fast becoming the commercial backbone of this country, and the government is doing all the necessary changes that will be required to support the businesses. For India to leapfrog and become a globally competitive economy of the size of USD 10 trillion, public platforms, as well as private innovation, need to work in tandem, he said. While making public platforms frictionless is 10 per cent of the story, 90 per cent of the story lies with the private players and businesses to innovate. "So, those are the kind of things we are working on right now, and there is a report that we will be putting out on strengthening credit flow to MSMEs, and we would welcome input from NBFCs on that... "Private sector innovation is required on top of these public platforms. The good news today is that there is ample capital available. Because of the great exits and tremendous capital that we have in the market right now, there is plenty of capital available to support high-quality businesses," Sinha said

Source: Economic Times

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12% GST on textile will sound death knell for business: Traders

Textile merchants and traders are worried about the impact of their business when the increase GST of 12% will come into effect from January 1 across the country and how their customers, particularly women, will respond. The Central government has increased the GST levied on garments from 5 per cent to 12 per cent. Nizamabad, Kamareddy, Armor, Bodan Banswada, Balakonda, Dichupally and Ellareddy Bhimgal along with mandal headquarters and villages across the erstwhile district have large luxury shopping malls as well as small textile clothing shops. Out of total textile and garment business in the district, sale of clothes and other garments of women and adolescent girls accounts for 43 per cent. Erstwhile Nizamabad district has a daily turnover of over 4 crore from the retail textile business. Out of this, Rs 3.5 crore comes from sale of saris and other ladies' garments. Over the years, the textile business in the district had been sluggish stage due to the impact the Covid epidemic. Prices of cotton and other raw materials used in the manufacture of fabrics, especially silk saris, have tripled and prices of silk garments for festivals, weddings and other celebrations are going up sharply in recent times. Under such circumstances traders in Kamareddy and Nizamabad districts are in a state of Under such circumstances, traders in Kamareddy and Nizamabad districts are in a state of dilemma due to the increase in GST. They are of the opinion that the increased GST will certainly put an extra burden on the buyers of saris and dresses. The imposition of GST should be reconsidered. The government should reconsider the GST hike. The basic necessities are getting costly due to frequent tax hike and burdening the people. Petrol prices have gone up. Edible oil prices have risen but earnings have gone down due to Covid. The government is not even sparing saris and garments without increasing prices. Gollapalli Jyothi Bhansuwada (consumer) It will be zero business Raising the GST to 12 per cent is expected to reduce business by 30 per cent. Zero business, on the other hand, is more likely to happen without paying taxes. Taxing at all stages, from the manufacture of textiles, will cost four times more than in the past until it goes into the hands of consumers. Already wholesalers are unable to maintain stores. It is no longer easy to manage all the retail stores Memorial Swapna women sari merchant Burden on textile consumers The GST hike will have a severe impact on the textile and sari business. The burden will passed on buyers as well. There is a situation where sales have decreased and traders lose out. Half the shops in Nizamabad Kamareddy district are in danger of closing forever if the BJP-led Central government does not withdraw its decision to increase the GST SS srinivasarao, Sari merchant, Bhansuwada.

Source: The Hans India

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Small units to lose businesses as govt tightens input tax credit rules

