Textile sector is one of the oldest industries in Indian Economy. It is one of the largest contributing sectors to India’s export business with approximately 14% of total merchandise export. The industry is currently pegged at around US$ 140 Billion and is expected to increase to US$ 350 by 2025. Indian textile industry has tremendous growth potential and is not only the world but is the largest employer in the manufacturing sector with 45 million people employing directly. Looking at the growing opportunity for Man-Made Fibre & Blended Textiles globally and also to take advantage of the ongoing trade war between US & China, SRTEPC has inaugurated the 4th edition of “Source India 2019” in Mumbai on 21st August, 2019. Speaking at the event, Mr. Ronak Rughani, Chairman, STREPC, said the trade war has opened up an opportunity, which will help our stagnant exports grow by 5 to 7 per cent in one-and-half years. We are thankful to our Government and particularly to our Hon’ble Minister of Textiles, Smt. Smriti Zubin Irani ji for extending us continued support and guidance. Talking about the event, Smt. Smriti Zubin Irani, Minister of Textiles, said It is noteworthy to mention that over the years the global trend has been changing and MMF textiles have been in demand for its versatility and adaptability. Indian MMF textiles is growing at a rapid pace and the time has come to project it as a reliable source of quality MMF textile products. “Source India” is an appropriate platform for Indian exhibitors and overseas buyers to meet under a single roof”. “Source India 2019”, in Mumbai witnessed contribution from more than 100 leading Indian textile companies displaying their latest range of Indian textiles items including fabrics, yarn, made-ups, fibre home textiles, and technical textiles in an area of around 7000 square meters. Around 180 leading buyers from 40 countries and 20 international buying houses visited to place orders for forthcoming season. During 3 day Source India 2019, leading textile buyers from Latin America, South Asia, EU region, Argentina, Colombia, Peru, Brazil, Mexico, USA, Japan, Vietnam, Thailand, South Africa, Uganda, Kenya, Nigeria, Egypt, Morocco, Turkey, Romania, Uzbekistan, Czech Republic, Australia, Denmark, Ecuador, Egypt, El Salvador, Guatemala, Honduras, Iran, Italy, Mauritius, Myanmar, Oman, Panama, Poland, Russia, Slovakia, Sri Lanka, UAE, etc., participated in Source India 2019 Mumbai. The aim of the event is to showcase strength to the entire gamut of textile and apparel value chain to the world and establish India as a global textile sourcing hub and investment destination. It is an ideal platform for the international buyer to source their requirements for Indian Man-made Fibre & blended Textile value chain.
Source: APN News
The statements underscore the government’s discomfiture to loosen its purse strings in a big way, given the ‘limited fiscal space’ amid subdued tax collection growth. Nevertheless, it will likely opt for targeted interventions in critical sectors like auto, MSMEs and infrastructure. Also, it could front-load its spending to spur demand. Top government officials on Thursday sought to temper expectations of a big-bang stimulus package to revive sagging economic growth, aiding a slide in the stock markets. Speaking at the Hero MindMine Summit 2019, chief economic advisor Krishnamurthy Subramanian said government intervention to bail out the private sector every time it goes through a “sunset phase” creates a “moral hazard” and is an “anathema” for the market economy. At the same event, power secretary Subhash Chandra Garg — who was the finance secretary until late July — held that reduction in interest rates and easier availability of credit to the private sector are better tools to boost growth than a fiscal stimulus. Garg said economic growth in the first quarter could be around 5.5-6% (against a five-year low of 5.8% in the March quarter) mainly due to subdued government expenditure on account of elections, and some demand compression. After a slowdown in the budgeted expenditure in Q1FY20, the Centre may, however, step up spending in Q2 to reach the spending trend of 53-54% by September (H1). Separately, in a reply on Twitter, Subramanian asserted that the government was “identifying the structural constraints faced by industry and working to remove them”. This will “empower industry to invest and foster the virtuous cycle” of growth led by investments. The statements underscore the government’s discomfiture to loosen its purse strings in a big way, given the ‘limited fiscal space’ amid subdued tax collection growth. Nevertheless, it will likely opt for targeted interventions in critical sectors like auto, MSMEs and infrastructure. Also, it could front-load its spending to spur demand. Already, NITI Aayog has proposed a comprehensive scrappage policy, as part of which buyers of new vehicles will get incentives in lieu of scrapping their old vehicles. While an incentive of Rs 50,000 is proposed for 10-year