With exporters continuing to face delays in getting refunds on the Integrated Goods and Service Tax (IGST), the Finance Ministry on Wednesday asked them to file GSTR 3 B and table 6A of GSTR 1 on the GSTN portal and Shipping Bill (s) on Customs EDI System, which are the pre-requisites for sanction of payment.
“The Government of India is seized of the issue of exporters complaining about delay in grant of refunds pertaining to IGST paid on goods exported out of India and similarly Input Tax credit (ITC) on exports,” it said in a statement.
It also clarified that the quantum of IGST refund claims as filed through Shipping Bills during the period July-October, was about ₹6,500 crore. About ₹30 crore was pending as refund of unutilised credit on inputs or input services.
A majority of refund claims for IGST paid on exports in July have already been sanctioned. Refund claims for August, September and October are also being sanctioned seamlessly wherever returns have been accurately filed.
The Finance Ministry said exporters must ensure that there is no discrepancy in the information filed in Table 6A of GSTR 1 and the Shipping Bill as these were the main reasons behind the delay or even rejection of refunds.
“While information has been made available to exporters on the ICEGATE portal if they are registered, they may also contact the jurisdictional Customs authorities to check the errors they have committed in furnishing information in GST returns and Shipping Bill, and rectify them at the earliest,” it further said.
The Central Board of Excise and Customs had last month begun processing IGST refunds to exporters after a special expert group under Finance Secretary Hasmukh Adhia reviewed the problem of delays in sanctioning them.
Earlier this month, the CBEC also permitted businesses making zero rated supplies or those who have paid IGST on exports or those want to claim input credit to fill Form RFD-01A.
Source: Business Line
The past month has seen hectic diplomatic activity having a crucial bearing on India’s ‘Act East’ policies of increasing strategic interaction and involvement across its eastern neighbourhood, from the Bay of Bengal to the South China Sea.
An assertive China has violated international laws and conventions by seizing control of a number of islands by force, from neighbours such as Vietnam, Japan, the Philippines, Malaysia, Brunei and Indonesia. The world also witnessed some clumsy American diplomacy involving military exercises off the shores of ally South Korea in a melodramatic but futile bid to coerce North Korea to desist from developing its ballistic missile and nuclear weapons capabilities.
Opportunistic
On his first long tour abroad, President Donald Trump visited Japan, South Korea, China, Vietnam and the Philippines. He was in Hanoi and Manila primarily for multilateral meetings of APEC and the Asean-centric East Asia Summit. The Manila visit also provided an opportunity for a useful bilateral meeting with Prime Minister Narendra Modi, who reached out significantly to his Asean hosts by inviting them all for a summit-level get-together in Delhi on Republic Day, 2018.
Modi’s initiative was timely, as Asean itself is undergoing strains and differences, on how to deal with a growingly assertive China, which is providing Asean members with huge opportunities for investment and trade. This, at a time when Trump, with his emphasis on ‘America First’ policies, withdrew from the Trans-Pacific Partnership, throwing to the winds prospects for meaningful increases in economic cooperation and integration with Asean while opening the doors for a China-centric order in the region.
The Manila summit coincided with an official-level meeting between India, Japan, Australia and the US (popularly known as the Quad), to develop a new basis for maritime and regional economic cooperation across what is now described as the Indo-Pacific Region, extending from the Gulf of Aden, where China has a full-fledged military base in Djibouti, to the South China Sea, an important trade route.
Even as China started voicing concern about the Quad, there was no joint statement after the meeting. It was, however, clear that the four countries shared similar views on issues like connectivity, respect for international conventions, maritime security and freedom of navigation and regional connectivity. There was a desire to move ahead collectively in balancing Chinese assertiveness and disregard for international laws and conventions on issues of freedom of navigation, over-flights and maritime boundaries, while avoiding references specifically targeting China. Australia and the US were, however, more direct than India and Japan in pointing fingers at China. Despite these subtleties, the Chinese will have no doubt that beginnings have been made by the four countries involved to balance Beijing’s growing, territorial and geopolitical ambitions.
