November IIP data indicates weakness in both consumption and investments, and does not bode well for India’s GDP growth rate in FY19. After surging to 8.4% in October, the Index of Industrial Production(IIP) slowed down significantly in November. Given that the base was high, some decline was anticipated but the headline IIP growth of just 0.5% was a substantial negative surprise. Consensus estimates for growth, which had kept the base effect in mind, stood at 3.5% .What more worrying is that production growth in manufacturing, consumer durables and capital goods contracted simultaneously. This signals weakness in both consumption and investments, and does not bode well for India’s GDP growth. “Consumption growth has slowed down recently, especially as the farm sector concerns have intensified. Private sector investment is unlikely to see a sharp recovery given low capacity utilization across sectors, still-weak balance sheets and limited scope for the private sector to invest in the basic infrastructure sectors,” Kotak Institutional Equities Ltd said in a report on 11 January. Since IIP is used as an input for gross value added computation, this subdued performance would translate into weaker GDP growth in quarters to come. This raises risks of a further downward revision to GDP estimates for fiscal year 2018-19. Recently, the Central Statistics Office released the first Advance Estimates for the current fiscal year. The federal statistics body projected an overall economic growth of 7.2% for the year ending 31 March 2019. This is lower than the 7.4% estimated by the Reserve Bank of India.
Source: Live Mint
Surat has seen daily production fall from 40 million metre per day to 25 million metre per day. While the Gujarat government may have announced an incentive scheme to attract new investment in the textile value chain, existing units in the state fear that the same could affect their operations. Already reeling from sluggish economy, coupled with an accumulated input tax credit under the goods and services tax (GST) regime, existing textile units across the value chain fear incentivising new units would mean stiffer competition for them. With the state’s textile policy expiring on September 3, 2018, the Gujarat government recently announced a ‘Scheme for Assistance to Strengthen Specific Sectors in the Textile Value Chain’ effective from September 4, 2018, to December 31, 2023. As against the policy that attracted fresh investments in ginning, spinning and garmenting, the assistance scheme covers segments such as weaving, knitting, dyeing/printing, machine carpeting, technical textile, composite units and other activities in the textile value chain such as embroidery, winding, sizing, twisting and crimping. The scheme provides financial assistance through credit-linked interest subsidy of six per cent for micro small and medium enterprises (MSMEs) and 4-6 per cent for large enterprises, with an upper ceiling of Rs 20 crore per annum. Further, the scheme offers subsidy in power tariff of up to Rs 3 per unit for weaving, and Rs 2 per unit for other eligible segments with a validity of five years. “The assistance scheme for textile value chain is meant for new units being set up in Gujarat. However, there is nothing for the existing scheme. On the basis of the subsidy, the newer units would be more cost-effective, and compete with us on price difference. Already, the existing textile industry in Gujarat is struggling because of multiple reasons. Hence, we are going to ask the state government for some relief against the new scheme,” said Jitu Vakharia, president of South Gujarat Textile Processors’ Association (SGTPA). Already, around 30 textile processing units have been shut in recent months, with the remaining 320 odd units functioning at only 70 per cent of the original capacity. Surat, the biggest textile market in the state, alone has seen daily production fall from 40 million metre per day to 25 million metre per day. According to industry sources, based on the subsidy under the new scheme, newer units could carry a 15-20 per cent production cost advantage over the existing ones. “Any such policy is for new investment, but this aggravates the scenario for the existing units. Earlier, we were facing competition from outside, but now the competition will be closer home. It is only now that the industry is reviving in terms of growing demand in the last fortnight or so. The move could pull us back unless similar benefits are provided for the existing units,” said Ashish Gujarati, president of the Pandesara Weavers’ Association. Apparently, the scheme also offers assistance covering all existing units which are compliant with the government’s energy, water and environment conservation norms, and have been in operation for more than three years. The scheme provides 20 per cent assistance on the cost of machinery with a ceiling of Rs 30 lakh, and 50 per cent assistance for audit fees with a limit of Rs 1 lakh. The benefits can be availed once in two years during the operative period of the scheme. Further, a one-time financial assistance of up to 50 per cent of cost, with a limit of Rs 25 lakh, is provided for technology upgrade and modernisation in textile value chain. The scheme provides assistance of up to 25 per cent of capital expenditure on common facilities and infrastructure, with a limit of Rs 15 crore for setting up textile parks.
Source: Business Standard
Tax experts say this relaxation along with increased threshold for composition scheme would encourage more SMEs to file returns and more businesses to opt for this scheme. It’s better late than never. News of simplification of the goods and services tax (GST) norms is welcome. Allowing composition dealers to file one annual return with a simple declaration, instead of every quarter earlier, is a relief for many small and medium-sized enterprises (SMEs). The payment of taxes still needs to be done on a quarterly basis. According to analysts, this move would reduce the compliance burden and take some pressure off SMEs working capital cycles. And that would eventually improve their credit profiles. Tax experts say this relaxation along with increased threshold for composition scheme would encourage more SMEs to file returns and more businesses to opt for this scheme, respectively. “Easing of compliance and relaxation in GST applicability by the GST Council in terms of the return filing process could provide some relief for SMEs. That, along with Reserve Bank of India’s one-time restructuring scheme for MSME loans could provide some breather to SMEs in terms of easing a part of their working capital requirements, having continuity in maintaining credit lines and thereby prevent defaults to banks,” said Jindal Haria, associate director at India Ratings and Research Ltd. One would reckon that increased tax compliance led to a spike in the working capital requirements of SMEs post-GST implementation in 2017. Technology glitches while filing monthly returns led to delayed tax refunds. These factors weighed on the credit profiles of SMEs. But as the alongside chart shows, the modified credit ratio of SMEs has improved, reflecting higher number of upgrades than downgrades. Data shared by CARE Ratings Ltd showed that the modified credit ratio for SMEs reviewed by it stood at 1.13 times in calendar year 2018. This is better than 0.99 times seen in 2017. “The higher modified credit ratio this year shows improvement and stabilisation in performance of many SMEs post the shocks of demonetisation and GST implementation. Industry-wise, ratings improved in steel sector. Increased demand in the consumer food segment resulted in improvement in financial risk profile of those companies driving rating upgrades. Textile, ceramic and construction sectors remained stable while diamond and jewellery industry witnessed some stress due to restricted access to bank finance,” said Yogesh Shah, director (corporate ratings) at CARE Ratings. Meanwhile, a global survey of MSMEs recently conducted by Dun and Bradstreet (D&B) showed that access to finance is the major obstacle for Indian companies in this segment to scale up. “In India only 4% of MSMEs get access to formal finance; this is much lower than 11% in Indonesia, 18% in Sri Lanka and 20% in China. So, measures announced by the GST Council and RBI certainly help to aid sentiment towards MSMEs because of improved transparency. It helps the lender to get a complete picture. From a lender’s perspective, lending money to a business that has lower compliance is a risk that cannot be priced for. On the other hand, if one has to lend to an MSME where the risk of default is higher, one can simply lend at higher interest rate and cover for it,” said Manish Sinha, managing director of D&B India. Of course, while these measures are positive, their impact on credit profiles of SMEs is expected to be gradual.
