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MARKET WATCH 12 APRIL, 2019

NATIONAL

INTERNATIONAL

Sweden stresses on need for EU-India free-trade agreement

Ease of doing business in India has improved: Swedish envoy. Sweden has stressed on the need for a free trade agreement (FTA) between India and the European Union for ease of doing business for companies that want “predictability”. “Part of that (FTA) would also hopefully flow an investment protection agreement. They can be negotiated together. Since the bilateral investment protection agreements have been ended by India over the last few years, this would be, I think, to many companies, a very important ingredient that would facilitate and increase trade,” said Klas Molin, Swedish Ambassador to India. “The day we sit down to negotiate, perhaps you will see a less traditional type of agreement come out of it, because there are a number of new factors,” Molin added. He also stressed on how Sweden is heavily dependent on trade, and that it shares a “sound” relationship with India. He underlined the need for more partnerships between companies from both countries. “If a Swedish company teams up with an Indian company or develops products that are interesting to consumers in our respective countries, I don’t see how it could not lead to more trade,” Molin said.

Betting big

Swedish firms like home-furnishing company IKEA and telecom player Ericsson are betting big on India. “Ericsson is bigger in India than anywhere else in the world. They have more people employed in India than any other country, Sweden included. IKEA has been sourcing in India for decades,” Molin said. India’s talent and digital focus are aspects that present a huge advantage. “The possibility of having this kind of talent and brilliance with scale is fascinating,” he said. Molin also said that issues like healthcare, sustainable transportation and public safety are important issues in India and that both the countries’ governments intend to work together to address them. “Quoting NITI Aayog CEO Amitabh Kant liberally, I understood him to say that whatever solutions we can find for India, many of these will be applicable on a global scale,” Molin elaborated, referencing Kant’s address earlier on Thursday at the AI for All summit, an India-Sweden partnership event. Both the countries launched a joint Industrial R&D programme on the occasion. Molin also said that it has become easier to do business in India. “Every year, the Swedish Chamber of Commerce puts out a survey to all its member companies. The survey indicates that the satisfaction rate (of doing business in India) is good. Major reforms like GST and Customs practises are making a difference,” said Molin. He also referenced IKEA’s retail entry and called it a “bi-partisan achievement”.“It was actually under Manmohan Singh that rules on single-brand retail started changing,” he added.

Involving stakeholders

Engaging all stakeholders — government, academia, and industry or the ‘triple helix’ — is key to the Sweden-India partnership, Molin said. “We are talking more and more about a quadruple helix — also involving civil society and people,” he added.

Source: The Hindu Business Line

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US seeks huge tariff concessions to restore trade benefits to India

Sources said while revenues foregone by India would be $190-240 million a year, Washington is asking for tariff concessions in IT products amounting to $3.2 billionTo restore trade benefits to India, the United States is asking for concessions that are much higher than the benefits the country would forgo with the withdrawal of the generalised system of preferences (GSP), affecting potential negotiations between the two countries. Sources said while revenues foregone by India would be $190-240 million a year, Washington is asking for tariff concessions in IT products amounting to $3.2 billion. GSP allows India to export some goods to the US at zero tariff. Besides, the US is against New Delhi's move to put price cap on medical devices ...

Source: Business Standard

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India says it's no tariff king, US also charges higher duty on some items

The US charges high tariffs on several items such as tobacco at 350 per cent, peanuts at 163.8 per cent, footwear at 48 per cent, shoes at 32 per cent. India has countered US President Donald Trump’s charges of India being a “tariff king” that imposes huge duties on products like Harley-Davison against zero by Washington on motorcyles. Sources said tariffs can't be compared on product to product basis, but on overall basis as every country has given its commitment to the World Trade Organisation (WTO) on specific products based on its necessities. The US charges high tariffs on several items such as tobacco at 350 per cent, peanuts at 163.8 per cent, footwear at 48 per cent, shoes at 32 per cent. Similarly, India charges high tariffs on some other products such as alcohol and wines at 150 per cent and motor cycles at 100 per cent, they said.