Crude behaviour
We should be clear: the Trump administration behaves in manner that is often crude and counter-productive, even with close allies such as South Korea. On the eve of Trump’s visit to South Korea and despite the display of crude military power by the US, South Korea buckled under Chinese pressure and dropped a deal for acquiring more American missile defences. This followed the imposition of tight Chinese economic sanctions, lasting over 16 months, which caused widespread dislocation and loss of billions of dollars for Seoul’s largest companies, and an estimated loss of tourism revenues of over $15 billion following Beijing’s ban on Chinese tourists visiting South Korea.
Worse still, Trump’s war rhetoric holding out the threat of military conflict, caused virtual panic in South Korea, which would suffer the loss of thousands of lives if tensions with the North led to conflict across the border.
While Trump was fulsome in his praise for President Xi Jinping, the Chinese have made it abundantly clear that they have no intention of fulfilling his demands for isolating Pyongyang and imposing crippling sanctions on North Korea. Pyongyang, after all, fulfils China’s ambitions of dominating the Korean peninsula. Moreover, while pleasantries were exchanged with the Philippines president, the blunt-spoken Rodrigo Duterte has decided to play along with the Americans while avoiding any action that could provoke China.
Within Asean, countries like Malaysia, Thailand, Laos and Cambodia are too closely linked economically with China to speak out strongly on China’s extravagant claims about its maritime boundaries. The Quad will have to work out carefully crafted policies that ensure that countries like Vietnam and Indonesia stand firm on issues affecting their maritime security. New Delhi will face continuing inconsistencies and brash rhetoric in the policies and statements of Trump and his administration on issues ranging from China and North Korea, to the Lashkar-e-Taiba as it works in the Quad to balance Chinese economic and military power.
Crucial issue
Maritime security is set to become a crucial issue affecting our strategic perceptions in coming years. With a full-fledged military base in Djibouti, virtual control of Gwadar where Pakistan has abdicated any pretence of sovereign control, a significant stake in Hambantota and a growing economic presence in the port of Kyaukpyu which it is developing in Myanmar’s Rakhine state, China is set to develop what was years ago described as a “string of pearls” across the Indian Ocean.
At the same time, there are growing voices of dissent in a number of countries discovering that China’s much touted One Belt One Road project is really meant to use China’s surplus construction and infrastructure capacities to promote Beijing’s global geopolitical ambitions, by setting terms which force recipients to hand over crucial sectors of their economy and territory to Chinese control. Even a supplicant for Chinese assistance like Pakistan is realising that the China-Pakistan Economic Corridor will lead to Chinese control over both agriculture and industry, apart from mortgaging the strategic port of Gwadar virtually in perpetuity, while accepting the yuan as a parallel currency in the country. But, with its army now seeking a say in the financial administration of the country, Pakistan is set to be ruled by a military elite with little sense of national self-respect, as long as it can foster terrorism across its immediate neighbourhood.
Source: Business Line
After reducing the rates of more than 200 items in the previous goods and services tax (GST) Council meet, the panel might now significantly tweak rules to simplify procedures and ease rules for businesses.
The six-member advisory panel formed by the government for simplification and rationalisation of GST will likely propose a faster refund procedure, deferment of electronic way bill, further simplification of the composition scheme, among others.
It is expected to submit its report by the first week of December to the government. “The key recommendations will essentially revolve around making refunds easy, putting off e-way bill and reverse charge mechanism for a year or so. In addition there is a demand for allowing inter-state supply in the composition scheme,” said a government official. He added these recommendations would be seriously considered by the government as the focus is on easing pain for small enterprises and reviving demand in the economy.
According to committee member Praveen Khandelwal, secretary general of the Confederation of All India Traders, at least Rs 2 lakh crore worth of input tax credit for four months was stuck, impacting working capital of companies.
“The refund process should be automated. The ITC should be released within the same month. Matching and adjustment may be done later,” he said. However, as the GST revenue fell to its lowest in four months in October to Rs 83,000 crore, the government attributed it to self-declared tax payments.