old commercial vehicles, buyers of passenger vehicles will get Rs 20,000. Buyers of new two and three wheelers will get a relief of Rs 5,000, a source told FE. Niti Aayog is also learnt to have suggested that the interest rates on elevated small savings deposits, a sore point with many banks, be cut over the next two years from 8% to 5%, the taxes on dividend distribution and buybacks be rolled back and the government clear its arbitration award dues expeditiously. According to a CNBC-TV18 report, the government has already paid 75% arbitration awards in contractual disputes in 2016. While the central bank and India Inc have called for a greater transmission of the RBI’s repo rate cuts (110 basis points since February), many banks have shied away from doing so, as the elevated interest rates on small savings, fixed by the government, have forced them to pay more on their deposit rates. Speaking at the event, Subramanian said: “I think we expect the government to use tax-payers’ money to intervene every time there is a sunset phase.” “You introduce possible moral hazard from too-big-to-fail and possibility of a situation where profits are private and losses are socialized, which is basically an anathema to the way the market economy functions.” Earlier, the CEA had said the government support is required at the time of infancy, and not when one has grown up. “I would say that the private sector has been in India since 1991 (liberalisation) and is now a 30-year-old kid. A 30-year-old kid, a man, now needs to start saying that I can stand on my own feet. I don’t need to go to papa.” The finance ministry is weighing proposals to “ring-fence” foreign portfolio investors (FPIs) structured as trusts from the higher surcharge and review the dividend distribution tax (DDT) and the long-term capital gains (LTCG) tax. While a cut in the corporate tax rate and personal income tax reliefs have been recommended by the direct tax code panel, analysts say the government will have to forgo Rs 1.2 lakh crore if all the panel’s suggestions for tax reductions are accepted. However, this can be done if the government withdraws various exemptions extended to both companies and individuals. To boost exports, while the government is considering “full reimbursement” of various imposts on outbound shipment, the Reserve Bank of India has proposed to ease priority-sector lending norms for exporters. Currently, exporters with a turnover of up to Rs 100 crore each are eligible for credit under the priority-sector norms. This limit is likely to be scrapped or doubled so that more exporters are benefitted. Even though tepid growth in tax revenue is constraining the fiscal situation, some experts believe that the fiscal space for a much-needed stimulus could indeed be found. Over 5% of GDP is lost due to tax exemptions, they point out, adding that some 1.5% of GDP as spending accounted for is not actually spent.
Source: Financial Express
Sixteen retail fashion brands have signed the Su.Re (sustainability resolution) project launched by the Textile Ministry, IMG Reliance and Clothing Manufacturers Association Of India (CMAI). Textile Minister Smriti Irani launched the project, in association with the UN, on Thursday at the Lakme Fashion Week Winter/Festive 2019 being held here. Retail brands like Spykar, Westside, Trends, Shoppers Stop, fbb, House of Anita Dogre and Lifestyle and Max joined the movement that aims to develop sustainable sourcing policy for consistent prioritising and utilising certified raw materials that have a positive impact on the environment. In her address at the event which was also attended by Renata Lok-Dessallien, UN Resident Coordinator in India, Irani said: "Never before in a population our size has voluntarily driven the retail force of India and fashion elite along with the government to come together at one platform. That this has happened voluntarily makes me proud. On October 2, we shall step into the 150th year of Mahatma Gandhi''s birthday. Gandhi said to the world, ''be the change you want to be''. And today, the resolution on sustainability is a reflective of that very thought of the Mahatma." She said that sustainability is the fourth criteria for 57 per cent of the consumers of the apparel and design industry. "This (project) makes it not only responsible business but also smart business. This project will impact worth Rs 30,000 crore in the market. Everything that we consume, we must consume responsibly." Jaspreet Chandok, Vice President and Head of Fashion, IMG Reliance, said: "This is a true confluence of what we want to stand for in fashion in the country which is a melting point of ideas that brings transformational change. Today is a major step towards that change with the launch of Su.Re which is the first and the largest initiative by the fashion industry. "This initiative is just a start point. In the next five years, it will reach millions and millions of garments in the country turning from non-sustainable resources to sustainable resources."