Source: Live Mint
GeM is an online platform of the ministry for procurement of goods and services by government departments, public sector units, and other agencies. The commerce ministry Monday said Government eMarketplace (GeM) has launched an initiative to enable women entrepreneurs and self-help groups to sell different products at the platform. The initiative - Womaniya on GeM - seeks to develop women entrepreneurship on the margins of society to achieve gender-inclusive economic growth, it said in a statement. The initiative would enable women entrepreneurs and women self-help groups to sell handicrafts and handloom, jute and coir products, home décor and office furnishings, directly to various government ministries, departments and institutions, it said. “Womaniya homepage [https://gem.gov.in/womaniya] will inform procurement officers in various government ministries, departments and CPSEs about the drive to promote procurement of common use goods and services from women entrepreneurs,” it added. So far, 1,80,862 sellers and service providers are registered with the portal to sell 7,31,431 products and services.
Source: Live Mint
Domestic ratings agency Icra has said there is a “compelling case” to revisit the “restrictive” retail foreign direct investment (FDI) policy as India has not been able to get sizeable investments despite opportunities. Citing examples of other emerging geographies to allay concerns, the agency said organised and unorganised retail can co-exist. The multi-brand retail sector remains “most restrictive” to FDI, with a cap of 51 per cent ownership and guidelines relating to mandatory investments in back-end infrastructure and local sourcing norms, it said. “There is a compelling case for the government to revisit its FDI policy. The investment requirements of the sector are sizeable,” its Vice President and Co-Head for Corporate Sector Ratings Kinjal Shah said.
Relaxing norms
According to data released by the Department of Industrial Policy and Promotion (DIPP), India received USD 1.4 billion in FDI in the retail sector between 2000 and 2018, which is only 0.36 per cent of the overall FDI inflows, it said. The agency said a population of over 1.3 billion with favourable demographics and a rising middle class present a big opportunity for foreign retailers, who have actually evinced interest. Icra said “restrictive nature of the retail FDI policy” has curtailed the foreign retailers’ operations. Shah said there remains on-ground opposition for multi-brand retail from local traders, who fear risk of being thwarted by the deep pockets and increased competition from foreign players. Pitching for relaxation in inter-segmental restrictions for multi-brand retail, Shah also said India needs to up the caps on foreign ownership in the segment. “There is limited domestic capital being invested in the sector and FDI flows can bridge capital deficit and remove the supply chain inefficiencies,” Shah said. Citing global experience to drive home the point of co-existence between organised and unorganised retail players, the agency said China saw a spike in employment and number of traders since liberalising on foreign ownership in retail in 1992 and Indonesia is witnessing traditional retailers holding on to food selling. It can be noted that relaxations in foreign ownership is an extremely sensitive subject politically in the country which faces opposition from large segments.
Source: The Hindu Business Line
India’s annual Wholesale Price Inflation (WPI) index has eased to an eight-month low at 3.8% in December 2018 as compared to 4.64% in the preceding month. The official WPI for ‘All Commodities’ (Base: 2011-12=100) for the month of December, 2018 declined by 1.4% to 120.1 (provisional) from 121.8 (provisional) for the previous month. The annual rate of inflation, based on monthly WPI, stood at 3.80% (provisional) for the month of December, 2018 (over December, 2017) as compared to 4.64% (provisional) for the previous month and 3.58% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 3.27% compared to a build-up rate of 2.21% in the corresponding period of the previous year. The index for primary articles has declined by 1.8% to 134.7 (provisional) from 137.2 (provisional) for the previous month. The index for manufactured products has declined by 0.4% to 118.3 (provisional) from 118.8 (provisional) for the previous month. The index for ‘Manufacture of Textiles’ group rose by 0.1% to 119.2 (provisional) from 119.1 (provisional) for the previous month due to higher price of manufacture of made-up textile articles, except apparel (4%) and manufacture of other textiles (2%).The rate of inflation based on WPI Food Index consisting of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products group increased from -1.96% in November, 2018 to 0.07% in December, 2018. For the month of October, 2018, the final Wholesale Price Index for ‘All Commodities’ stood at 122.0 as compared to 121.7 (provisional) and annual rate of inflation based on final index stood at 5.54% as compared to 5.28% (provisional) respectively.