“Since implementation of some of the main features of GST such as matching of returns, e-way bill and reverse charge mechanism have been postponed, tax compliance might not be up to the mark,” the government had said. The advisory panel might also recommend doing away with declaration of HSN code in the invoice for easier return filing.
Besides, the classification should be such that the raw material and finished product are in the same slab. This would make refunds easier, added another member. The council might pitch for a 1 per cent composition tax for restaurants under composition scheme as against 5 per cent charged at the moment. In the last meeting, the Council lowered rates for manufacturers in the composition scheme to 1 per cent from 2 per cent earlier, bringing it on a par with the rate for traders. However, the rate under composition scheme was unchanged for restaurants at 5 per cent, even as the normal GST rate for restaurants was reduced from 18 per cent to 5 per cent.
“We will ask for a common rate of 1 per cent under composition scheme even for restaurants,” said Khandelwal. He added that inter-state supply must also be permitted under the composition scheme, which offers easier compliance and a flat rate of tax for small taxpayers.
The GST Council in the last meeting had hiked the threshold for the composition scheme to Rs 1.5 crore from Rs 1 crore, which will need amendment in the law. It is expected to come up in the winter session of Parliament next month. The panel received more than 700 representations on problems faced by industry over return filing, the e-way bill, input tax credit, and exports.
The panel may recommend doing away with e-way bill for at least two years and coming up with an alternative mechanism in the meantime. Chief Economic Advisor Arvind Subramanian in an interaction with Business Standard on Tuesday said the priority must be simplifying GST further for small and medium enterprises.
“The government is open to taking feedback from industry and rectifying the anomalies in the law. We are putting in efforts to make the GST industry-friendly and will be open to incorporating suggestions by the advisory panel,” said a government official. Prime Minister Narendra Modi had said last month that the government was open to accepting issues raised by traders and businesses.
Source: Business STandard
Exporters have claimed refunds of Rs 6,500 crore in the first four months of GST roll out, the government said today, while asking them to file claims in proper form with matching shipping bills to facilitate early settlements.
It also said that businesses can upload the final sales return for August in GSTR-1 on GST Network (GSTN) portal from December 4.
In a statement, the finance ministry said: "It is clarified that the quantum of IGST refund claims as filed through Shipping Bills during the period July to October, is approximately Rs 6,500 crore and the quantum of refund of unutilised credit on inputs or input services, as per the RFD-01A applications filed on GSTN portal, is to the tune of Rs 30 crore."
The CBEC had last month started refunds for exporters of goods who have paid Integrated GST (IGST) and have claimed refund based on shipping bill by filling up Table 6A. Earlier this month, it allowed businesses making zero rated supplies or those who have paid IGST on exports or those want to claim input credit to fill Form RFD-01A.
It asked them to approach Chief Commissioner of Central Tax and the Commissioner of State Tax for refund claim. The ministry said that of the IGST paid on goods exported, a majority of refund claims for exports made in July have been sanctioned. "Refund claims of IGST paid for exports made in August, September and October 2017 are being sanctioned seamlessly wherever returns have been accurately filed," it said.
Exporters should file GSTR-3B, Table 6A of GSTR-1 on the GSTN portal and Shipping Bills on Customs EDI System, it said. However, the statement said, instance of errors are noticed in Shipping Bill number in GSTR-1, mis-match of invoice number and IGST amount paid and wrong bank account, which is delaying the refund process.
"These errors are the sole reason for delay in grant of refunds, or rejection thereof. While information has been made available to Exporters on the ICEGATE portal if they are registered, they may also contact jurisdictional Customs authorities to check the errors they have committed in furnishing information in GST returns and Shipping Bill, and rectify them at the earliest," the ministry said.
It asked exporters to ensure that there is no discrepancy in the information furnished in Table 6A of GSTR-1 and the Shipping Bill. It said that since Customs system automatically grant refunds without involvement of any officer by matching information that is furnished on GSTN portal and Customs system, the onus is on the exporters to fill in all the details accurately.