Source: Business Standard

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Pact inked to empower handloom weavers

Tata Trusts, Microsoft India join hands to impart business skills, digital literacy. Tata Trusts and Microsoft India have signed a Memorandum of Understanding (MoU) to jointly rejuvenate the handloom clusters in the eastern and north-eastern parts of the country. Through this collaboration, both partners will be leveraging each other’s strengths to provide business and communication skills, design education and digital literacy to handloom weavers to build a sustainable future in the slow fashion industry.

Project ReWeave

Microsoft’s Project ReWeave will help preserve traditional weaving forms by upskilling workers, designing and marketing merchandise, and creating sustainable livelihood options. The project has implemented a new e-commerce platform by setting up digital empowerment centres and design curriculum in Telangana’s weaving clusters of Rajouli, Chottuppal, Pochampally, Naryanpet and Gadwal, and will shortly extend it to Warangal and Siddipet. Microsoft will also enable digital training through Project Sangam, a Microsoft Azure-based Learning Management System, which provides necessary training and tools to weaving communities to help them realise their full potential.

Antaran initiative

Tata Trusts’ initiative, Antaran, aims at rejuvenating ailing handloom clusters through an end-to-end programme, which would nurture artisans as designers and entrepreneurs. The Trusts have initiated intensive work in Odisha, Assam and Nagaland. The programme will benefit 3,000 artisans directly involved in pre-loom, on-loom and post loom processes, impacting the livelihood of weavers in six weaving clusters in these three States. Commenting on the partnership, R. Pavithra Kumar, chief programme director, Tata Trusts, said, “We are delighted to partner with Microsoft India to digitally educate and further empower these weavers. Often, these communities are marginalised and do not receive much exposure to modern technical amenities or training to develop business skills. Through this initiative, we want to empower artisans and bring them on a par, making them competitive in the industry.” Anil Bhansali, CVP Cloud & Enterprise and managing director, Microsoft India, said, “As a part of our philanthropies’ programmes in India, we are focused on reviving some of the forgotten and fading handloom forms in India’s textile heritage. Our partnership with Tata Trust will help reach down to the grass-root level of the weaver clusters and train them, building a digitally inclusive society. We will use Project Sangam to empower the weavers across India so that they can adopt and deploy digital tools to improve their craft.” Employing over seven million families in India, the craft sector is the country’s largest source of employment after agriculture. In addition to having a high potential of employment, the sector has great economic importance in terms of foreign exchange earnings.

Source: The Hindu

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China-India mainline service to provide faster transit, connectivity via Kochi

The DP World Cochin will strengthen the direct connectivity from Kochi to Far East locations like Penang, Port Klang, Hong Kong and Shanghai. DP World, which operates International Container Transshipment Terminal (ICTT), Vallarpadam, has added a new weekly mainline service, China-India Express 2 (ci2) run by Wan Hai Shipping Line. The maiden vessel called on DP World Cochin on Tuesday. The service will strengthen the direct connectivity from Kochi to Far East locations, officials said here. The direct service is an opportunity to the trade, benefiting customers for faster connections ensuring timely loading and delivery as per schedules. With this major development, ICTT reinforces its position as South India’s transhipment hub. The service will provide direct connectivity to Kochi – Penang - Port Klang - Hong Kong – Qingdao – Shanghai – Ningbo - Shekou. Praveen Joseph, CEO of DP World Cochin said with this new service, the port operator was pleased to see India gain even greater access to key destinations across the world. It will provide a direct, reliable and stable service benefitting the trading community of the country. “Wan Hai Shipping Line’s decision to join forces with us underlines the confidence they have in our capabilities, adding value to trade across the seas. With this major development, DP World reinforces ICTT as an international transhipment hub,” he said. Wan Hai has regular mainline services connecting Australia, the Far East, South-East Asia, Middle East, Europe and the Mediterranean. Terminal also expects to further boost its international mainline connectivity in the coming months, which will help its customers reduce delivery times and costs to serve international markets. M Beena, chairperson of Cochin Port Trust, said the launch of Wan Hai Lines comes in the backdrop of the historical ties between China and Kochi, has reflected in the Chinese fishing nets and the growing trade between China and Far East sector and Cochin Port. “The new service will link key ports in China and other Far East ports to Kochi, by providing faster transit and better connectivity,” she said.