Source: Knn India
MUMBAI: The rupee on Monday plunged by 43 paise to close at nearly one-month low of 70.92 against the US dollar amid weak industrial output growth data, fall in domestic equity markets and sustained foreign fund outflows. A weak US dollar against major global currencies and fall in crude oil prices, however, capped losses of the domestic currency. At the Interbank Foreign Exchange (forex), the rupee opened on a firm note at 70.50 and touched a high of 70.44 per US dollar in early trade. But it pared early gains later and fell to an intra-day low of 70.95 against the US dollar. The domestic currency, however, recovered some lost ground and finally settled for the day at 70.92 per dollar, down 43 paise over its previous closing. This is the lowest closing level since December 17 when the rupee closed at 71.56 per dollar. On Friday, the rupee had weakened by 8 paise to close at 70.49 against the US dollar. HDFC Securities Head PCG & Capital Markets Strategy V K Sharma said weaker economic data, fall in domestic equity and foreign fund outflow weighed on the rupee sentiment. Industrial output growth dropped to a 17-month low of 0.5 per cent in November on account of contraction in the manufacturing sector, particularly consumer and capital goods. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, dipped 0.11 per cent to 95.56 in late afternoon trade. Brent crude, the global benchmark, was trading at $59.63 per barrel, lower by 1.41 per cent. Meanwhile, foreign funds sold shares worth Rs 687.20 crore on a net basis Friday, while domestic institutional investors bought equities to the tune of Rs 123.17 crore, provisional data showed. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.8244 and for rupee/euro at 81.2469. The reference rate for rupee/British pound was fixed at 90.9640 and for rupee/100 Japanese yen at 65.50.
Source: Times of India
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1291.64 |
USD/Ton |
0% |
1/14/2019 |
|
VSF |
1951.88 |
USD/Ton |
0.15% |
1/14/2019 |
|
ASF |
2382.19 |
USD/Ton |
0% |
1/14/2019 |
|
Polyester POY |
1196.27 |
USD/Ton |
0% |
1/14/2019 |
|
Nylon FDY |
2706.02 |
USD/Ton |
0% |
1/14/2019 |
|
40D Spandex |
4805.78 |
USD/Ton |
0% |
1/14/2019 |
|
Nylon POY |
1419.55 |
USD/Ton |
0% |
1/14/2019 |
|
Acrylic Top 3D |
2972.19 |
USD/Ton |
0% |
1/14/2019 |
|
Polyester FDY |
5574.70 |
USD/Ton |
0% |
1/14/2019 |
|
Nylon DTY |
1486.09 |
USD/Ton |
0% |
1/14/2019 |
|
Viscose Long Filament |
2528.58 |
USD/Ton |
0.59% |
1/14/2019 |
|
Polyester DTY |
2528.58 |
USD/Ton |
0% |
1/14/2019 |
|
30S Spun Rayon Yarn |
2691.23 |
USD/Ton |
-0.27% |
1/14/2019 |
|
32S Polyester Yarn |
1988.85 |
USD/Ton |
0% |
1/14/2019 |
|
45S T/C Yarn |
2883.47 |
USD/Ton |
0% |
1/14/2019 |
|
40S Rayon Yarn |
2144.12 |
USD/Ton |
0% |
1/14/2019 |
|
T/R Yarn 65/35 32S |
2528.58 |
USD/Ton |
0% |
1/14/2019 |
|
45S Polyester Yarn |
3001.76 |
USD/Ton |
0% |
1/14/2019 |
|
T/C Yarn 65/35 32S |
2513.79 |
USD/Ton |
0% |
1/14/2019 |
|
10S Denim Fabric |
1.36 |
USD/Meter |
0% |
1/14/2019 |
|
32S Twill Fabric |
0.83 |
USD/Meter |
0% |
1/14/2019 |
|
40S Combed Poplin |
1.11 |
USD/Meter |
0% |
1/14/2019 |
|
30S Rayon Fabric |
0.65 |
USD/Meter |
0% |
1/14/2019 |
|
45S T/C Fabric |
0.70 |
USD/Meter |
0% |
1/14/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14787 USD dtd. 14/01/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
China will double the quota for the country's foreign institutional investment programme as Beijing talks up financial reforms amid stock market weakness and slowing economic growth. The State Administration of Foreign Exchange, the foreign exchange regulator, said on Monday it would increase the quota for the Qualified Foreign Institutional Investor (QFII) programme to $300 billion from $150 billion to meet investment demand from abroad. The QFII programme, however, has struggled to use up even the existing $150 billion quota. In December, overseas investors received quotas - the amount each investor is allowed to invest under the scheme - worth $101.1 billion. Jim McCafferty, head of equity research, Asia Ex-Japan at Nomura, said the QFII announcement was an "incremental" change. "For some individual investors that are invested in the QFII programme, it's indicative of a more relaxed and more responsive government to getting those overseas investors in," he said. In contrast, index changes taking place this year, including higher weighting of Chinese Ashares in MSCI indexes, are "very, very crucial" for boosting foreign capital flows, McCafferty added. Fang Xinghai, Vice-Chairman of China's securities regulator, said on the weekend that inflows into the Chinese stock market could double to 600 billion yuan ($88.8 billion) in 2019 due largely to greater inclusion of A-shares in global indexes. Inflows into China's bond market, the world's third-largest, are also set to rise with the phased inclusion of Chinese yuan-denominated government and policy-bank bonds in the Bloomberg Barclays Global Aggregate Index starting in April. The QFII programme was first introduced in 2003 to allow foreigners to invest in China, but has since been partially superseded by the Stock and Bond Connect schemes linking Hong Kong and mainland markets. The QFII quota offers the potential to invest beyond traded securities. The benchmark Shanghai Composite index fell nearly 25 percent last year, making it among the world's worst-performing major equity indexes, amid signs of slowing growth and an escalating trade war with the United States.