"Exporters may, therefore, take due precaution to ensure that no errors creep in while filing Table 6A of GSTR 1 of August 2017 and onwards," the ministry added. In case exporters have committed errors in filling up July claim forms, they can make changes by filling up Table-9 of GSTR-1 of August returns, it said.
For claiming Input Tax Credit (ITC), the ministry said exporters will have to ensure that all the necessary documents are submitted along with the Form RFD-01A for timely sanction of refund.
"Exporters are advised to immediately file Table 6A and GSTR-3B, for processing of IGST refund; RFD-01A on GSTN portal for refund of the unutilised ITC on inputs or input services used in making exports; and GSTR-1 for August 2017 for amending details provided in July GSTR-1," the ministry said.
The government has taken various measures to alleviate the difficulty of exporters and is fully committed to provide speedy disbursal of refunds due to them, it added.
Source: Money Control
Five months after the roll out of the goods and service tax (GST) regime, exporters have pointed out that last mile, procedural issues continue to plague the sector due to the yet-to-be-updated filing systems and poor on-ground implementation of norms.
Difficulties in filing for export refunds and a plethora of new regulations and changing norms which continue to make the process of exports difficult, the Federation of Indian Exports Organisations (FIEO) have informed the Commerce and Industry Minister Suresh Prabhu.
They have also pointed out that most issues still revolved around the unreleased tax refunds under GST-the most pressing issue among exporters. A staggering Rs 50,000 crore worth tax refunds are yet to be released by both the Centre and state governments, FIEO has said
"Exporters are absolutely in dark to know the status of their pending claim. The response given by the customs authorities is also very limited. It is, therefore, essential that a facility to view the status of refund may be provided so that the exporters are aware of the stage of refund and deficiency, if any." FIEO President Ganesh Kumar Gupta said.
He added that the port-wise breakup of pending refunds should also be made available in line with the system in place for pending duty drawbacks.
In a recent interaction with Business Standard, Prabhu said that he has taken up the refunds issue with the Finance Ministry also pointing out that a long-term solution needed to be brought out to reduce the time period between the payment of taxes and the starting of the refunds process.
This is expected to bring down India's exports in November as exporters in a number of sectors such as apparel and engineering, among others, have been able to accept significantly fewer orders over the past three months.
India's exports dipped for the first time in 15 months in October falling 1.1 per cent. Last month's trade deficit widened the most in three years to $14 billion.
On Wednesday, the Finance Ministry said in a notification that it has received Integrated GST refund claims worth Rs 6,500 crore in the first four months of the GST rollout. "Refund claims of IGST paid for exports made in August, September and October 2017 are being sanctioned seamlessly wherever returns have been accurately filed," it further added.
On the other hand, a senior Finance Ministry official pointed out that claims are not being filed with proper forms and matching shipping bills. He added that businesses can upload the final sales return for August in GSTR-1 on the GST Network (GSTN) portal from December 4.
Faced with an acute shortage of funds owing to a lack of working capital, exporters are unable to file claims for the month of August under Table 6A due to technical glitches.
"For the month of August, exporters are still not able to file Table 6A as initially. there was an error. Exporters have, however, already filed the GSTR-1 form for July."
In a number of cases, refunds have not flown into traders' accounts as shipping and airline operators did not file the online Export General Manifest properly. FIEO has demanded a system be worked out whereby traders are not penalised for any acts of omission by the logistics firm.
This is resulting in the refund settlement and exporters asking for a re-credit, T S Bhasin, Chairman of Engineering Exports Promotion Council said. But in the process, precious time is lost. For instance, for July, the re-credit would be paid along with August claims and thus the refunds keep on accumulating, he added.
Also, FIEO President Ajay Sahai pointed out that the process for clearing pending input tax credit hasn't even started yet.
Merchandise traders are also unable to file claims in some cases unable to file it as application forms such as the RFD-01A' application form is not available/activated on the GST common portal, FIEO said.
Source: Business Standard
Apparels & Manufacturers Association (AEMA),Garments Exporters Association (GEA) and Textile Cluster (OGTC and Noida Apparel Export Cluster (NAEC) on Tuesday jointly organized a press conference on the adverse impact of GST on the Apparel Sector consisting primarily of Micro Small and Medium Enterprises (MSMEs) due to reduction in drawback and RoSL (Rebate of State Levies)in New Delhi.