Source: Outlook India
Improving ‘ease of doing business’ apart, India needs to develop a vibrant electronics sector and leverage the FTAs better. The advent of the twenty-first century marked the turning point in India’s economic growth. The end of US and western sanctions, imposed after our nuclear tests in 1998, led to an economic boom, in the first decade of the 21st century. This economic boom was triggered by the economic liberalisation ushered in by Prime Minister Narasimha Rao. The Indian economy experienced an over 9 per cent rate of growth, during three consecutive years, of 9.48 per cent in 2005-06, 9.57 per cent in 2006-07 and 9.32 per cent in 2007-08. The rate of growth, thereafter, reached 8.59 per cent in 2009-10. The rates of growth in India have, however, been lower in the present decade, varying between 6.7 per cent and 7.4 per cent, with an unusual fall to a mere 3.2 per cent, in 2013. While these rates of growth are relatively high by global standards, they do not match the levels China continuously achieved for over two decades, when Deng Xiao Ping’s reforms began paying rich dividends. The growth in India’s global merchandise trade during the first decade of the present century far exceeded the country’s domestic growth figures. Merchandise exports expanded significantly, rising from $44.2 billion in 2001-02 to $306 billion in 2011-12. The same cannot be said of our exports of goods in the second decade of the century. Merchandise exports have remained almost stagnant in this period, at around $300 billion annually, while our annual imports have now gone past $500 billion. India’s service exports, spearheaded by information technology, however, rose from $137 billion in 2011-12 to $205 billion in 2018-19. But, continually high deficits in world trade of goods and services are neither desirable, nor sustainable.
Ambitious goal
Prime Minister Modi has set the country an ambitious goal of building a $5 trillion economy by 2025. This will necessitate an economic growth of well over 8 per cent per annum — a target we have achieved for a few years, during the past two decades. Modi recently alluded to initiatives to boost the capital of public sector banks, promote productivity and exports of agricultural products, boost industrial production and incentivise the services sector, while fostering the ease of doing business. He expressed understanding of concerns of the business community and assured that honest taxpayers would not be harassed. Foreign investors, however, note that setting up new industries in India is a daunting and often frustrating task. Some State Governments, however, recognise the need to be investor-friendly.
Trump effect
The external challenges in promoting trade and industry today are more formidable than what prevailed a few years ago. Globalisation is now virtually a swear word in the US and parts of the EU, where industries unable to face foreign competition, especially from China, are crying foul. India is losing its competitive edge in traditional industries like textiles, to countries like Bangladesh and Vietnam. President Trump’s protectionist policies have hurt America’s friends, allies and foes alike. His moves against globalisation, commenced as soon as he assumed office, by US withdrawal from participation in the Trans-Pacific Partnership. This grouping linked major economies across the Asia-Pacific, from the US, Canada and Mexico, to Australia, Japan and members of ASEAN. He then unilaterally raised protectionist walls against major partners including Canada, Mexico, China, Japan and South Korea. The US has also clamped additional duties on a wide range of products from allies, ranging from Germany and France, to Japan and South Korea. The most wide-ranging US Trade sanctions have been imposed on China, though Chinese business and trade practices have not exactly been ethical. China had a massive trade surplus with the US, of $420 billion last year. Trump’s actions have triggered the biggest trade war in contemporary history, with China retaliating on some US exports, with little, or no impact. While the US trade deficit has reduced after the imposition of trade sanctions, China is already feeling the impact of these sanctions on its economic growth. While the US and China could well reach an agreement, in the course of time, this trade dispute has global repercussions. India, like many others, has itself been hit hard by enhanced American duties on a range of products like aluminium and steel, and measures to end of trade preferences, it enjoyed as a developing country. India has retaliated, with its own sanctions on a number of US products. Trump has indicated that like China, India will get no benefits available traditionally to developing countries. New Delhi also recognises that its own trade practices are now seen as being excessively protectionist, with a large number of countries prepared to seek remedial measures, by reference to the WTO. Negotiations have commenced with the US, which remains concerned by existing and new Indian protectionist tariffs/restrictions, on items like medical devices, apart from electronics and telecom products. There is obviously going to be serious bargaining ahead, before we can conclude a satisfactory trade agreement with the US. India must, however, realise that it cannot become a significant, modern economic power unless it develops a vibrant electronics industry, with an indigenous capability for research and development and a substantial manufacturing capability to produce crucial items like semi-conductors and computer chips.