Source: Indian Express

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Louis Vuitton keeps rivals on their toes with solid sales

Some luxury manufacturers are struggling more than others to hold onto their all-important Chinese clients, who make up over a third of industry sales and are increasingly spending on high-end wares at home rather than overseas. Louis Vuitton owner LVMH on Wednesday set a high bar for rival luxurygoods companies all trying to capitalise on Chinese demand for high-end handbags and clothing, as sales growth at the conglomerate picked up pace in the first quarter. Some luxury manufacturers are struggling more than others to hold onto their all-important Chinese clients, who make up over a third of industry sales and are increasingly spending on high-end wares at home rather than overseas. LVMH - which cited a "buoyant environment" at the start of the year and said all regions were experiencing "good growth" - has been one of the big beneficiaries of thriving appetite among younger Chinese shoppers for branded goods. It did not break down its performance by country on Wednesday, with more details due on a Thursday conference call with analysts. But it had previously flagged enduring demand in China in the first weeks of January, even against the backdrop of a slowing economy. The French conglomerate, which owns other labels like Christian Dior in fashion or Krug in champagne, was boosted by a strong performance in its leather goods unit, while sales of spirits like cognac improved from a quarter earlier. Group revenues rose 16 percent to 12.5 billion euros ($14.1 billion) in the period, up 11 percent on a like-for-like basis, which strips out currency swings and the impact of acquisitions or disposals. That beat analyst forecasts and marked an acceleration from the 9 percent growth notched up a quarter earlier. Its performance bodes well for peers who derive much of their profits from high-margin handbags, and which have also proved a hit with consumers in recent years, like Kering's Gucci or Birkin bag maker Hermes. Yet the gap is also growing among brands benefiting from a strong presence in mainland China, and those trying to catch up there as the Chinese government looks to fuel more domestic spending by cutting VAT or import duties. Jeweller Tiffany has flagged a spending slowdown among Chinese tourists in the United States, while Prada noted a slowdown among this clientele in Hong Kong in the fourth quarter, as the weaker yuan and the backdrop of a Beijing-Washington trade war also took its toll. LVMH shares closed up 2.45 percent on Wednesday before the results were published, at 329.8 euros per share - just shy of a recent record high of 337.5 euros hit earlier this month.

Source: ET Retail

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Rupee rises for 3rd day, up 19 paise at 68.92

Mumbai: The Indian rupee Thursday climbed 19 paise to close at 68.92 against the US dollar, also marking a third straight session of gains, driven by sustained foreign fund inflows. Besides, weakness in the greenback against major global currencies and easing crude prices aided the rupee uptrend. The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.03 per cent to 96.91. At the Interbank Foreign Exchange, the domestic unit opened at 69.15 and advanced to a high of 68.83 during the day. It finally settled at 68.92, a rise of 19 paise against the dollar over its previous close. The rupee Wednesday had strengthened by 19 paise to 69.11 against the US dollar. In the last three trading sessions, it has appreciated by 75 paise. "Beside weakness in American dollar against G-10 currencies, the fall in crude oil prices added strength in the domestic currency. Crude oil retreated from a five-month high after Russia's comment on crude output and an increase in US crude inventories," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities. Sharma further said the bias for the rupee remains bullish following foreign fund flows and more flows are lined up by a couple of overseas companies. Brent crude futures, the global oil benchmark, fell 0.86 per cent to USD 71.11 per barrel. Further lifting market sentiment, foreign institutional investors (FIIs) put in Rs 476.51 crore on a net basis Thursday, provisional data showed. Benchmark equity indices ended marginally higher Thursday as voting began in the first phase of the Lok Sabha elections.The 30-share BSE Sensex inched up 21.66 points, or 0.06 per cent, to close at 38,607.01. The broader NSE Nifty settled 12.40 points, or 0.11 per cent, higher at 11,596.70. Meanwhile, the Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 68.9742 and for rupee/euro at 77.7942. The reference rate for rupee/British pound was fixed at 90.2762 and for rupee/100 Japanese yen at 62.07.