Addressing the conference, PMS Uppal, President, Okhla Garment and Textile Cluster said that the textiles exports had declined for the period of July-October by 6% due to sharp reductions in the effective drawback and RoSL rates.
On the employment front he said that the apparel sector employs women in large numbers and further losses would force the sector to shed jobs in large number.
Vinod Dhawan, President, Apparel Exporters & Manufacturer Association (AEMA) said that the govt should incentivize the sector to boost the production and to counter the dwindling exports due to fierce competition from Vietnam and Bangladesh who have various cost advantages due to competitive wages.
Source: (KNN/AG)
The apparel industry has set its sights lower for the medium term with a US $ 8 billion annual export target to be reached by 2022 over the delays in regaining the duty free access to the European Union (EU) via GSP Plus and due to the economic and political uncertainties in key Sri Lankan export markets.
Over the past two years, the Sri Lanka Apparel Exporters’ Association (SLAEA) had had a target of achieving US $ 8.5 billion exports by 2020.
“Actually, we were expecting GSP Plus to come earlier and we needed to revise the target based on the changes in economic conditions,” SLAEA Chairman Felix Fernando told Mirror Business. There had been some delay in applying for re-entry into GSP Plus. The government had faced domestic unrest and criticism over recommitting to implement human rights conventions that Sri Lanka had signed in the past, to become eligible for the facility.
The unilateral duty waiver from the EU was reinstated this May after losing the trade benefits in 2010 over allegations of human rights abuses during the latter stages of the civil war.
Economists have pointed out that there would be challenges for Sri Lanka to regain the lost businesses due to the competitors with GSP Plus and other preferential benefits stepping in over the past six years.
Also, weighing on is the uncertainty of retaining the GSP Plus facility, as during a recent visit to Sri Lanka to observe the progress of the reforms, an EU delegation noted that progress was slow and Sri Lanka cannot afford to sit back and relax after regaining GSP Plus.
The EU absorbed over 40 percent of Sri Lankan garment and textile exports and the loss of the GSP Plus facility had stricken a hard blow to the local apparel industry.
According to the Central Bank, Sri Lanka’s apparel exports grew from US $ 2.5 billion in 2001 to US $ 4.2 billion in 2011 but from then till 2016, during the period of having no preferential access to the EU, apparel exports grew at a slow pace, reaching just US $ 4.9 billion. Fernando said that with regaining GSP Plus, the industry would surpass the US $ 5 billion mark for the first time in 2017. According to the Central Bank data, Sri Lanka’s apparel export earnings stood at US $ 3.7 billion for the first nine months of the year. However, over the first eight months of this year, apparel exports had fallen by 2 percent to US $ 3.1 billion, according to the Joint Apparel Association Forum (JAAF) data. Exports to the EU too had fallen by one percent to US $ 1.3 billion, although there was a double-digit growth in exports in July and August, due to the GSP Plus benefits.
Nevertheless, the effect of the UK leaving the EU by 2019 will have a negative impact on Sri Lankan exports, according to Fernando, if Sri Lanka and the UK could not enter a trade pact.
“Of the exports to the EU, 43 percent goes to the UK. With the uncertainties around Brexit, the Sri Lankan authorities need to talk to the UK counterparts and we are not certain if both the countries will continue to offer the same trade facilities. Due to these uncertainties, it is imperative that we consider the other EU countries and especially Germany, where our presence is limited,” he said.The government in the past had indicated its interest in pursuing a trade agreement with the UK, although there has been no further indication of progress.
However, Fernando added that the silver lining is in the fact that all competitors will lose preferential access to the UK at the same time, ensuring a level playing field for Sri Lanka to compete.
He noted that the other key market, the US, is not doing well for apparel.
“What we see is the US retail sector is not doing so well. There was a boost in exports but that was temporary,” he said.