‘Act East’ policy
India’s “Act East” policies have included Free Trade Agreements with ASEAN, Japan and South Korea. These agreements have brought us trade benefits, as our regional partners have made good use of them. We need to significantly improve our use of these arrangements. We face difficult choices in dealing with negotiations, now under way, for an Indo-Pacific economic community, labelled as the “Regional Comprehensive Economic Partnership” (RCEP), which includes ASEAN members, together with Japan, China, South Korea, New Zealand and Australia. There are understandably serious misgivings about joining the RCEP, given our concerns about China’s trade practices and our huge trade deficit with Beijing. These challenges have to be faced and overcome, while moving ahead in building the $5 trillion economy that Prime Minister Modi envisages by 2025. With enthusiasm for post Cold War style “globalisation” declining in Europe and the US, India now faces serious choices it has to make, given the security and diplomatic challenges it faces, from an increasingly assertive China. While Chinese military and economic power can be balanced by partnerships with like-minded countries like Japan, Vietnam and Indonesia, India will have little leverage left with its “Act East” partners, if its economy lacks the strength and competitiveness, enabling it to become a significant economic partner, in the Indo-Pacific region. The writer is a former High Commissioner to Pakistan.
Source: The Hindu Business Line
The time has come to take on the policies of protectionism and unilateral measures by some developed countries that are having an adverse effect on global free trade and if this continues there will be recession in the world and no country will escape it, said Union Minister of Commerce & Industry and Railways, Piyush Goyal. He was speaking at an international dialogue on South-South and Triangular Cooperation today in New Delhi. Commerce and Industry Minister urged that all member countries must take up reforms of the WTO and not deal with issues in a piecemeal manner. We cannot afford to walk away from the current system but all member countries of the WTO must re-engage to ensure that the rule-based, transparent, and non-discriminatory governance that free-trade requires is taken forward honestly and in a non-discriminatory manner and keeping in mind the interests of different member countries with disparate GDP. Piyush Goyal further stated that the policies of protectionism being followed by some countries in the developed world are affecting engagement between countries for trade in goods, services and protection of investments. The aspirations of people cannot be held back for a better life: for sustainable growth of the seven billion people of the world and India is committed to the Sustainable Development Goals (SDGs) and believes that peoples’ aspirations cannot be held back till 2030, said the Commerce and Industry Minister. India is not going to wait till 2030 to give access to energy, literacy and clean potable water to its people, India is fast-tracking its efforts to reach the SDGs to the last man at the bottom of the pyramid. India also desires that this pace of development reaches people in the rest of the world. South-South cooperation is a broad framework of collaboration among countries of the South in the political, economic, social, cultural, environmental and technical domains. Involving two or more developing countries, it can take place on a bilateral, regional, intraregional, or interregional basis. South-South cooperation is a manifestation of solidarity among peoples and countries of the South and the attainment of the goals of Sustainable Development. Commerce and Industry Minister hoped that the South-South and Triangular Cooperation will help the developed world become a part of the developing world’s growth agenda.
Source: PIB
Niti Aayog has proposed a multi-pronged strategy to revive the ailing economy. Among the several measures, the government policy think tank has suggested a reduction in the interest rate from 8 percent to 5 percent on new small savings in a phased manner spread over 24 months. If the government agrees to the proposal, implementation could begin starting October 1, 2019, people aware of the matter told CNBC-TV18. Niti Aayog has also suggested the creation of a new special purpose vehicle (SPV) based on Specified Undertaking of the Unit Trust of India (SUUTI) to raise bonds and invest in preferred equity in non-banking finance companies (NBFCs) in a bid to support the struggling sector. SUUTI, like the SPV, could have a net worth of about Rs 38,000 crore. Niti Aayog has suggested a delay in merger of public sector banks (PSBs) at this stage, and recapitalization of the banks on the basis of performance soon, as announced in the annual budget this year. On the tax front, the think tank has pushed for a rollback of dividend distribution tax and buyback tax which was levied in the 2019 Union Budget. It believes that capital gains due to a rise in market value as a consequence of the rollback will more than offset revenue losses for the government. Proposal for the automobile sector includes allowing the BS4 buses purchased in the next six months be allowed to operate for the next 10 years — provided they comply with pollution emission norms. Niti Aayog estimates a shortage of over 80-90 percent buses in India and this move will allow for clearance of the inventory. On the scrappage policy for the sector, the think tank has suggested giving incentive vouchers for commercial vehicle scrapping at Rs 50,000, passenger vehicles at Rs 20,000 and two- three-wheelers at Rs 5,000 in order to facilitate the purchase of new vehicles, a step, it believes, will clear pending inventory. For the textile sector, it has proposed the removal of inverted duty structure on man-made fibers and abolition of anti-dumping duties on purified terephthalic acid and viscose staple fiber. India had imposed anti-dumping duty on purified terephthalic acid in July 2019 and viscose staple fiber in 2016. Niti Aayog is also of the view that there should be a monitoring mechanism to implement and fast track the government's decision of 2016 when it was decided that departments and public sector undertakings (PSUs) should pay up 75 percent of the arbitral awards in contractual disputes. Prime Minister Narendra Modi is slated to meet finance ministry and Niti Aayog officials to take stock of the economy and discuss its revival, people aware of the development have told CNBC-TV18.