By doing away with the provisional ITC, the authorities have also made it difficult for small businesses to get supply orders from Corporate India, which will now deal with only businesses above a certain size that can meet the compliance requirements under the GST regime. Come January 1, businesses could find their working capital and profitability taking a hit if any of their suppliers fail to upload their invoices on the goods and services tax (GST) portal, as the government has tightened the norms on input tax credits (ITC) to check frauds. By doing away with the provisional ITC, the authorities have also made it difficult for small businesses to get supply orders from Corporate India, which will now deal with only businesses above a certain size that can meet the compliance requirements under the GST regime. Currently, businesses can claim 5% of their total eligible ITC as ‘provisional’ ITC even if these are not matched with supplier invoices. As per the rules for Central GST notified by the Central Board of Indirect Taxes and Customs (CBIC) on Tuesday, no provisional ITC would be available to businesses from January 1. The 5% provisional ITC has been giving a cushion to businesses, more so to MSMEs, which are struggling to come out of the pandemic-induced slump, analysts reckon. “It’s a bit unfair that even after complying with all GST return filings and tax payments, a business has to suffer due to non-compliance by some vendors. Effectively, tax administration shifts the compliance burden to recipient of goods/services,” said MS Mani, Partner, Deloitte India. After GST was rolled out from July 2017, all taxpayers claimed ITC on a self-declaration basis. From October 2019, the concept of provisional ITC was introduced, allowing businesses to claim only 20% ITC as provisional (largely covering non-compliant vendors) from the eligible ITC reflected in their GSTR-2A statement on the inward supplies. The provisional ITC got reduced to 10% in 2020. However, from January 1, this limit was reduced further to 5% of the eligible ITC reflected in the GSTR2B.GSTR-2B is an auto-populated (from GSTR-1, GSTR-5, GSTR-6 and ICEGATE) statement reflecting input tax credit details. The central tax authorities have booked about 8,000 cases involving fake ITC availment of over Rs 35,000 crore in FY21. While misuse of the beneficial provision of ITC under GST regime was the most common way of evasion under the GST law, the scale of this has been worrisome for the taxman. However, Mani said, given that nowhere in the world vendors are 100% compliant with regard to GST as small businesses lack resources to engage professional tax consultants or hire the skilled manpower, 5% provisional ITC gave a cushion to businesses and it should have been continued for a few more years till GST stabilised. For a company which pays `100 crore GST in cash every month, 5% amounts to Rs 5 crore and that is huge sum from working capital point of view. “This will lead to a situation where large businesses will deal with large businesses only as dealing with smaller one means losing some credits,” Mani added.

Source: Financial Express

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RBI extends card tokenisation rule by 6 months after industry request

Tokenisation refers to the technology of substituting sensitive card data with random numbers The Reserve Bank of India (RBI) on Thursday extended the deadline for wiping off card data on merchant sites and applying tokenisation by another six months as merchants and payments companies expressed their inability to meet the December 31 deadline. In a statement on its website, the central bank said “at the request of industry stakeholders”, the timeline is being extended until June 30, 2022. After that, all card data “shall be purged”. In addition to tokenisation, industry stakeholders must devise an alternative mechanism to handle recurring e-mandates, equated monthly instalment (EMI) options, etc. or any post-transaction activity that currently involves the storage of card-on-file data by entities other than card issuers and card networks. On March 17, 2020, the central bank had said from June 30, 2021, merchant websites and payment aggregators should not store customer card data. At the request of merchants and payment aggregators as well as card companies and banks, this timeline was extended until December 31, 2021. In order to avoid inconveniencing customers, the central bank on September 7 this year introduced cardon-file tokenisation (CoFT) services. Ashish Agarwal, vice-president and head of policy, Nasscom, said this extension was valuable and would mitigate business and payments risks for customers. “We really hope the #Banks and other ecosystem players look at this extension with responsibility and comply with the timeline now.” Sijo Kuruvilla, executive director, Alliance of Digital India Foundation, said “thanks to the RBI for listening to stakeholders and acknowledging the readiness challenges. The extension gives a breather to all players in the payment ecosystem.” Tokenisation refers to the technology of substituting sensitive card data with random numbers. The merchant sites get this random set of numbers while processing is done by the card-issuing bank or the card company such as Visa, MasterCard, or Rupay. Card on file tokenisation (CoFT) is used to register card data with a merchant site in a manner that the basic details reside with the card company or the issuer bank, but not with the merchant, so that the customer does not have to key in his or her details every time for a transaction. The deadline for card tokenisation had created problems in the payments industry because not all banks and payment companies were ready with the infrastructure. Many customers who were upset with the RBI decision to change the recurring payments to a consent-based system were not willing to tokenise their card details for the new system. Besides, most merchants and even banks were not prepared to switch to the new system on time. The payments industry had lobbied for two years at least for a smooth transition, according to reports. In a status check report earlier this week, Business Standard quoted Sanjeev Moghe, executive vice-president and head (cards and payments), Axis Bank, who said some merchants had completed the changes for customers to tokenise their cards, and many others were expected to be ready by the end of the year with the proposed changes. Vishwas Patel, chairman, Payments Council of India (PCI), and director, Infibeam Avenues, however, said: “A few card-issuing banks are not ready, and some merchants are taking time, so it might be a challenge for the ecosystem to go live from January 1, 2022.” The tokenisation services of Visa and Mastercard have been tested in other countries. Rupay was also ready with its technology, but it was untested, being the newest card network, mainly concentrated on India. According to food delivery and e-commerce executives, even as payments firms are ready with the technology, customers are not. “We are ready with our solution. However, we are unable to offer it to most card customers because the upstream support for all banks and card networks is far from 100 per cent,” said an executive at a food delivery unicorn. Rameesh Kailasam, chief executive officer and president of IndiaTech.org, an industry association representing India’s technology start-ups, unicorns, and investors, said: “All banks, processing banks that process tokens, payment networks, payment processors, and millions of merchants have to build support to fetch tokens, purge card data, and rewire internal logic. This will take time. Ideally, a graduated process is the need of the hour and while the RBI had given enough time, clarity emerged largely around September.” But companies had started their own tokenisation solutions. PayU, an online payment solution provider, has launched “PayU Token Hub”, which offers both network tokens and issuer tokens under a single hub.