This temporary phenomenon was seen in July and August 2017, though over the first eight months of this year, apparel exports to the US fell by 4.3 percent to US $ 1.4 billion, according to the JAAF.
Fernando said that the industry has to expand its presence in non-traditional markets as well and that the Sri Lanka-China free trade agreement may help in this regard to enter into the Chinese market.
He noted that despite the export target falling, the industry will be attempting to exceed these expectations.
The Sri Lankan apparel exporters are hoping for the EU to grant permission to source high-quality fabrics from the Association of South East Asian Nations (ASEAN) and export the goods produced using such under the GSP Plus scheme.
“To maximize the use of GSP Plus, the SLAEA, with our apex body, the JAAF, requested the Commerce Department to explore the possibilities of undertaking a joint request to the EU, between Sri Lanka and selected ASEAN countries to agree on cross regional accumulation for fabric,” Fernando said.
Speaking to Mirror Business, he said that currently only the fabric sourced from South Asia or Europe are eligible for GSP Plus, although fabric sourced from the ASEAN is competitive, in both price and quality.
A sizable portion of high-quality apparel exports to the EU are therefore not eligible for GSP Plus, since these garments are made using fabrics sourced from China and Southeast Asia, Fernando said.
He noted that to take advantage of an EU clause, which allows for applications for exemptions, discussions have taken place between Thailand, Indonesia and Malaysia to source fabrics. He noted that most of the fabric sourced from South Asia or even from within Sri Lanka, is of lower quality.
“Most of our top exporters don’t purchase fabric from this region. Sometimes, if we can, we buy from Hayleys or Textured Jersey, who have high-quality fabrics but they are for use in things like jerseys. For denim fabrics and undergarments, we don’t have a proper fabric producer,” Fernando said.
European fabrics are of high quality but are expensive and incur higher logistical costs, he noted.
He said that the EU has tentatively agreed to the arrangement between Sri Lanka and the three ASEAN countries but that it is now the responsibility of the Commerce Department to finalise and gain the facility for the exporters.
LAHORE/KARACHI: Government allowed cotton imports from India to meet the growing appetite of key textile industry, though it slapped tough set of rules for consignments from the neighboring country, officials said on Thursday.
“Pakistan is likely to start issuing permit for import of cotton from India through land route in a next few days under new tough conditions that may not fully ease already imposed restrictions on trade,” an official said.
Pakistan, which is the world’s fourth largest cotton producing country, falls short of around four million bales a year to meet the local demand of nearly 16 million bales. Officials said a permit from the Department of Plant Protection of Pakistan’s food ministry is mandatory, under the new phytosanitary conditions, for import of unprocessed cotton, including raw or seed cotton, cotton lint, linters, cotton waste and cotton stuffing from India.
The National Plant Protection Organisation would inspect and test the consignments according to appropriate procedures and to ensure the goods are free from biosecurity pests. “The goods must be clean and free of contaminant seed, soil and plant debris and other bio-security risk material prior to arrival in Pakistan,” the department said in a letter.
Pakistan used to import 0.5 to 2.8 million bales from India in the past, but the government suspended the import last year because of some objection of the Department of Plant Protection.
Naseem Usman, chairman of Karachi Cotton Brokers Association expected an import of around 0.7 million bales from India this year. Usman said textile mills have signed import contracts of 1.8 million bales from countries, including US, Brazil, South Africa and Middle East.
Ihsanul Haq, chairman of Pakistan Cotton Ginners Forum, however, said the new conditions would not help in fully restoring cotton trade between the two countries. A senior textile ministry’s official, defending the government’s move, said tough conditions are indispensable to protect any threat to local cotton crop. “Due to flawed cotton ginning process in India, it has been observed that cotton seed was also found in the imported consignments,” he said, requesting anonymity. “This seed may contain diseases and also carry eggs of various insects and pests. So, it is important to allow import of cotton after going through all phytosanitary requirements.”
Usman argued that Indian cotton is good in quality, “while it would be convenient for us to buy from India, as delivery time is short and price is feasible.” Haq agreed that the cotton prices would also fall in the local market following the import from the neighbouring country.