Source: Economic Times

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Cotton price to go up on lower output forecast

The cotton price will increase further in the current season on the back of recent revised production estimates. The cotton price will increase further in the current season on the back of recent revised production estimates. The price is expected to be in the range of Rs 127-130 per kg in the CS (cotton season) of 2018-2019. Earlier, it was projected to be in the Rs 125-127 per kg range. According to the recent revision, the cotton production is estimated to be around 321 lakh bales (1 bale equals 170 kg) as against 328 lakh bales projected a few months ago, a drop of 7 lakh bales in the current season. Hence, the commodity price is expected to shoot up. The current season’s output estimate is lower by about 12% year-on-year compared with the output in CS 2018 which stood at 365 lakh bales. Further, the price is expected to be supported by weakened rupee and rising consumption in both the domestic and overseas markets. Price is also expected to be affected by the ongoing trade talks between the US and China. Also, with high cotton prices and sluggish domestic and export demand for cotton yarn, the yarn demand is expected to stagnate at the current levels majorly on account of weak demand from China, which is the world’s largest consumer. However, in medium to long term, decrease in demand from China will be offset by improvement in demand from Bangladesh, Pakistan and Vietnam, said a Care Ratings analysis. This downward revision in cotton production is largely attributed to the water shortage faced by cotton crop in southern states, including Telangana, Andhra Pradesh and Karnataka and due to reports that farmers have uprooted their crop forgoing a chance for additional pickings. As per the Cotton Association of India (CAI), crop estimate for Gujarat has been reduced by 1 lakh bales, Maharashtra by 80,000 bales, Telangana by 4 lakh bales, Andhra Pradesh by 1 lakh bale and Karnataka by 75,000 bales, while there has been a marginal uptick of 50,000 bales in Tamil Nadu and 5,000 bales in Odisha, the rating agency analysis said. The CAI has also maintained the estimated domestic consumption of 316 lakh bales. Consequently, China is expected to regain its tag of the world’s largest producer of cotton which it had lost to India a couple of years ago. Based on the latest estimates, imports for the year would be 27 lakh bales, higher by 12 lakh bales compared to the previous year’s import estimated at 15 lakh bales. The exports have also been estimated at 47 lakh bales, lower by 22 lakh bales compared to the export of 69 lakh bales estimated during the last year. According to the analysis, cotton prices have come off last season’s high and are trending lower at around Rs 125 per kg for Shankar-6/Shankar-4 and around Rs 118 for J-34(Sg) but are still higher year-on-year. The cotton yarn prices have also moved in line with the cotton prices, during the period. Further, China is importing more cotton and less yarn from India given the duty differential between the two.Going forward, cotton price is expected to increase with this further cut in the production estimate. With limited supply in the market, prices are expected to average at about Rs 127-130 per kg for CS 2018-19.

Source: Financial Express

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Pakistan: FTA negotiations with Turkey to conclude in June

Negotiations on free trade agreement (FTA) between Pakistan and Turkey would conclude in June; followed by formal agreement to boost bilateral trade cooperation in different potential areas between the two brotherly countries. Pakistan would finalise FTA with Turkey, under the Pakistan-Turkey Strategic Economic Framework (SEF) plan of action, a senior official of the Ministry of Commerce and Textile said on Thursday. Pakistan and Turkey had agreed to formalise a Pakistan-Turkey Strategic Economic Framework (SEF) during the Prime Minister Imran Khan’s visit to Turkey in January this year and the committee was also formed to finalise the SEF draft. After the approval by the prime minister, the SEF draft was sent to Turkey on February 20. Through the SEF, Pakistan would get tariff free access in potential Turkish markets to increase the bilateral trade between the two countries. The senior official said the two countries can increase bilateral trade to $6,000 million in the near-term from the existing level of $598 million. Pakistan’s top 20 high-potential exports can go up from $400 million to $2,600 million, while Turkey’s top 20 high potential exports to Pakistan can be enhanced to $2,600 million from $200 million. The country’s major exports to Turkey included denim PET, ethanol, cotton yarn, fabric and rice, garments, leather, carpets, surgical instruments, sports goods, and chemicals. The official said the two sides held discussions on goods, services and investment. After signing a new FTA, the two countries would be able to improve their trade balance, he added. He said after the finalisation of FTA, Pakistan would get market space in agriculture and pharmaceutical sectors in Turkey. Pakistan’s major imports from Turkey included manmade textiles, towels, steel structure, tanning and plastic chemicals, processed milk and whey. The official also said priority of the government was to promote trade liberalisation for searching new potential markets in different parts of the world to increase trade.