Source: Business Standard

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Exports may be slow down in FY23 due to Covid, supply issues: Trade group

Rise in input cost, delays in shipments and payments among problems in growth, says FIEO. India’s outbound shipments growth may slow down in 2022-23 compared to the previous fiscal year due to new variants of Covid-19 and supply side challenges, Federation of Indian Export Organizations (FIEO) said on Thursday. Exports clocking 15-20 percent growth or more in the next fiscal will depend on whether the pandemic is contained through massive vaccination across the globe and creation of required capacity, the exporters’ body said in a statement. “Looking into the emergence of the new variants and supply side challenges at this point of time, we would like to be a little conservative and will aim for an export of $460-475 billion during the next fiscal,” said FIEO president A Sakthivel. India exported goods worth $290.63 billion during the financial year 2020-21. It aims to achieve a target of $400 billion in the current fiscal year, which is expected to translate into a growth of nearly 38 per cent YoY. While in absolute terms, the target of $400 billion is likely to be achieved by the end of the fiscal year, the growth may not be as sharp due to a high base. “Thus, export growth of 30-35 per cent on such numbers ($400 billion) would be difficult, particularly as additional exports may require augmenting the capacity as well. Moreover, the spectacular increase in global trade by about 22 per cent, buoyed by high prices of commodities, as witnessed in 2021 will not be there to provide the tail wind to our exports,” Sakthivel said. There has been a sustained increase in exports since the beginning of the current fiscal, amid robust external demand due to opening up of various economies. As of now, India has met nearly two-thirds of its annual export target. “The good thing with our exports has been a very balanced growth across sectors both in traditional exports as well as sunrise sectors of exports during the current fiscal. We are hopeful that the same trend will continue particularly as the order booking position of all exporters are extremely encouraging and China plus one policy of global companies is definitely helping our exports,” Sakthivel said. During April-October, when the overall exports grew by about 59 per cent, almost all regions witnessed a growth rate of at least 60 per cent, barring Association of Southeast Asian Nations (ASEAN), North East Asia and Commonwealth of Indian States (CIS) countries. Therefore, in the next year as well, FIEO believes that export growth will be widespread and exports to NAFTA, Europe, Middle-East, Oceania will continue to boom. India should ink trade agreements with the UK and UAE soon and finalize trade pacts with Canada and Australia next year, he said. Lack of capacity is one of the major concerns to meet the increasing demand. Rise in input cost and delays in shipments and payments have resulted in the need for additional credit. While container shortage has eased due to peak season supplies for Christmas, New Year and Chinese New Year getting over, the same is likely to compound once countries open up after the holiday seasons particularly if the new Covid-19 variant is not brought under control, said the exporters association.

Source: Business Standard

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Assocham suggests rationalisation of TDS in Union Budget

 Assocham also said that at present, there are about 40 sections under the act dealing with TDS and in addition, there is a huge list of rules and forms associated with these TDS provisions. Industry body Assocham on Thursday suggested the government to cut Tax Deducted at Source (TDS) in the next Budget with a view to reducing litigation on the application of correct rate. Presently, there are various rates of TDS prescribed under the Income Tax Act on different categories of transactions and that has led to ambiguities in the context of applicability of relevant sections and correct rate, resulting in litigation, the chamber said. It has suggested "slashing of TDS to one or two rates and could be as low as 0.1 per cent or 1 per cent". To streamline these provisions, Assocham said, it is desirable that at the maximum one or two rates may be prescribed. "This would achieve the twin objective of creating a log of the transaction in the tax department's database (in cases where the trial cannot be established by other sources) while reducing litigation on the application of the correct rate," it added. It also said that at present, there are about 40 sections under the act dealing with TDS and in addition, there is a huge list of rules and forms associated with these TDS provisions. "It is evident from the statistics, that only a few sections contribute significantly to the total collections by way of TDS. The other sections contribute a minuscule portion to the total amount of TDS collection." "Such low figures emphasize the need for reconsideration of these provisions, considering that though their removal would have a little impact on the tax collections, it can provide relief for the taxpayers from the necessary compliance burden which revolves around such provisions," it said.