Textile mills have been long demanding restoration of cotton import from India, the world’s second biggest cotton producer, to meet shortfall in local production. All Pakistan Textile Mills Association (Aptma) also urged the government to immediately notify withdrawal of four percent customs duty and five percent sales tax and other non-tariff restrictions on import of cotton to enable the industry to meet its export commitments.
An Aptma official said the government should remove phytosanitary restrictions. The official said the government pledged to withdraw the import restrictions in the Prime Minister Trade Enhancement package in January. The department further said an Indian consignment arrived without valid import permit and phytosanitary certificate would be destroyed or deported.
“The department reserves the right, if considered necessary to cancel the import permit even after issuance on detection of bio-security pests/risks or any other violation of import conditions,” it said. The department further said non-commodity concerns must be assessed, including container cleanliness, packaging and destination concerns, “and may be subject to inspection and treatment on arrival.”
Technology and its new advances are a reality in today's world. One such advancement is robots with the capability to perform many human tasks. So much that robots are now being made that can replace workers.
In the coming days, technological advancement such as 3D printing and laser technology will make it easier for companies in developed economies to create production bases onsite, instead of placing bulk orders for garment in countries such as Bangladesh, China, Cambodia and Indonesia.
“This process has just really started to happen,” said Phu Huynh, employment specialist at Decent Work Technical Support Team for East and Southeast Asia and the Pacific at the International Labour Organisation.
If the process continues in its trajectory and grows and multiplies, this could automatically bring the production of garments and labour intensive sectors back into the US and the EU.
Huynh's comments came in an interview with The Daily Star on the sidelines of a workshop last week in Bangkok.
“So, what does that mean for us in future? It means that we need to think about whether or not the production that we have is focused only on the export markets or it is also focusing as well on the local domestic consumer market.”
It is important to think about the balancing of the economic structures in place, he said, while citing Bangladesh's garment industry, on which the country's economy relies heavily, as a potential casualty of technological advances.
The labour economist touted the German sportswear giant Adidas as an early proponent of technology.
The company has been testing a store where shoppers can design a sweater, have a body scan to determine fit and get it knitted by a state-of-the-art machine within hours, according to a report by Reuters in March this year.
“We would not see these changes happening overnight. It is a process and it may take some time.”
But, he stressed the need for labour-rich countries like Bangladesh to start taking preparations now for the eventual shift in production methods.
Robots that can replace workers already exist, but mass adoption of the technology depends on two factors: cost and skills.
Over time, the cost of robots will come down and wages will go up, making robots cheaper. Skills will also increase, making adoption of the technology easier for manufacturers.
“So, our sense is that these factors will affect the garment industry in Asia, particularly Bangladesh, Cambodia and Vietnam. It is just a matter of when.”
And the government has an important role to play in this regard.
“They really need to think about the direction of the economy as a whole and look at sectors where there are job prospects.”
He cited the case of Thailand, which has been focusing on its healthcare and tourism sectors, as an example for Bangladesh to follow.
Robots would be able to do the work of humans in tasks that can be very repetitive, that can be done over and over again in the same way.
“What they cannot do is replace the skills of people in which we show our ability to make a connection with other people to tap into our social and emotional sides, our ability to work in a team, our ability to communicate, our ability to persuade, and our ability to show emotional empathy to other people.”
On questions about the implications of poverty and inequality on technology, he said there might be increasing inequity in the labour market.
“If we look at the evolution of technology, oftentimes those who had the skills to work with technology were benefitted -- they are paid for the skill premium. And people who do not have that fall behind. So, this is the major concern that we have.”
Subsequently, he urged policymakers to ensure that the technological transition does not leave more people behind.
But, technological advances have also opened doors, he said, citing that many people living in remote areas of India and Bangladesh can now do things for firms in developed states through the internet.
“A company in Europe may ask for somebody to write a programme code and a programmer in Bangladesh can apply for the job and get it. It opens up door.”
On the question of access to latest technology like internet and smartphones, he said: “It is the most basic necessity. These need to be done at the national level. There is a role of government here.”