Source: CNBC 18
Sri Lankan minister of development strategies and international trade Malik Samarawickrama recently invited Indian investors to enjoy the nation’s geographical advantage, port connectivity, preferential tariff access to large markets and competent human resource pool. He was addressing a business forum organised by Sri Lanka’s Board of Investment in Gujarat. The forum was organised at the Chamber of Commerce and Industry (GCCI) in Ahmedabad. Over 100 leading Indian businessmen from Gujarat representing diverse sectors participated in the forum, according to Sri Lankan media reports. GCCI president Durgash V Buch said Gujarat and Sri Lanka can be partners in promoting agro-processing Industries, textile, petrochemicals, spices and tea. Out of GCCI’s total member strength of 6,000, at least 1,000 deal with Sri Lanka on a regular basis in sectors like refractories, pharmaceuticals, apparel, plastic packaging, starch, petroleum and petro products, tea and other agro-products, he added.
Source: Fibre2Fashion
Under pressure from its business community, the Pakistan government has allowed partial import of goods from India. But at the same time, the neighbouring country has launched a campaign to prevent Indian goods from reaching its markets via third country. Highly-placed sources said the Pakistan’s ministry of commerce and textile had issued a notification saying that shipments, which had been issued letter of credit (LC) or bill of landing (BL) prior to August 9, could be traded and would remain unaffected by announcement of border trade suspension following the scraping of special status for Jammu and Kashmir (J&K) under Article 370. Sources said the notification of Pakistan ministry mentioned that importers and exporters had been approaching the ministry regarding scope of trade and fate of shipments in the pipeline. Following the decision, a truck load of goods had left for Pakistan through the Integrated Check Post (ICP) at Attari on Tuesday, but was returned owing to some technical issue. Notably, a day after Lok Sabha had okayed the scrapping of special status given to J&K, Pakistan had retaliated with suspension of bilateral trade, downgrading of diplomatic relations and other measures, including expelling Indian high commissioner and calling back Pakistani envoy. Sources said in view of the high demand of Indian goods, the Pakistan government had showed concern that suspension of bilateral trade with India could result in increase in import of Indian goods by misdeclaration via third countries or smuggling under the Afghan-Pakistan Transit Trade Agreement (APTTA). In the notification, the Pakistan’s commerce and textile ministry has urged the Pakistan’s Federal Board of Revenue to take necessary enforcement measures to prevent misdeclaration and smuggling of Indian goods into the country. It has also asked the board to initiate a campaign to confiscate Indian goods that may be available and traded in Pakistani markets. However, India-Afghanistan trade being carried under APTTA has remained unaffected as goods from Afghanistan continued to arrive at the ICP, Attari.
Source: Times of India
Fiercer competition looms as the influx of Chinese goods may depress prices. Textile companies in Indonesia might be hit by depression in prices as Chinese companies redirect their textile products to Southeast Asia in light of heightened tensions with the US, Moody’s Investors Services reported. The US hiked tariffs on China to 25% from 10% in May, which could prompt Chinese companies to dump goods in Southeast Asia. Indonesia is considered a more favorable destination for Chinese textile products given its tariffs of 10-15%. Homegrown textile firms Sri Rejeki Isman Tbk (Sritex) and Pan Brothers Tbk may need to brace for fiercer competition from cheaper Chinese goods, although the two are expected to maintain stable credit profiles within the next year as they rely more heavily on exports than on domestic sales and have longstanding relationships with their customers and value-added products that cannot be easily replaced by imported manufactures. The two players export around 60% of its products, and have other business divisions catering to the fashion as well as military and corporate uniform businesses on a made-to-order basis. It has also been supplying uniforms to the military and police since 1990. Sritex’ domestic spinning sales, which contributed around 20% to total revenue, could be most exposed to competition as it can most easily replaced by Chinese goods and its sales to textile manufacturers, wholesalers and traders are not bound by long-term contracts. Meanwhile, Pan Brothers gets 96% of revenue solely from exports. For the 12 months ended 30 June 2019, 57% of the company's sales were distributed to its customers' retail locations within Asia, 26% to the US and 15% to Europe. Pan Brothers’ top five customers account for 46% of total sales, with its largest customer Uniqlo making up around 28% of total sales.