Source: Economic Times
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has officially come into force in Vietnam as of today January 14. From this date, Vietnamese goods exported to countries that have ratified the deal will enjoy new preferential tariffs. This will create great opportunities for domestic enterprises to seek and expand their markets but is also a big challenge for enterprises due to increasingly fierce competition. Actively joining the playground With a deep level of commitment to tariff reduction, the CPTPP is expected to bring benefits to many industries in Vietnam, particularly textiles, garments and footwear. Regarding the Canadian market, for example, all Vietnamese textile and garment products will be subject to tariff elimination at the effectiveness of the agreement. According to statistics from the Vietnam National Textile and Garment Group (Vinatex), the textile and garment import revenue of Canada reached US$13.86 billion in 2018 including only US$814 million worth of imports from Vietnam, accounting for 5.9% of the total market share. Australia's textile and garment import turnover was reported at US$9.01 billion in 2017, including only US$256 million worth of imports from Vietnam, accounting for merely 2.8% of the total market share. Thus, Vietnam's textile and garment industry still has many opportunities to expand its exports when the CPTPP kicks off. Ho Chi Minh City accounts for one third of the country's textile and garment export turnover. Therefore, local enterprises are preparing to make good use of opportunities to increase exports to new potential markets including Canada, Peru, Mexico and others. Tran Huu Phuoc, Finance Director of Tran Hiep Thanh Textile Joint Stock Company, said that the company has invested VND1 trillion (US$43 million) in its textile factory with an annual capacity of 77 million m2 of cloth to prepare for the CPTPP. Chairman of the Ho Chi Minh City Textile and Garment - Embroidery Association, Pham Xuan Hong, said that enterprises in the association are all excited and are carrying out human resource training and changing technology and machinery in order to be ready to welcome "new air" from the CPTPP. Furthermore, enterprises have actively learnt about new issues in the CPTPP such as the environment, quality, origin of products, and others because these are mandatory regulations for countries participating in the deal. TNG Investment and Trading Joint Stock Company, the largest apparel exporting company in Thai Nguyen province, with more than 13,000 employees and a network of dozens of factories in the province, is also prepared to join the new playground. According to TNG Chairman Nguyen Van Thoi, the company has prepared conditions to meet the rules and standards set out in the CPTPP for five years and so far TNG has been able to meet most of the requirements in the CPTPP. In addition, TNG has planned to shift the import of materials to CPTPP member countries and build its own raw material factory instead of importing from countries that do not enjoy the many incentives of the CPTPP. Not only the business community, many local authorities have also made necessary preparations to effectively implement the CPTPP. Vice Chairman of Vinh Phuc provincial People's Committee Le Duy Thanh said that there will surely be a "wave" of foreign investors in Vietnam when the CPTPP comes into force and brings benefits to Vietnam. Vietnamese enterprises will likely meet difficulties due to weaker capacity compared to foreign enterprises, forcing them to promote research, investment in machinery and equipment, and improve management capacity and quality of human resources. Therefore, Vinh Phuc authorities have developed resolutions and offered many solutions to support businesses, while creating the best business environment for local enterprises to grow without intervention by administrative measures. Continuing to accompany enterprises Director of WTO Integration Centre under the Vietnam Chamber of Commerce and Industry (VCCI), Nguyen Thi Thu Trang said that Vietnamese enterprises are more proactive and willing to join the CPTPP. Businesses have learnt more about the deal and clearly defined their responsibilities as well as anticipated difficulties. However, there are still many things to do in order to solve the difficulties due to limited capacity of almost all Vietnamese enterprises, particularly small and medium-sized enterprises. According to the preliminary survey results of VCCI, there are three main groups of issues that are hindering enterprises from taking advantage of opportunities from the CPTPP. The first issue is that businesses do not understand fully the commitments in the CPTPP because they are too difficult and complicated. Secondly, enterprises do not have enough confidence in the capacity of State management agencies in implementing the CPTPP as well as supporting enterprises to take advantage of the CPTPP. Finally, domestic enterprises have weak competitiveness in both capital and technology. Therefore, the Government, ministries, sectors and localities must provide consultancy and complete information for people and businesses on the CPTPP. In return, businesses should actively acquire information on the commitments related to their industry and sector. The most important aspect for enterprises is to focus on improving their competitiveness in order to cope with challenges from the CPTPP and fluctuations in the international trade situation. Economist Vo Tri Thanh said that the CPTPP is also a legal contract, requiring us to fully understand these legal issues to make the best use of the deal and protect our rights. Another special feature of the CPTPP is that it requires strong institutional reforms from the Government to further support businesses to take advantage of opportunities as well as limiting costs in the integration process. The CPTPP is considered an important milestone in the integration process of Vietnam. According to the assessment, Vietnam is one of the countries enjoying the most opportunities from the CPTPP besides big challenges. If the country can overcome the challenges, it will have a chance to make great strides, under which enterprises play the key role. It is expected that the Government will issue a detailed action programme for the CPTPP to ensure the smooth and effective implementation of the agreement. Enterprises also need to make more efforts to grasp the commitments in their areas to turnchallenges into motivation to renew technology, reduce production costs, and increase competitiveness in order to participate more deeply in the global supply chain.