“The big issue for the ILO is we want to make sure that this process is just. We do not want people being left behind. We are not here to say that we should stop technology. That's not the right answer. We think technology is a very positive trend.”
While it is exciting to hear about the new innovations from Microsoft, Google and so on and so forth, their impact on the society needs to be considered.
Technology will only enhance from here onwards but it is important to guarantee that the advances do not affect a disproportionate number of jobs.
“We also believe that in the long run jobs will be created, jobs will be transformed. A lot of new jobs will emerge that do not exist now.”
The most important thing is to prepare the labour market for the new jobs, so that transition happens in a way that does not make the society more unequal, that does not leave people further behind, he added.
The country's garments industry is still in transition. Following the Rana Plaza disaster, European Union (EU)-based retailer under the Accord and North American retailers under the Alliance inspected more than 2,300 garments factories in order to identify how their safety standard could be improved. Of those, 150 were referred to the government for immediate action on the ground of serious safety risks. Again, of the 150, 39 were closed, 42 partially closed and 69 were allowed to operate with some recommendations. The rest were brought under a remediation programme. But there remained another 1,549 outside the scanner of the Accord and the Alliance. On inspection for structural, fire and electrical integrity under a joint initiative by the government and the International Labour Organisation (ILO), about one-third of those factories have been closed by their owners. Non-compliance with safety standard, failure to compete in the market and also the reluctance to reinvest in units led to their closure.
If these are negative developments, there is a silver lining also in that 64 factories moved to new buildings, 14 were shifted to export processing zones (EPZs) and 178 were added to Western retailers' platforms. This means that a total of 256 factories inspected under the National Initiative (NI) got their acts together. Now of the rest 780 garments units, 312 are housed in their own buildings. Sadly, a significant number of garments factories have completed only 20 per cent of the remediation suggested over the past two years. This means there is a lot to be done by this large number of factories in order to stay in business. The Department of Inspection for Factories and Establishments (DIFE), a body vested with the power to inspect for the NI have issued a directive for the factory authorities to complete remediation by next April. Failure to meet the deadline will invite closure of factories, the authorities threaten.
So, overall not all is well on the readymade garments front of the country. The factories housed in their own buildings certainly have a better chance of retrofitting their establishments in order to comply with the required safety standard. But the factory owners have to be serious about the job on hands. In a highly competitive world, they must pull their socks up and be ready to take the challenge. The fact that 256 units have improved their performance by this time is going to act as an incentive for them. When the competition is stiff, the toughest get going.
The fate of the rest 468 looks bleak indeed because they are operating from rented buildings where other establishments are also housed. Remediation there is out of the question. All they need is recapitalisation. If they cannot independently take up the job, better it would be to go for partnership business. Vietnam is making gains in export share in the global market because it has proceeded in a planned manner. Bangladesh, sadly, did not follow the same policy. Now putting its house in order proves daunting. But given the prospect of a better organised garments industry, the country has no option other than getting its acts together. A campaign for convincing Western buyers aimed at raising prices of Bangladeshi products should also be launched. Its positive impact can save garments factories here.
Source: Financial Express Bangladesh
Following a multi-year slump, the Philippine cotton industry is anticipating a renaissance through the help of an innovative, science-based crop that farmers began planting this month.
With the introduction of the Bt cotton variety, revival of the local cotton industry is very likely, according to Edison Riñen, regional director of the Philippine Fiber Industry Development Authority (PhilFIDA). The country currently imports all of the cotton required by the local textile industry.
Bt cotton has been genetically engineered to resist the dreaded bollworm (Heliothis armigera), a destructive pest that is partly responsible for the decline of the country’s cotton industry. The crop technology largely replaces the need to control the bollworm through applications of synthetic chemical pesticides, which cause harm to human health and the environment, Riñen said.
The Bt variety is being cultivated in experimental areas as PhilFIDA works on securing approvals for commercial release of the seeds. This year, 26 farmers in Ilocos Norte and a growing number of farmers in Pangasinan are expected to plant Bt cotton, Riñen said.