Source: SBR
Vietnam’s Ministry of Industry and Trade (MOIT) recently released draft regulation – Decree No. 31/2018/ ND-CP – on labeling criteria for domestically consumed goods. The draft and subsequent media reports have caused many in Vietnam’s foreign investment community to question how the regulation will impact their business. In particular, many importers who manufacture in Vietnam and export to other countries are concerned about how the new regulation will impact their business operations. However, the new regulation will only affect goods produced for the Vietnamese market. The Nikkei Asian Review reported that the draft regulations specify that goods must have a localization ratio of at least 30 percent to be designated as Vietnamese made. This will primarily impact companies that produce a product in multiple countries for sale in the Vietnamese market. These companies must now source 30 percent of their value of input locally to be recognized as Vietnamese in origin and apply the appropriate Harmonized Commodity (HS) code to qualify.
Which products are affected by the draft regulation?
Dezan Shira & Associates Business Intelligence Manager Maxfield Brown has advised many foreign-invested manufacturers on rules of origin in Vietnam and more recently on the Decree No. 31/2018/ ND-CP draft regulation. Brown summarizes the scope of the regulation as follows:
If the regulations comes into effect, the 30 percent input requirement will not be a problem for labor-intensive industries, such as textiles and garments, which are able to source locally. However, industries that use less labor and source a significant amount of raw material from abroad may have a re-think of their business plans. It is also important to note that the regulation affects goods produced for the Vietnamese market and not applicable for exports to international markets that are dictated by specific free trade and bilateral agreements.
Why is there a new focus on Made in Vietnam?
The new draft regulations follow a government investigation into Vietnamese electronics manufacturer Asanzo, which was reported to be importing Chinese products and selling them as Asanzo- or Vietnam-made. Reports stated that Asanzo would only assemble electronic products – such as televisions – at its factory using most or all components from China.
However, on closer look, Asanzo may not have done anything wrong.
Vietnam lacks clear regulations on the labeling of goods as made in Vietnam. Decree 43 tells a manufacturer how to label products in Vietnam and import products, but the regulation does not stipulate the criteria that products must meet to be labeled as made in Vietnam. Further current regulations do not specify the percentage of locally made content to qualify as made in Vietnam. Due to such vague regulations, manufacturers often have to decide whether to label goods as made in Vietnam or not. Current regulations state that the origin of goods is defined as the country where the goods are wholly produced or where substantial processing is done in case there are several countries involved in producing the certain product. Manufacturers can use domestic law or bilateral agreements to determine labeling requirements. For example, in Asanzo’s case, products that do not originate from Vietnam cannot be labeled as Vietnamese made under the ASEAN-China FTA. However, as per World Trade Organization(WTO) regulations effective for both Vietnam and China, Asanzo did nothing wrong, as the last stage of production took place in Vietnam, while inputs were sourced from China. Vietnam Law Magazine reported that Au Anh Tuan, Head of the Customs Control at the General Department of Customs, said, “we have adopted the rules of origin applicable to exports, but none for goods sold in the domestic market.” The draft regulation is currently open to the public for comment. Some media reports have speculated that the draft is partly a response to US pressure for scrutiny of Chinese products in Vietnam. However, this new regulation does not take aim at companies that may be seeking to evade US tariffs on China. Ultimately, the Vietnamese government wants to protect consumer’s interests. The draft regulation will help clarify what products qualify as made in Vietnam. One way it could do this is by using Apple’s example of imprinting the back of its iPhones with “Designed by Apple in California, Assembled in China.” This gives the consumer a clearer picture of where the product is coming from.
Source: Vietnam Briefing
Uncertainty arising out of the US-China trade conflict could lower world gross domestic product (GDP) by 0.6 per cent in 2021, relative to a no-trade-war scenario, according to Bloomberg Economics. That is double the direct impact of the tariffs and the equivalent of $585 billion off the International Monetary Fund’s estimated 2021 world GDP of $97 trillion. The Bloomberg Economics report was drafted by Dan Hanson, Jamie Rush and Tom Orlik. The analysis showed China would be hit harder by the uncertainty factor, with its GDP lower by 1 per cent compared with a 0.6 per cent chunk taken out of the economic output of the United States, the news agency reported. A survey released last week by the Federal Reserve Bank of New York found a growing conviction among businesses that tariffs were hitting their bottom line. The Fed responded to economic headwinds with a rate cut of 0.25 per cent last month. The Bloomberg Economics report said that while monetary policy can be used to mitigate uncertainty shocks, it cannot prevent the damage entirely. If central banks respond to demand weakness, world GDP will be 0.3 per cent lower in 2021 than it would be in a no-trade-war scenario.
