Indian states' fiscal battle amid economic slowdown

The RBI study shows that the aggregate debt level could go beyond 25 per cent of GDP in the current year itself if off-budget guarantees are taken into account. The Reserve Bank of India’s annual study on state budgets underlines weaknesses in financial position of states. A large number of states are running fiscal deficit beyond the upper limit of 3 per cent of gross domestic product, laid down by the Fiscal Responsibility and Budget Management (FRBM) framework (Chart 1). Moreover, most of them are laggards in terms of per capita income levels. Owing to the tight revenue situation and the pressure on exchequer emanating from power utilities and farm sector support (loan waivers and income support), states are being compelled to borrow more (Chart 2). The RBI study shows that the aggregate debt level could go beyond 25 per cent of GDP in the current year itself if off-budget guarantees are taken into account. Notice that debt level surged after 2016-17 due to UDAY. This has put limitations on development-related spending, as interest payments and other compulsory spending is set to grow faster than capital expenditure this year (Chart 3). Higher debt levels are associated with lower economic growth, the study shows (Chart 4). To make the debt sustainable, revenues need to grow at 14 per cent per year, higher than what the last three years have achieved.

Though revised estimates for 2018-19 show a higher growth, provisional actuals show a drop. Higher budgeted growth in 2019-20 has been flagged down by near stagnation in the financial year to date. The debt requirement is increasingly being catered to by market borrowings (Chart 6). But the market for state government bonds is too illiquid to be attractive with trade happening only for less than a third of trading days in several states (Chart 7). As a result, foreign investors have stayed away from state government bonds. This financial year, FPI’s have put money in less than 3 per cent of the available limit to invest

Source: Business Standard

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FM to inaugurate National e-Assessment Centre of Income Tax Department Tomorrow

The Income Tax Department is ushering in a paradigm shift in its working by introducing faceless e-assessment to impart greater efficiency, transparency and accountability in the assessment process. There would be no physical interface between the tax payers and the tax officers. The setting up of National e-Assessment Centre (NeAC) of the Income Tax Department is a momentous step towards the larger objectives of better taxpayer service, reduction of taxpayer grievances in line with Prime Minister’s vision of ‘Digital India’ and promotion of ease of doing business. Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman will inaugurate National e-Assessment Centre ( NeAC) in New Delhi tomorrow in the presence of Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs . Dr. Ajay Bhushan Pandey, Revenue Secretary, Shri Pramod Chandra Mody, Chairman, CBDT will also be present . Officers of the Income Tax Department and other dignitaries shall also be linked through Multimedia Video Conferencing at Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Hyderabad, Pune and Bengaluru. Under the new system, tax payers have received notices on their registered emails as well as on registered accounts on the web portal with real time alert by way of SMS on their registered mobile number, specifying the issues for which their cases have been selected for scrutiny. The replies to the notices can be prepared at ease by the tax payers at their own residence or office and be sent by email to the National e-Assessment Centre by uploading the same on the designated web portal. This is another initiative by CBDT in the field of ease of compliance for our tax payers.

Source: Press Information Bureau

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Ahmedabad: Textile markets seek buyers ahead of Diwali

With just weeks left for Diwali, fabric and garment traders in Ahmedabad are worried as markets are yet to witness normal footfalls. They say that the upcoming week will be crucial for the earnings in the season. They said that demand has dropped by about 25% this year in local markets as well as in other states. Ahmedabad is a major hub for supply of garments and fabrics to almost all the states in the country and therefore a barometer of the demand in the sector. “Footfalls are just trickling in. The demand and buying is not as per our expectation. This week is to watch out for. Post Diwali, marriage season would set in on November 20. We can expect buying then as well,” said Kirit Patel, president of Panchkuwa Kapad Market, a wholesale market for fabrics catering to various states. Patel caters to Maharashtra and Chhattisgarh and said that there is a fall in demand, irrespective of states. He said that retail markets are key as they create demand for wholesale markets and thereby for manufacturers. He informed that sales of fabrics dropped by 60% in August this year compared to the previous year. However, it grew 20% in September. “All eyes are now on October. We would be happy if sales of previous year are maintained. Anyway, sales would be lower by 25-30% on an annual basis,” said Patel. Manufacturers of garments said they had factored the drop in the demand very early and therefore tuned accordingly or else would be worried about the pile-up in the inventory. “We had reduced production by about 35-40% about 12-18 months ago. So we can sell what we have produced. The drop in demand is uniform across the states,” said Arpan Shah, vice president of Gujarat Garment Manufacturers Association (GGMA). Shah said that conducive rains earlier during Monsoon had raised hopes of a rise in demand but the last spell has ruined crops and resulted in floods in many parts of country. “In Bihar, sherwanis displayed in front of shops were half-submerged in floodwater. We do not expect payments to come soon from Bihar. With standing crops getting destroyed due to rains and floods, farmers will earn less and rural demand will take a severe hit,” Shah told DNA. Gaurang Bhagat, president of Maskati Market Kapad Mahajan said that payment cycles have already extended to over 120 days, an indication that goods are not sold in retail market. “There are undated cheques lying with the traders. But they have no cash. Rotation of money has drastically decreased in market. Businesses have been consistently slowing down since 2015-16. There is a sustained contraction in demand,” said Bhagat. Changes in consumer behaviour and choices have also hurt markets. “Fabrics are no longer in demand. Retailers are now stocking both ready-made garments and fabrics. Consumers do not have the patience to buy suiting and shirting, give it to the tailor for stitching. Now, they do not have the luxury of time. They are buying ready-made garments,” said Patel. Moreover, the trend of online shopping among the young generation has hurt footfalls in shops and showrooms. The recent festival discount by Amazon and Flipkart has pre-empted the footfalls. Those who would have come to shops, have made deals online,” said Patel. Shah said that 12% GST is levied on garments priced over Rs 1,000. Others have five per cent GST. So manufactureres are tweaking quality, rolled back on value addition. This has caused job losses in the sector, reduction is outsourcing for value addition. “In addition to textile and garments, other sectors are also facing a slowdown. There are layoffs, salaries have stagnated, causing the retail demand to drop. The government should take immediate and concrete steps to revive consumer demand,” he said.