Source: Nhan Dhan Online
With his wrinkled hands, a worker surnamed Gao in his 50s stacked red kerchiefs decorated with floral patterns every day for almost a year in a factory in Yiwu, East China's Zhejiang Province, but he has no idea what these products are made for. His co-worker, who stood in a packaging section, attached small tags to these red kerchiefs that say Old Navy — an American clothing and accessories retail brand owned by Gap Inc that operates thousands of stores in the US. "I don't know where these products will be sent to," Gao told the Global Times. Before moving to the next section, he carefully looks to see if there are any defects, which may affect the sales of the American brand for upcoming summer season in 2019. Yiwu-based Xize Fashion Scarf produces millions of scarfs every year and ships them to countries including the US, Germany, UK and France. As a major original equipment producer (OEM) for American brands such as Gap, Macy's and French firms Camaieu and Gemo, Xize is among hundreds and thousands Chinese factories in southern China, an area known as the factory of the world. The total foreign trade volume of Yiwu accounted for nearly 9 percent of the total trade volume of China in the first half of 2018, according to official data. About 1,100 kilometers away from the city, which is also home to the world's largest wholesale market, some factories in Dongguan, a manufacturing hub in South China's Guangdong Province, are making a variety of products for American consumers ranging from tablecloths to toys for children. In Botex Daily Products Manufacturing's plant in southern Dongguan, dozens of workers are packing grey woolen slippers that will be later sold at US wholesale chains such as Costco and Wal-Mart at retail price of $25 per pair. "We export about HK$70 million ($8.93 million) worth of daily products every year, and 70 percent of our products are shipped to the US," Li Zhijie, general manager of the company, told the Global Times. Part of American lives Mobile phones and other household goods make up the largest single category of US imports from China, accounting for $70.4 billion in 2017, according to Reuters' calculation citing the US Census Bureau. "I buy made-in-China things at random, the quality is usually very good," said Caroline Ianneta, a resident living in Long Island, New York, where several wholesale markets such as Target and HomeGoods sell countless products imported from China. During the past holiday season, Ianneta said she had got Chinese-produced gifts for Thanksgiving and Christmas, such as clothes and housewares. China has been the largest supplier of daily goods to American consumers for many years. "Some Chinese goods — including cheap plastics and toys — were around in my house long before I was born," Parker Brown, who is from Arizona and now lives in New York, told the Global Times. "I'll buy household goods, incense, clothes, and other things from China," he said. While the US imported approximately $522 billion worth of goods from China in 2017, an escalated trade war between China and the US has been disrupting the supply chain in 2018, and some Chinese entrepreneurs are now reconsidering the way of doing business with the country on the other side of the Pacific Ocean. Price to pay Beijing and Washington announced they would impose tranches of tariffs on each other in 2018, and tariff lists covered thousands of specific items. The Trump administration first authorized tariffs of 25 percent and 10 percent on steel and aluminum imports in March 2018 and then slapped a 25 percent tariffs on $50 billion in Chinese goods in last June. Three months later, the US government raised the stakes by announcing 10 percent tariffs on $200 billion in Chinese goods, and planned to hike the rate to 25 percent at the beginning of 2019, though the two sides have agreed to have a 90-day truce. In Dongguan and in Yiwu, Chinese manufacturers have been keeping a close eye on what is now happening the 90-day truce between the two countries. With some workers putting together components for a Super Mario race car toy, CH Kwok, general manager of Dongguan LC Technology Co, was considering how to remain competitive even with increased tariffs on Chinese-made goods. The company had engaged in producing for American brands in Dongguan since 1990s. The OEM exports millions of dollars worth of products every year to the US for companies such as Kid Galaxy and Mattel. "It's up to our American buyers whether they would pay more tariffs or not," Kwok said, noting that the business has such low profit margins that it could not be able to bear a significant burden like tariff hike. When US companies have to pay more to purchase goods from China, it is directly reflected in retail prices. Some US consumers are already seeing higher prices on some products. "We hope the US and China will negotiate a positive resolution that improves our trading relationship and avoids further tariffs, which are ultimately taxes paid by American businesses and consumers," Jonathan Gold, vice president of supply chain and customs policy of the National Retail Federation, told the Global Times. Trade helps provide a wide range of products to consumers at prices they can afford, lowering the cost of living for American families, he noted. "Trade barriers such as tariffs are taxes that drive up prices and limit the availability of consumer products," he said. Prepared for the worst Some Chinese factories have seen their products included into the tariff lists, and others have not been affected yet. As businesses hope for the best outcome from the ongoing US-China trade talks, some have been reorienting their focus to the domestic market or shifting some orders to their affiliates in Southeast Asia and South Asia. Zhu Haishan, chairman of Zhejiang Jiabolang Blanket and Carpet Co, has lately been studying a proposal from the local government for the purpose of supporting local private companies, as they have seen growing challenges since 2018. "Small- and medium-sized enterprises lack capabilities to adjust to a changing environment and diversify their supply chain. That makes them more vulnerable amid a trade war," Zhu said. In a manufacturing plant that produces about $10 million worth of carpets every year for household use, nearly one-third are shipped to the US, and this portion of the products is now facing a 10 percent tariff increase, according to the businessman. "In our case, factories are the ones paying for higher trade barriers, and the impact will become much more apparent in 2019," he told the Global Times. With lingering uncertainty over the outcome of trade talks, some factories said US buyers have already halted making new orders in recent months, which weighed on overall confidence and forced them to restructure their business plans. "We're now considering expanding our sales channels to the domestic market," Zhu noted. Some labor-intensive industries such as textiles and toy manufacturing have been moving out of China in recent years due to rising labor costs. And a recent report from UBS suggested that the majority of exporters have already made efforts to shift at least some production operations out of China as threats from the US-China trade war impact their businesses. For some manufacturers who have been investing for decades in the country's manufacturing hubs, leaving China is not the best option to get prepared for the worst scenario amid escalated tensions between the two countries. "Some of my friends went to invest in Vietnam, but they faced higher procurement costs, as many raw materials had to be shipped there from China," Jason Ye, general manager of Dongguan Yimei Houseware Co, told the Global Times. It usually cost $1.50 to make a tablecloth at his factory in Dongguan, which is sold at a retail price of $3 in the US. "Shifting the production lines means adding up costs for logistics, and cheap made-in-China products may not always be available," he said.
Source: Global Times
Rwanda and Egypt are looking to cooperate in development projects including real estate development and construction materials, meat and leather, textiles as well as tropical fruits and vegetables, according to Rwanda’s envoy to Egypt Amb. Saleh Habimana. This comes after Habimana on Friday met and held discussions with Abdel Moneim al-Taras, the Chairperson of the Arab Organization for Industrialization (AOI) on cooperation on the sidelines of a visit by 40 African ambassadors to the organisation. He said that, among others, the Egyptians are advanced in real estate development as well as construction materials. Habimana whose residence is in Cairo, Egypt, represents Rwanda’s interests in Egypt, Tunisia, Algeria and Libya. “As Egypt is busy warming up to succeed Rwanda as chair of African Union, the Embassy of the Republic of Rwanda in Cairo has embarked on efforts to further promote bilateral relations,” the envoy said. “They consume a lot of meat and are ready to develop this industry as well as benefit from leather by manufacturing shoes. In textiles, of course they are rich in cotton,” he added. From October 2018, Habimana said, they started Umuganda to plant trees and protect the River Nile and the participation of locals is growing rapidly. “On the investment and political front, we are approaching organisations and parastatals under government,” he said. In the meeting with Al-Taras, the envoy said, they also agreed that the AOI also establish an Africa office in Kigali. Asked when this would happen exactly, Habimana said that issues are still in negotiations.