Source: Fibre2Fashion
With an expected decrease in electronics exports, Vietnam is projected to still secure its export goal this year on account of an increase in export of traditional items such as textiles and agricultural products. Spain-based FocusEconomics, which provides in-depth economic analysis globally, just released its fresh forecast for Vietnam’s economic prospects, stating that the Vietnamese economy will expand 6.7% in 2019. “The economy will be one of the region’s star performers this year, buttressed by strong tourism, exports and industrial output,” the firm stated in a report. Last week, Standard Chartered Bank also released its freshest projections that Vietnam will “remain the fastest-growing ASEAN economy in the near term, with 2019 growth being projected at 6.9%.” One of the key drivers of the high economic growth will be high exports. According to the bank, the country’s export growth is expected to remain steady and outperform peers. Electronics exports, which make up about a third of the total, are likely to be less supportive than in recent years due to a reduction in external demand and lower semiconductor prices. However, improving traditional exports – textiles and agriculture – should continue to take up some of the slack. The Ministry of Industry and Trade (MoIT) reported that in 2019, Vietnam’s exports will be affected by contracted production and exports of the electronics industry led by the Republic of Korea (RoK)’s Samsungand LG. Samsung’s business and production activities have shown signs of slowing down due to the group’s reduced business results globally. This has underminedthe group’s production and export of mobile phones and their spare parts in Vietnam. An MoIT report on Vietnam’s seven-month tradereleased two weeks ago cited Samsung Electronics based in RoK reporting that the group’s profit in the second quarter of 2019 decreased by over 50% on-year due to negative impacts of the US-China trade warwhich caused a reduction in the global demand for electronics chips and mobile phones. “Samsung is expected to reduce its annual profit in the third quarter of 2019 due to slashed prices of chips caused by oversupply and the US’ sanction on China’s telecommunications manufacturer Huawei Technologies, one of Samsung’s most important customers,” the report stated. In July this year, Vietnam raked in US$3.8 billion from shipping mobile phones and their spare parts, down 1.9% as compared to the same period of last year, when the figure reached US$3.5 billion, a 5.4% rise from the corresponding period of 2018. In the first seven months of this year, Vietnam earned about US$27.3 billion from exporting mobile phones and their spare parts, up 3.1% on-year, and accounting for 18.8% of the nation’s total export turnover. In the first seven months of 2018, the figure touched US$26.1 billion, a 15.8% climb on-year. Last year, Samsung Vietnam’s export turnover totalled over US$60 billion, taking up 25% of the country’s total. At present the 2019 production and business plans of Samsung and LG in Vietnam are still ensured. However, in the long term, if Samsung and LG in South Korea do not have sufficient materials for production as planned, their production of semiconductors, chips and screens will decrease. As a result, this will likely influence the spare part supplies for their production and assembly of phones and TV in Vietnam. This would mean the country’s output and exports of electronics will be negatively affected. An expected reduction in electronics exports is believed by the MoIT to be one of the key obstacles for Vietnam to reach its export goal of US$262 billion this year, up 7.5% on-year. Under the impact of reduced growth in electronics exports, Vietnam’s average monthly export turnover reached US$20.73 billion in the first seven months of 2019. “Thus, it will be a very big challenge to hit an average monthly export turnover of US$23.57 billion for the remaining five months of this year, in the context of the global market’s uncertainties,” stated the MoIT report. In the first seven months of 2019, the total export turnover was estimated to be US$145.13 billion, up 7.5% on-year, but US$1 billion lower than the MoIT’s initial expectation. The import turnover was estimated to hit US$143.34 billion, up 8.3% on-year. This resulted in a US$1.8 billion in trade surplus. Key pillars The MoIT expect there will be a rise in exportation oftraditional items to keep and even exceed its export turnover target for 2019. According to the MoIT, during the remaining months of 2019, Vietnam’s exports are projected to continue keeping its current growth speed with key drivers being traditional staple exports, such as textile and garment, footwear, and wood products. In the first seven months of this year, Vietnam earned US$10.4 billion from exporting footwear products, up 13.8% on-year. The footwear sector expect that the figure will be US$21.5 billion for 2019. Meanwhile, the export turnover of textiles and garments hit US$18.3 billion in the first seven months of 2019, a10.5% increase from the same period last year. It is forecasted that the figure will be around US$40 billion this year, up from US$36 billion