Source: Economic Times

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Vietnam and South Korea promote cooperation in trade, industry, energy

South Korean businesses should pour more capital to fully tap Vietnam’s 100-millionstrong market and gradually access the Asean market of 600 million as well as other markets which have signed free trade agreements (FTAs) with Vietnam, said a Vietnamese official. Minister of Industry and Trade Nguyễn Hồng Diên made the statement at the VietnamRoK business seminar that took place in Seoul, South Korea on Wednesday. The event was held by the Vietnamese Ministry of Industry and Trade, in collaboration with the Republic of Korea (RoK)’s Ministry of Trade, Industry and Energy and the Korea Trade-Investment Promotion Agency (KOTRA). Diên said that since the establishment of their diplomatic ties in 1992, Vietnam and the RoK have enjoyed the best-ever development stage of their relations. The RoK is Vietnam’s third biggest trade partner and largest investor with over 9,000 projects. He said that Korean groups and businesses have made important contributions to boosting export growth and trade surplus of Vietnam. Chang Sang-hyun from KOTRA said that Vietnam is one of the important destinations of Korean investors. An increase of Korean investment in Vietnam amid the complicated developments of the Covid-19 pandemic has shown their trust in the country’s business and investment environment, he stressed. At the event, RoK enterprises proposed the Vietnamese Government and Ministry of Industry and Trade help untie difficulties in entry and ground clearance, and create more favourable conditions for them, especially in the fields of energy, chemicals and textile and dyeing. They expressed their confidence in Vietnam’s potential and development, hoping to expand their investment in the future. Meanwhile, Vietnamese firms showed their hope to strengthen cooperation with Korean partners in clean energy, recycling materials and chemicals, and get engaged in their production chains in the field of support industries. Concluding the seminar, Minister Diên said that the Vietnamese Government and the Ministry of Industry and Trade have consistently supported and created favourable conditions for domestic and foreign investors, including those from the RoK, to continue expanding their investment and business activities in Vietnam as well as supporting Vietnamese firms to deepen cooperation with Korean partners. RoK is the largest investor in the textile - garment and leather - footwear industries of Vietnam, which holds considerable chances to boost the export of these commodities to the North-East Asian market. During the webinar and online business matching on connecting Vietnam-Korea businesses in the fields of textile, leather and shoes held in Hanoi on Tuesday, Deputy Director of the Vietnama Trade Promotion Agency Lê Hoàng Tài said the RoK is currently one of the leading economic partners of Vietnam, ranking first in foreign direct investment and third in trade with the latter last year. Bilateral trade reached US$63 billion in the first 10 months of 2021, up 17.6 per cent year on year. That included $17.9 billion of Vietnamese exports, rising 11.5 per cent. Vietnam shipped $26.9 billion worth of textile - garment and $14.24 billion worth of leather - footwear products to the RoK during the period. The full-year figures are forecast to hit $33.9 billion and $18.52 billion, respectively, according to Tài. Kyoung Don Kim, head of the investment promotion division at the KOTRA Office in Hanoi, noted his country is the biggest investor in the textile - garment industry in Vietnam, which in turn is the second trade partner of the RoK in this sector. Vice Chairman of the Vietnam Textile & Apparel Association (VITAS) Trương Văn Cẩm expressed his hope that the RoK will invest more in the local industry, especially in material production and design, so as to benefit from preferential treatment under free trade agreements. For her part, Phan Thị Thanh Xuân, Vice Chairwoman and Secretary General of the Việt Nam Leather, Footwear and Handbag Association (LEFASO), said the country is the second biggest exporter of leather - footwear products in the world, with about $20 billion in revenue, following China. There are nearly 2,000 enterprises in this sector, and they engage in all production steps. Meanwhile, the RoK is one of the five main export markets of this industry. Given this, Vietnamese businesses have relatively big opportunities to cooperate with Korean importers to boost exports, she added.