Egypt Air starting direct flights
Habimana also noted that “we hope to have EgyptAir starting direct flights” as Egypt would like to ease its dependence on Latin America in its tropical fruit and vegetable consumption.“Now Rwanda is considered by many as the secure gateway to the Great Lakes region, they don’t mind opening their point of distribution in Kigali for the region,” the envoy said.
EgyptAir is the flag carrier airline of Egypt.
Meanwhile, in a related development, Egyptian media reports indicate that EgyptAir will launch two new routes in the continent by end January, one being to Kigali, and the other to Douala, Cameroon.
Source: The New Times
In Uzbekistan, Indian companies are exploring investment opportunities in the sectors like pharmaceutical, textile, education, Information Technology and tourism. President of Uzbekistan Shavkat Mirziyoyev will attend the Vibrant Gujarat international investment summit as a key guest in a first Central Asian country to participate as a country partner in the flagship investment summit of Gujarat. During the two day summit, the President will also hold a bilateral meeting with Prime Minister Narendra Modi, who will inaugurate the 9th edition of the summit on January 19th. “Our President is coming to participate along with a government and business delegation for the Vibrant Gujarat Summit,” Farhod Arziev, Uzbekistan’s Ambassador to India, told The Hindu on January 14. The high-level delegation from Uzbekistan includes heads of Investment Committee, Trade Committee, Chamber of Commerce, Ministry of Foreign Affairs as well as more than 60 business owners, CEOs of the biggest national and private companies of Uzbekistan. According to him, this is the second visit of President Mirziyoyev to India during the last four months. State visit of Uzbekistan’s President in October 2018 opened a new chapter in Uzbek-India relations, including wider trade and investment cooperation. During the two day summit, the first meeting of newly formed Uzbekistan Indian Business Council will also be held to pitch the central Asian country as an investment destination for Indian businesses. “As Uzbekistan is opening up as an investment destination, Indian businessmen look at the country as a hub for further expansion within the resource-rich region,” Ambassador Arziev said. "Economic liberalization, rapid political reforms and encouragement of FDI make Uzbekistan an inviting destination for business and investment.”
Investment opportunities
In Uzbekistan, Indian companies are exploring investment opportunities in the sectors like pharmaceutical, textile, education, Information Technology and tourism. “Since Gujarat is a hub of pharmaceuticals as top firms are based here, we have invited countries like Uzbekistan and African countries where our companies can explore opportunities for enhancing their trade and businesses,” Gujarat Chief Secretary Dr. J.N. Singh said. To attract investments in the pharmaceutical sector, an Uzbek Indian Free Pharmaceutical Zone is being developed in the Andijan region and this project was among 17 agreements that were inked during the Uzbek president’s State visit to India last year. In Uzbekistan, 18 free economic zones (FEZ) have been established with a 30-year operational life and the possibility of a subsequent extension. Seven of them have a pharmaceutical focus. After the inauguration of the summit by PM Modi, a country seminar on Uzbekistan will be held with a special focus on Uzbek Indian Free Pharmaceutical Zone in Andijan.
Source: The Hindu
China's exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world's second-largest economy in 2019 and deteriorating global demand. Adding to policymakers' worries, data on Monday also showed China posted its biggest trade surplus with the United States on record in 2018, which could prompt President Donald Trump to turn up the heat on Beijing in their bitter trade dispute. Softening demand in China is being felt around the world, with slowing sales of goods from iPhones to automobiles, prompting warnings from the likes of Apple and from Jaguar Land Rover, which last week announced sweeping job cuts. The dismal December trade readings suggest China's economy may have cooled faster than expected late in the year, despite a slew of growth-boosting measures in recent months ranging from higher infrastructure spending to tax cuts. Some analysts had already speculated that Beijing may have to speed up and intensify its policy easing and stimulus measures this year after factory activity shrank in December. China's December exports unexpectedly fell 4.4 percent from a year earlier, with demand in most of its major markets weakening. Imports also saw a shock drop, falling 7.6 percent in their biggest decline since July 2016. Analysts had expected export growth to slow to 3 percent with imports up 5 percent. "Today's data reflect an end to export front-loading and the start of payback effects, while the global slowdown could also weigh on China's exports," Nomura economists wrote in a note, referring to a surge in shipments to the U.S. over much of last year as companies rushed to beat further tariffs. "The export growth print also suggests that the recent strength of the yuan might be short-lived; Beijing will perhaps be more eager to strike a trade deal with the U.S.; and that policymakers will need to take more aggressive measures to stabilise GDP growth." Net exports had already been a drag on China's economic growth in the first three quarters of last year, after giving it a boost in 2017. Asian shares and U.S. stock market futures fell as the surprisingly weak Chinese data added to fears of weaker corporate profits and investment, while the yuan currency gave up some of its early gains.
HIGHER TRADE SURPLUS WITH U.S.
China's politically-sensitive surplus with the U.S. widened by 17.2 percent to $323.32 billion last year, the highest on record going back to 2006, according to Reuters calculations based on customs data. China's large trade surplus with the United States has long been a sore point with Washington, which has demanded Beijing take steps to sharply reduce it. Washington imposed import tariffs on hundreds of billions of dollars of Chinese goods last year and has threatened further action if Beijing does not change its practices on issues ranging from industrial subsidies to intellectual property. China has retaliated with tariffs of its own. However, Beijing's export data had been surprisingly resilient to tariffs for much of 2018, possibly because companies ramped up shipments before broader and stiffer U.S. duties went into effect. As many market watchers predicted, that boost has faded in the last few months. China exports to the U.S. declined 3.5 percent in December while its imports from the U.S. were down 35.8 percent for the month. China's total global exports rose 9.9 percent in 2018, its strongest performance in seven years, while imports increased 15.8 percent. But December's gloomy data, along with several months of falling factory orders, suggest a further weakening in its exports in the near term. "A trade recession is likely, in our view," Raymond Yeung, chief economist at ANZ, said in a note, predicting a period of export contraction similar to 2015-16. "The global electronics cycle remains the key driver of Chinese exports. A potential downturn in the sector poses the real risk to China's external outlook even if China and the U.S. reach a resolution on their trade dispute." ING said a fall in electronic shipments could be related to foreign companies avoiding using China-made electronic components, adding that exports and imports of electronic parts and goods will likely shrink this year.