Source: The News

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U.S., China agree to establish trade deal enforcement offices -Mnuchin

The United States and China have largely agreed on a mechanism to police any trade agreement they reach, including establishing new "enforcement offices," U.S. Treasury Secretary Steven Mnuchin said on Wednesday. Mnuchin, speaking on CNBCtelevision, said that progress continues to be made in the talks, including a "productive" call with China's Vice Premier Liu He on Tuesday night. The discussions would be resumed early on Thursday, Washington time, he added. "We've pretty much agreed on an enforcement mechanism, we've agreed that both sides will establish enforcement offices that will deal with the ongoing matters," Mnuchin said, adding that there were still important issues for the countries to address. Mnuchin declined to comment on when or if U.S. tariffs on $250 billion worth of Chinese goods would be removed. Although President Donald Trump said recently that a deal could be ready around the end of April, Mnuchin declined to put a timeframe on the negotiations, adding that Trump was focused on getting the "right deal." "As soon as we're ready and we have this done, he's ready and willing to meet with President Xi (Jinping) and it's important for the two leaders to meet and we're hopeful we can do this quickly, but we're not going to set an arbitrary deadline," Mnuchin added. The United States is demanding that China implement significant reforms to curb the theft of U.S. intellectual property and end forced transfers of technology from American companies to Chinese firms. Washington also wants Beijing to curb industrial subsidies, open its markets more widely to U.S. firmsand vastly increase purchases of American agricultural, energy and manufactured goods. The Chinese commerce ministry on Thursday confirmed that senior trade negotiators from both countriesdiscussed the remaining issues in a phone call following the last round of talks in Washington. "In the next step, both trade teams will keep in close communication, and work at full speed via all sorts of effective channels to proceed with negotiations," Gao Feng, the ministry's spokesman told reporters in a regular briefing in Beijing. Mnuchin did not address whether the enforcement structure would allow the United States a unilateral right to reimpose tariffs without retaliation if China fails to follow through on its commitments. People familiar with the discussions have said that U.S. negotiators are seeking that right, but that China is reluctant to agree to such a concession. Alternatively, the United States may seek to keep tariffs in place, only removing them when China meets certain benchmarks in implementing its reforms. Mnuchin said he and U.S. Trade Representative Robert Lighthizer, who is leading the negotiations, are focused on "execution" of drafting the documents in the trade agreement. The two sides are working on broad agreements covering six areas: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade, according to two sources familiar with the progress of the talks. "Some of the chapters are close to finished, some of the chapters still have technical issues," Mnuchin said.

Source: Devdiscourse

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Dhaka: Sales of duty-free imported yarn knock out local manufacturers