in 2018. Nguyen Viet Thang, head of Technical Division under the X26 JSC, told VIR that after the company reaped VND580 billion (US$25.22 million) last year from exporting garments and textile, footwear, and wood products, the company is expected to earn VND600-650 billion (US$26-28.26 million) from exporting these products this year. In the first seven months of 2019, the figure was about VND420 billion (US$18.26 million), up 10% on-year. “The world’s demand for these products keep rising, benefiting exporters like our companies. Besides, Vietnam’s business climate has been significantly improved, making it more favourable for enterprises to perform and boost exports,” Thang said. Nguyen Ton Quyen, vice chairman of the Timber and Forest Product Association of Vietnam, said that many foreign firms currently want to co-operate with domestic enterprises to swell exports to their home markets. A slew of foreign enterprises are exporting significant volumes of wood. For example, Nam Dinh Export Foodstuff and Agricultural Products Processing JSC’s export turnover is forecasted to climb from US$50 million in 2018 to about US$55 million this year. Meanwhile, many other businesses such as Dai Thanh, Hiep Long, Tien Dat, Cancia Pacific, Phu Tai, and Minh Phat are also expected to rake in an export turnover of US$30-50 million for 2019, up 15% on-year. “The wood industry’s export turnover has been rising strongly over the past few years from US$7 billion in 2016 to US$7.66 billion in 2017 and US$8.48 billion last year. The figure is projected to be US$11 billion this year,” Quyen said. Last year, Vietnam’s wood export turnover strongly increased from many markets, such as France (25.5%), Japan (16%), Malaysia (100%), South Korea (48%), and the US (17.5%). According to the MoIT, in the time to come, many types of export items from Vietnam will likely replace Chinese ones in the US market, perhaps because of the ongoing US-China trade-war. Especially textiles and garments. Together with this, there has been an investment shift from China to neighbouring markets including Vietnam. This has led to a rise in foreign direct investment (FDI) in Vietnam in the first seven months of 2019, laying a firm foundation for Vietnam to boost its production and exports in this year and beyond. The Ministry of Planning and Investment reported that in the first seven months of 2019, FDI disbursement for the January – July 20 period reached US$10.6 billion, up 7.1% on-year. Meanwhile, Standard Chartered Bank also projected that FDI inflows into Vietnam will stay robust this year, particularly in the manufacturing sector, totaling US$18 billion. The sector will also become home to the country’s exports that will considerably contributed to high economic growth this year. “Vietnam’s growth prospect remains strong, with macro-economic conditions staying stable in the first half of the year which is likely to continue towards year-end. We expect growth to accelerate mildly in the second half of 2019 from 6.7% in the first six months of the year,” said Chidu Narayanan, economist for Asia of Standard Chartered Bank.
Source: Nhan Dhan Online
As the major Las Vegas supply-chain show for apparel brands and designers, Sourcing at MAGIC ran at the Las Vegas Convention Center Aug. 11–14. Bringing together companies that provide apparel manufacturing, textiles, technology and services with the businesses that need these partners, options were available from around the globe to fulfill these needs. At the booth for Eclat Textile Co., Ltd., Stefan Novak, who manages global sales and marketing for textiles and full garment packaging mentioned that brands were looking for an option other than China. “They are looking out. Eclat is offshore in Vietnam, where we’ve been set up with Lululemon and Nike for seven or eight years,” he said. “I don’t think a lot of people are looking toward China as a big player anymore.” For the Brea, Calif., factory AST Sportswear, Inc., maker of the Bayside label, workingquickly to meet customer demand was how the company was bringing in business. Nadir Zulfiqar, who manages strategic accounts and brand development, was promoting his company’s ability to manufacture pieces quickly within the United States. “When you go overseas, you are looking at 90 to 120 days, and our minimums are lower,” he said. “We saw a lot of online retailers this time and military people who are starting businesses.” One of these new, emerging online businesses is District 85, an e-commerce brand that sells pieces that transition easily from office to after-work engagements. Founder Dominique Jones sees her clientele as professional women ages 25 to 40. Ahead of her December launch, she was looking for supply-chain partners to create quality blazers and pump-style footwear for every size woman. “When it comes to blazers, I like a range of colors and patterns—from black to gray or polka dots, flowers and animal prints. It’s something you can dress up or down,” she explained. “I want something that can speak to every woman, whether she is more conservative and wants the solid power colors or is more fun and freer and prefers to do something funky with prints.”
Source: Apparel News