WEAK IMPORTS HIGHLIGHT SOFTENING DEMAND
The higher tariffs China levied on U.S. supplies also hit overall import growth. For all of 2018, soybeans, the second largest imports from the U.S., fell for the first time since 2011. Even if Washington and Beijing reach a trade deal in their current round of talks, it would be no panacea for China's slowing economy, analysts say. "The import slowdown is consistent with other signs that growth in China's domestic economy continued to weaken," said Louis Kuijs, head of Asia economics at Oxford Economics. "Overall economic growth slowed further in the fourth quarter and remains under pressure from weaker exports, slow credit growth and cooling real estate activity." Chinese policymakers are widely expected to roll out more support measures in coming months if domestic and external conditions continue to deteriorate. Early this month, the central bank said it would slash banks' reserve requirements -- the fifth such cut in a year -- as it tries to encourage more lending and reduce the risk of a sharp slowdown."If pressure on the economy is still relatively large in the first half, a cut every quarter should be highly likely," said Xu Gao, chief economist at Everbright Securities. In an annual meeting of top leaders last month, China said it will boost support for the economy in 2019 by cutting taxes and stepping up policy adjustments. A few analysts believe interest rate cuts are a possibility, but most expect Beijing will refrain from massive stimulus measures like those deployed in the past, due to worries that it could add to a mountain of debt and weaken the yuan. Sources told Reuters last week that Beijing is planning to lower its economic growth target to 6-6.5 percent this year after an expected 6.6 percent in 2018, the slowest pace in 28 years.
Source: Gdn Online
Vietnam’s textile and garment sector is hoped to make breakthroughs in 2019 based on successes and momentum last year. Vietnam’s textile-garment industry hopes for breakthroughs in 2019, vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking new. According to the Vietnam Textile and Apparel Association (VITAS), 2018 was a successful year for the textile and garment industry with a total export turnover of over 36 billion USD, up over 16 percent year-on-year, making Vietnam one of the three biggest exporters of textiles and garments in the world. VITAS Chairman Vu Duc Giang said last year, the world saw complicated developments, rising trade disputes and scientific-technological advances. In that context, the association proposed many measures to the Government, and relevant ministries and sectors to remove policies that cause difficulties for businesses operating in this field, he said. With the results achieved in 2018, Vietnamese textile firms have witnessed positive signals for orders in 2019. Many businesses have already received orders for the first six months of 2019 and even the whole year. Vietnam’s products are highly competitive and the country gradually completed the textile supply chain because flows of capital investment in the textile and dyeing industry, and material has been on the rise. The upcoming enforcement of new generation free trade agreements is a positive factor supporting for production and business activities of the sector in 2019. On that basis, VITAS has set a target of 40 billion USD in export turnover, up 10.8 percent compared to 2018. The sector is expected to enjoy a trade surplus of 20 billion USD, and create employment and increase income for 2.85 million workers. Experts said in 2019, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is hoped to create a boost for many industries of Vietnam, including the textile and garment sector. In addition, the textile and garment sector is also waiting for more orders shifted from China to Vietnam due to the US-China trade war. According to Pham Xuan Hong, Chairman of the Board of Directors of Saigon 3 Garment Joint Stock Company, domestic enterprises will be enabled to choose orders with highs price and easier requirements when a lot of orders are moved from China to Vietnam. In order to catch up with these opportunities, local businesses need to gradually improve technologies and invest more in new technologies, he said. However, opportunities will always go with challenges, experts said. According to the Ministry of Industry and Trade, 2019 will continue to be a challenging year for the sector to integrate into the global textile supply chain. Especially, the fourth Industrial Revolution will have great impacts on the textile and garment industry in the coming time, forcing it to change and strongly increase investment in equipment and personnel. Many consumers now require origin certifications and environmentally-friendly products, so textile and garment enterprises need to ensure global standards of materials to ensure health of customers. Bui Kim Thuy, Chief Representative of the US-ASEAN Business Council (USABC), said Vietnam is participating in 16 free trade agreements (FTAs). Ten out of 12 signed agreements have been enforced, such as the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN-China FTA, the ASEAN-Korea FTA, while the two remainders, the CPTPP and the ASEAN-Hong Kong (China) FTA, have not yet come into force. The participation in various FTAs helps Vietnamese enterprises to have more choices in exporting goods abroad. However, those are also bringing challenges to the sector, she said. Thuy stressed that if businesses do not meet regulations on origin of goods, it will be difficult for them to take full advantage of incentives from FTAs.-VNA
Source: Vietnam Net
ISLAMABAD: Adviser to the Prime Minister on Commerce Abdul Razzaq Dawood has vowed to develop the textile industry on modern lines. Chairing a meeting on the textile industry in Islamabad on Monday, the adviser said the textile industry could not develop in the country due to the shortage of trained workforce. He said the development of human resource is amongst the priorities of the incumbent government and the country requires 300,000 trained people annually. On the occasion, the adviser was apprised about the problems faced by the textile industry.
Source : Pakistan Today
Turkey’s textile industry foresees weaker demand in the domestic market as rising costs will push prices higher, but hopes to boost exports this year. “The overall costs of the firms operating in the textile industry have increased by 30 percent over the past one year due to the rises in energy costs and minimum wages as well as exchange rates. Those cost increases will be reflected onto prices in the coming months,” said Ahmet Öksüz, the head of the Istanbul Textile and Raw Materials Exporters Association (İTHİB). The expected price increases will translate into a contraction in the domestic market, according to Öksüz. “This contraction will be felt particularly in the first half of the year, but the industry will see double-digit growth in exports,” he said. Exports of the textile and raw materials industry increased by 4.5 percent in 2018 from a year ago, hitting $10.5 billion. “Our target for 2019 is to generate more than $11 billion in export revenues. We expect to boost exports in 75 percent of our markets. The industry’s three largest export markets are Germany, Italy and the U.S., while 50 percent of exports go to the EU,” Öksüz added. Turkey is the seventh largest textile and textile raw materials supplier in the world. “Many textile firms, which want to avoid risks stemming from the expected contraction in the domestic marker, are increasingly focusing on exports. The costs in the industry are indexed to foreign currencies thus companies experience hardship when currency rates rose,” he said. Öksüz also noted that 314 member companies of the association exported their goods for the first time in 2018. “Last year, Turkish firms shipped goods to a total of 188 countries, but the EU remained the largest single market with $5.4 billion in export revenues. Exports to Russia, meanwhile, soared 107 percent and sales to Belarus jumped 43 percent. Exports to Portugal saw a 26.3 percent increase.” According to Öksüz, the textile industry will also target the South American and Far Eastern markets.