Government urged not to impose VAT on local yarn. Primary textile sector people have urged the government to take measures to stop misuse of duty-free imported fabrics and yarn and not to impose value added tax (VAT) on locally produced yarn and fabrics. Bangladesh Textile Mills Association (BTMA) president Mohammad Ali Khokon made the call at a press conference at a Dhaka city hotel yesterday. “Foreign yarn, fabrics and several dress materials, imported through mis-declaration or illegally, are being largely sold in the local markets. As a result, local manufacturers of fabrics and yarn are facing serious trouble and struggling to survive due to lower prices of imported fabrics and yarn,” said Mohammad Ali. The platform of the primary textile also claimed that about 50% looms located in Narsingdi, Baburhat, Rupganj, Pabna, Sirajganj and Madhabdi were on the verge of closure due to sales of smuggled and duty-free imported fabrics and yarn. Amid this situation, the government was going to implement VAT from the next budget, which would deal a death blow to the manufacturers of yarn and fabrics, said Ali.  “Moreover, the gas distribution companies have proposed to increase the prices of gas, an important element for the textile sector, by 96% and 208%,” he mentioned. So, considering the present status of the primary textile sector, the government should include fabrics and yarns on the list of products exempted from VAT, the BTMA president demanded. On the other hand, the sector people also urged the government to increase cash incentives from existing 4% to 15% on freight on board (FoB) prices of fabrics prices. In addition, they also urged the government to stop the misuse of fabrics and yarn imported under duty-free facilities. There were some people, whose business was to sell the product imported under bonded warehouse facilities and they lived on this, said Ali. In stopping the sale of duty-free imported fabrics, the business leader suggested that the government write “not for sale” on the fabrics so that one could identify it easily. Call to reduce corporate taxes and interest rateSince the production cost of the primary textile sector has gone up due to rise in wage and raw materials, local manufacturers have urged the government to cut corporate tax from the existing rate and keep it effective for a long time. Production cost of yarn and fabrics went up by 12% to 13% due to high bank interest rate while the local manufactures of fabrics and yarn were struggling to survive as importers were importing the goods through mis-declaration, said Ali. As a result, the manufacturers were facing trouble in paying the installment of loans and becoming defaulters. So for help the business survive, the government should bring down the interest rate to 7% and extend the repayment tenure to 12 years, he added. He also urged the government to give opportunity to the business people, who were paying installment of loans regularly as a reward. Meanwhile, the sector people called a level playing field in the case of corporate tax as the apparel sector was paying 12% corporate tax. As per the current budget, the sector is paying 15% corporate tax, which will expire on June 30, 2019. “So, to ensure a level playing field, we are urging the government to set cooperate tax at 12.5% and to continue it till 2028,” said Ali. On top of that, the sector people also expressed concern over the illegal import of sari, three-piece, and other clothing products ahead of Eid-ul-Fitr. In Eid-ul-Fitr and Eid-ul-Azha, the two largest festivals of the Muslims, about 60% sales of the year take place. “But there is no enthusiasm among the local manufactures due to dominance of smuggled goods ahead of Eid,” mentioned Ali. He urged the government to strengthen monitoring of the board so that no one could import clothing products evading taxes.

Source: Dhaka Tribune

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Textiles and Apparel Recycling campaign seeks to improve textile sustainability on campus

The Textiles and Apparel Recycling campaign began last semester to research textile recycling and eventually establish an on-campus recycling center. The campaign, which is funded through the Sustainability Office’s Green Fund grant program, currently collects clothing donations from students at residence halls. Wearable clothing goes to the Trash to Treasure pop-up thrift shop on campus, and nonwearable clothing goes to a local recycling company that converts the clothes to rags. Eventually, the campaign will use new technology to convert the donations to cloth that textiles and apparel students will use to make new clothing items. “The idea came about as we were seeing the problems in the (textile) industry,” campaign creator Jonathan Chen said. “We wanted to start it on our own campus and help the industry recycle textiles.” Chen created the campaign in hopes of applying his research of regenerated cellulose fiber — which is more environmentally friendly than traditional fibers — and to study how it can be applied to different industries. “We wanted to see the consumers’ perspectives and intentions for textile recycling, and eventually, we also want to use our technologies to make new rayon fibers,” said Chen, a textiles and apparel professor. “Textile and apparel waste is closely related to everybody as consumers, and the consequences are huge.” Katherine Polston, project design and market researcher for the campaign, said the environmental impact of the apparel industry is known to be vast since the industry encompasses so many different areas. “People are buying more, throwing away more,” said Polston, a textiles and apparel lecturer. “Clothes don’t last as long. It’s a combination of things. The sustainability of our industry is extremely broad, and it covers everything (because) we’re an interdisciplinary field, and we’re global.” Carmen Mosnia, a student researcher with the campaign, said the donation of wearable clothes is indicative of a larger problem in the fashion industry. “For me, the type of clothes that were being donated was very surprising,” Mosnia said, a textiles and apparel senior. “Some perfectly good, brand new clothing were being donated, and it shows how terrible the fast fashion industry is, honestly.” Becky Phung, a research assistant with the campaign, said advertising the campaign was important to increase the number of donations received. “We’re not quite there yet as a society or even as a community to recognize that textiles (are) something to recycle,” Phung said, a textiles and apparel senior.