Source: The Star

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Cambodia's trade with China tops $10 mn 2 years before target

Trade between Cambodia and China rose by 45.9 per cent year on year to $10.98 billion between January and October this year, according to China’s commerce ministry. The two sides had committed to reaching annual bilateral trade of $10 billion by 2023, according to Cambodia’s commerce ministry. Bilateral trade fell by 5.2 per cent last year to $8.1 billion. Imports from China dropped nearly 7 per cent last year as garment factory closures reduced fabric demand. When the Cambodia-China Free Trade Agreement (FTA) comes into force next year, Cambodia will import 340 kinds of goods from China, 95 per cent of which will be taxed at zero per cent The two countries are members of the Regional Comprehensive Economic Partnership (RCEP), both of which come into force on January 1. China’s commerce ministry said the FTA and RCEP will help raise imports from Cambodia and encourage Chinese companies to invest more in the Kingdom, according to Cambodian media reports. It said Beijing is willing to help promote cooperation in infrastructure development, improve production capacity, expand the digital economy through e-commerce cooperation and develop more sustainable low-carbon industry. The two countries signed a memorandum of understanding on establishing an investment and economic cooperation working group last week. Cambodia’s main exports to China include milled rice, cassava, fresh mangoes, and bananas. It mainly imports fabric and accessories for garment production, construction materials and vehicles.

Source: Fibre2 Fashion

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German economy may shrink in Q4 2021 due to COVID: Bundesbank

The German economy will witness a setback in the last quarter (Q4) of 2021 and the first quarter (Q1) of 2022 due to the pandemic, but is set to pick up significant momentum again in spring of next year, according to the Deutsche Bundesbank (German federal bank), which projected that gross domestic product will rise by 2.5 per cent this year— less strongly than anticipated in June. Over the next two years, calendar-adjusted economic growth will then rebound to 4.2 per cent and 3.2 per cent respectively, according to these projections. “The upswing has been slightly delayed,” said Bundesbank president Jens Weidmann at a presentation of the institution’s current projections. Private consumption is expected to rise substantially from spring onwards, with the assumption that pandemic-induced restrictions will largely have fallen away by then, Bundesbank said in a press release. Additional spending of household savings accumulated during the pandemic is likely, in part. The bank’s projections for the inflation rate are consistently markedly higher than June expectations. An inflation rate of 3.2 per cent as measured by the harmonised index of consumer prices is expected for this year, attributable not only to one-off effects that have been on the radar for some time, but also to the expiry of the reduction in value-added tax rates and the introduction of carbon emission certificates. The inflation rate will only fall significantly if these influences diminish in 2023, according to the bank’s experts. At 2.2 per cent in 2023 and 2024, too, however, it will still remain relatively high, not only on account of strongly rising wages and the favourable economic situation, but also due to the costs associated with the transition to a climate-neutral economy.

Source: Fibre2 Fashion

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Service costs, infrastructure, warehousing logistics issues in Vietnam

Though Vietnam’s logistics industry witnessed robust growth in recent years, it faces several challenges like service costs, infrastructure bottlenecks, warehousing, equipment and human resources, deputy minister of industry and trade Do Thang Hai told a recent conference with the theme ‘Development of Vietnam's logistics industry with EuropeAmerica region’. Hai said the World Bank's most recent logistics performance index ranked Vietnam 39th out of 160 countries and third in Southeast Asia. This is the country’s highest position to date. “Logistics is also one of the fastest-growing and most stable industries of Vietnam with an average growth rate of 14-16 per cent per year, contributing to GDP [gross domestic product] from 4-5 per cent,” he was quoted as saying by Vietnamese media reports. He said the country has about 30,000 enterprises operating in logistics. However, while Europe and America are major trade partners, congestion on container transport routes, especially in transport routes, as well as a large shortage of empty containers continuing from 2020, has seriously affected the export of goods to these markets. In the first ten months of 2021, the total export turnover of seasonal products like apparel, footwear, agricultural products, electronics, and consumer goods to the US reached $24.8 billion, accounting for 32.8 per cent of the total export turnover of Vietnam to the United States. If these businesses continue to face difficulties in logistics in the long run, they will lose their direct link with the transport chain and have to depend on other businesses. Around 90 per cent of exports from Viet Nam depend on foreign shipping companies. A participant of the conference suggested that Vietnam should develop its own logistic routes, adding that a local company like Hoa Phat could produce the empty containers.

Source: Fibre2 Fashion

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