Source: Hurriyet Daily News
FRANKFURT— Malaysia has the potential to increase exports of textiles to the United States (US) in light of its trade war with China. The textile industry, often described by some experts as a “sunset industry,” began to lose its sheen decades ago following rising costs and fierce competition from China, Bangladesh and Vietnam. But the ongoing US-China trade war has prompted some western buyers to look for alternative source, and this is where Malaysia can take advantage of the situation. Hopes of reviving the industry in Malaysia — and other South-east Asian suppliers of home-textiles and other textile products — were visible at Frankfurt’s just-concluded four-day Heimtextil Trade Fair, the world’s largest event for home textiles and accessories. While an abrupt switch by buyers representing the US and other western importing companies and houses to other supplying countries is not expected, the ongoing dispute between the two economic giants has caused what traders at the Frankfurt show call a “gentle panic.” “I am pretty sure buyers in the US and elsewhere are aware of the perils of asymmetrical dependency on China as a source of textile products, coupled with the many problems which foreign importers face in that country, particularly in regard to quality and post-sales service, among others. “Prices of Chinese products have also risen, no thanks to the soaring labour and production costs in that country. So, the ongoing trade war could, in fact, be the proverbial straw that will break the camel’s back,” said one US buyer who preferred to remain anonymous to Bernama at the Heimtextil show. He said Malaysia could step in to fill the vacuum if US companies decide to quit China, adding Malaysia’s textile quality is definitely a plus, despite prices being slightly higher. Meanwhile, Malaysian exhibitors offered testimony of the changing scenario in the home-textile trade. Fernex Sdn Bhd’s marketing director Lee Kheang Lim said the company received many solid business enquiries from both existing and potential new buyers from around the world, including the US. Wendy Tan, managing director of Nature World Manufacturing Sdn Bhd said the company, which manufactures home textile products, also received numerous enquiries. “While our buyers have shown a keen interest in our Bio-Active Energy-based products, the increase in the number of enquiries may possibly be due to the ongoing trade war, with buyers trying to establish alternative sources of supply,” she said. Organised by Messe Frankfurt, the Heimtextil show from January 7-10 boasted 3,025 exhibitors from 65 countries. Olaf Schmidt, Messe Frankfurt vice-president of textiles and textile technologies said the number of US buyers at the show had increased, implying that the country was exploring opportunities in the international market. “All the big US stores are here. There is, clearly, a shift to other countries and because of the emotional character of the ongoing problem, we should know in about six months from now what will happen,” he added. However, he was unsure if other suppliers can quickly replace China as the world’s biggest textile supplier with its huge textile-manufacturing infrastructure. Schmidt was upbeat about the Asean region’s potential, with Vietnam, Malaysia, Indonesia and Bangladesh expected to become key players in the global textile supply chain. “I also believe fierce international competition will force suppliers to upgrade their production processes, adopt automation and devising faster and convenient modes of supplies. Technological innovation is the mantra of the industry’s future,” he said. The textile exhibition saw participation from Asean exhibitors, including eight exhibitors from Indonesia, three from Malaysia, three from Thailand and eight from Vietnam. The top two textile giants, China and India, had 559 and 394 exhibitors respectively, surpassing the host country Germany at 301. According to the Malaysian trade commissioner in Frankfurt, Badrul Hisham Hilal, Malaysia’s total exports of textiles, apparel and footwear amounted RM13.69 billion in the January-November 2018 period. The US is the biggest market for such products, accounting for RM1.78 billion (13 per cent) of total exports. ― Bernama
Source: Malaysia Mail
Thousands of Bangladeshi garment workers downed tools and walked out of clothing factories Monday, refusing to end a week-long strike over wages and rejecting government efforts to end the standoff. Police said thousands of labourers marched off factory floors for an eighth consecutive day, disrupting Bangladesh's USD 30-billion-a-year industry spinning clothes for major western brands. Unlike previous days, there were no reports of violence. One worker was killed last week after police fired rubber bullets and tear gas at some 5,000 protesters. In Ashulia, near the capital Dhaka, armoured personnel carriers and hundreds of police guarded factories in the country's largest garment hub. A message broadcast over loudspeakers urged protesters to return to work: "A list is being prepared of those who are roaming around. No violence will be tolerated." As the strike entered a second week Sunday, the government brokered a deal between unions and manufacturers to end the dispute, agreeing to raise wages for mid-tier tailors. But some received hikes of little more than 20 taka (USD 0.25) a month, angering many tailors who churn out boutique clothing for high-end fashion lines overseas. "I think the wage hike was unjust," Ruhul Amin, executive president of the Garment Trade Union Centre, told AFP. Some workers joining Monday's protests expressed anger over the heavy-handed police response last week and accused factory bosses of withholding pay from those who joined the strike. "We're not getting paid for the last week, that's why we walked out," Mitali Begum, another labourer, told AFP. The protests are the first major test for Prime Minister Sheikh Hasina since winning a fourth term in the December 30 elections, which were marred by violence and allegations of vote rigging and intimidation. An estimated four million Bangladeshis work in the country's 4,500 garment factories. Roughly 80 percent of Bangladesh's export earnings come from clothing sales abroad, with global retailers H&M, Primark, Walmart, Tesco and Aldi among the main buyers. Last year, Bangladesh was the second-largest global apparel exporter after China. It has ambitious plans to expand the sector into a $50-billion-a-year industry by 2023.
Source: Business Standard