Source: Daily Texa Online

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PROMOTED: Official statement on Project MINE (Made in Nigeria for Export) and Nigeria SEZ Investment Company Limited

The attention of the Federal Ministry of Industry, Trade and Investment has been drawn to the various stories in the media on Project MINE (Made in Nigeria for Export) and the Nigeria SEZ Investment Company Limited (NSEZCO), some of which include inaccuracies and misrepresentations of the facts. It is therefore important to set the record straight in the interest of all stakeholders and the general public. Project MINE is a Presidential Initiative, under the supervision of the Honourable Minister of Industry, Trade and Investment to develop “world-class” Special Economic Zones (SEZs) across Nigeria and boost the manufacturing of ‘Made in Nigeria’ goods for export, regionally and globally. Project MINE’s strategic objectives are to increase manufacturing sector’s contribution to GDP to 20%, create 1.5 million new direct jobs and generate over US$30bn annually in foreign exchange earnings by 2025, amongst others. Given the Federal Government of Nigeria’s (FGN) limited annual budgetary resources for infrastructure and SEZ development, the Federal Executive Council (FEC), Economic Management Team (EMT) and Project MINE’s Steering Committee (including various stakeholders) endorsed Project MINE’s implementation strategy to use a sustainable Public-Private Partnership (PPP) model to develop world-class SEZs across Nigeria. Nigeria LNG, Nigeria Mortgage Refinance Company Limited and Development Bank of Nigeria Limited have adopted similar PPP models. In line with the PPP model, a special purpose public-private partnership (PPP) entity – Nigeria SEZ Investment Company Limited – was designed to enable institutional investors participate in Project MINE alongside the FGN, and to apply global best practices and processes to the long-term financing and development of SEZs.In June 2018, the FEC approved NSEZCO as the vehicle for implementing Project MINE and for co-investment between the FGN, development finance institutions and other institutional investors. NSEZCO is NOT a privately-owned company. NSEZCO was incorporated at the Corporate Affairs Commission (CAC), on the 12th of June 2018 as a limited liability company under the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria 2004 (CAMA), with the FGN represented by the Ministry of Finance Incorporated (MOFI), holding 25%of the shares in NSEZCO at incorporation. The remaining 75% shareholding was held in trust by A&O Secretarial Services Limited, the Company Secretaries,on behalf of a group of development finance institutions who had indicated interest in co-investing with the FGN in NSEZCO (the Strategic Investment Partners), whilst they completed internal investment approval processes for their shareholding in NSEZCO. The Strategic Investment Partners are African Export-Import Bank (Afreximbank), Bank of Industry Limited (BOI), Nigeria Sovereign Investment Authority (NSIA), Africa Finance Corporation (AFC) and African Development Bank (AFDB). Dr Bakari Wadinga,who was Director, Revenue & Investment, Office of the Accountant-General of the Federation, was appointed as a Director representing MOFI on the Board of NSEZCO. Mr Olufemi Edun and Ms Oluwadara Owoyemi who lead the Project MINE project delivery team were also nominated as Directors by the Minister of Industry, Trade and Investment following consultation with the Strategic Investment Partners. None of these Directors have any beneficial interest, directly or indirectly in the shares of the Company. Since NSEZCO’s incorporation, significant progress has been made by the Project MINE project delivery team:

  •  NSEZCO intends to raise $US500million in equity by 2023 from the FGN, the Strategic Investment Partners and other institutional investors. Currently, NSEZCO is executing a Round 1 equity fund-raising programme for $250million, in tranches.
  •  The Strategic Investment Partners participated in a signing ceremony presided over by President Muhammadu Buhari on the 8th of February 2019. Definitive agreements were signed between NSEZCO, Afreximbank, BOI and MOFI, with NSIA signing a Memorandum of Understanding to signify its interest to invest in NSEZCO subject to its internal approval process. AFC and AFDB who are also at various stages of their internal approval processes, were also in attendance.
  •  Senior Representatives of the Strategic Investment Partners have been nominated to the Board of Directors and NSEZCO is currently carrying out the necessary processes to perfect their appointment and registration at CAC.
  •  The recruitment process for NSEZCO’s substantive management team has commenced.

The early stage projects in the first phase of NSEZCO’s operations are also progressing well. These include:

Enyimba Economic City, Abia State: A 9,500+hectare multi-township economic city at the heart of the South-East and South-South geopolitical areas of Nigeria. Pre-development work has been completedand three major anchor investors have been secured. Construction expected to commence in the second quarter of 2019; Lekki-Epe Model Industrial Park, Lagos State: A 1,000-hectare multi-cluster model industrial park in the North East quadrant of the Lekki Free Zone area. Pre-development work is currently ongoing and two major anchor investors have been secured; Funtua Cotton Cluster, Katsina State: Aggregating cotton grown by over 800,000 farmers in Northern Nigeria into a world-class vertically integrated ginning, spinning, weaving and garment-making cluster in the traditional centre of cotton ginning in Nigeria, that will also supply yarn and cloth to other textile clusters around the country; andIn addition, pre-development studies are ongoing for greenfield SEZs in Benue, Kwara and Sokoto States whilst studies will soon commence in Ebonyi, Edo and Gombe States amongst several others. Pursuant to these early stage projects we are also pleased to report the following:

Further to the Memorandum of Understanding signed with the Federal Ministry of Industry, Trade & Investment in June 2018, Shandong Ruyi Group, the leading integrated textile and garment group in China and one of the largest worldwide, met with President Buhari during the Forum on China-Africa Cooperation in September 2018 and announced an investment commitment of $2bn to the Cotton, Textile and Garment industry in Nigeria by way of anchor investments in manufacturing facilities in Enyimba Economic City, Abia State, Kano and Lekki Model Industrial Park. On the 28th of March 2019, CCCG Industrial Investment Holding Company (CIHC), a subsidiary of China Communications Construction Group ranked 91st in the Fortune 500 companies and the 3rd largest international contractor globally, signed a Letter of Intent to invest in the Lekki Model Industrial Park Project as a Developer and to be the Lead Investor in a package of external infrastructure projects to serve the entire Lekki Free Zone Area including, power, water, access roads and bridges. As there has been specific misinformation in the media in this regard, it is necessary to state that subsequent to the incorporation of NSEZCO, the following issues were referred to the Honourable Attorney General of the Federation (HAGF) for his opinion and legal advice: Whether the establishment of NSEZCO is lawful and whether it takes over the functions of NEPZA; and

Whether it is lawful to transfer Project MINE funds to NSEZCO.

The HAGF’s comprehensive legal opinion and advice is summarised as follows:

  • NEPZA is not the implementing entity for Project MINE and Project MINE is not under NEPZA.
  •  NSEZCO was not established to take over the functions of NEPZA. The mandates of both entities are distinct with little or no area of overlap. NSEZCO is set up to facilitate investments in SEZs. This does not touch on or derogate from the functions of NEPZA under the existing law. The relationship between NSEZCO and NEPZA is that of sector participant (albeit indirect) and sector regulator. NSEZCO is an investment vehicle and not a regulator while NEPZA is a regulator.
  • The provisions in the Appropriation Acts of 2017 and 2018 were made for Project MINE and not for NEPZA but were domiciled in NEPZA at the specific request of the Honourable Minister of Industry, Trade & Investment.
  • The transfer of Project MINE funds to NSEZCO is lawful and does not contravene the Appropriation Acts or the NEPZ Act, Therefore, the funds domiciled in NEPZA should be released to NSEZCO to enable her to utilise same for the Presidential initiative – Project MINE as approved by the Federal Executive Council.

We will continue to provide regular updates to the public on this transformational Presidential Initiative.

Source: The Cable, Nigeria

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