Source: Daily News & Analysis

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Viscose yarn puts Centre in a Catch-22

Low import duty has resulted in increased dumping of the yarn in India. While spinners want this to stop, weavers want it to continue. The Indian textile sector already has problems aplenty — from loss of market share in export markets to slowing consumer demand in the domestic market. Now, one more has been added to the basket — cheap viscose yarn being dumped into the country.

Source: The Hindu Business Line

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Knitting up a miracle economy: What India should learn from Vietnam’s textile revolution

Vietnam’s rise from the rubbles is the stuff post-war dreams are made of. From its war-torn past to its glorious present, the South Asian country has transformed into a rising star among emerging-market economies. India has a lot to imbibe from Vietnam’s textile sector which has remained nearly resilient even amid a global slowdown…….

Source: Economic Times

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Companies optimistic despite consumption slowdown: It’s not all turbulence for luxury goods market

What’s the state of India’s luxury goods market? Not so good in the immediate term, but better beyond, although the answer depends also on whom you are asking. There are definite signs of a chill in sales this festive season, in line with the slowdown in India’s consumption engine. But there are brands and segments that continue to do well. Indians continue to buy luxury during travels overseas, and gilded digital stores are taking off in a big way, too. It’s around 9 pm on a Thursday night. Diwali is just three weeks away. At the DLF Emporio mall in Vasant Kunj, New Delhi, home to top international luxury brands such as Louis Vuitton, Burberry, Jimmy Choo and Gucci, the air is scented and thick with anticipation. A luxury shopping festival is underway to prod buyerson this festive season. Stores are decked up, the latest wares are smartly displayed and charming shop attendants, trained to compliment your shoe, are spiffy and ready. But customers aren’t walking in. Except a few window-shoppers, there’s hardly anyone in sight carrying a shopping bag. Store managers say in informal conversations that things are muted compared with last year. At the Palladium mall in Mumbai, the destination for such elite brands in India’s commercial capital, the story was no different on Friday night. The luxury goods sector, which witnesses a big chunk of its annual sales during the festive season, is watching the unfolding scenario closely. Having been at the receiving end of various policy changes in recent years, it was hoping this year would finally see strong sales. “We are not seeing a negative sentiment. Some of our brands are doing exceedingly well and some are seeing tepid sales. But we will get to know a much clearer picture in the next couple of weeks, closer to Diwali,” said Dinaz Madhukar, executive vice president at DLF’s luxury retail and hospitality vertical, which runs upscale malls such as Delhi’s Chanakya and Emporio. Gayatri Ruia, director of Phoneix Mills that runs Palladium, also has a similar outlook. “We are expecting a growth of anywhere between 5-6% this year. Consumers are still spending on luxury goods,” she says. Because luxury is small, secretive and vaguely defined, authoritative industry figures are hard to come by. Statista estimates India’s luxury goods segment to be worth $8 billion and forecasts 6.6% CAGR growth during 2019-23. It’s a minnow compared with the US market, worth $62 billion in annual sales, and China, worth $41billion. Market research firm Euromonitor provides rosier estimates. It forecasts that the luxury segment in India will grow at 18.1% during 2019-23. It counts luxury eyewear, jewellery, leather goods, time pieces, writing instruments and consumer electronics for its estimates. Due to the massive expansion in India’s economy in the post-liberalisation decades, India was seen to be emerging as a major market for luxury goods. But compared with China, for luxury brands, India is yet to live up to its potential.

Perceptible slowdown

In other luxury segments such as watches and air charters, executives say there’s a perceptible slowdown. According to the Federation of the Swiss Watch Industry, a leading trade association, Swiss watch exports to India between January and August this year fell to 96.3 million Swiss Franc, or CHF (approximately .`685 crore), from 98.7 million CHF during the same period last year. Yasho Saboo, founder and chairman of Ethos Watch Boutiques, which retails brands such as Ulysse Nardin, Chopard, Longines, Jaeger-Le-Coultre and Rolex in India, says after a very robust growth in 2018, there is a slowdown which is especially being felt after April 2019. “I think it is partly due to macro-economic conditions and soft consumer sentiment, as well as cyclical and global factors,” Saboo says. Air charters are also witnessing a slump. “Corporate clients are shying away from chartering jets for travel. I think it’s got more to do with the prevailing economic sentiment. Companies have turned conscious about how much to spend and on what,” says Rajeev Wadhwa, chairman of Baron Luxury Lifestyles, a company that charters business jets, choppers and yachts. Air charters attract a GST of 18%, compared with 5% for commercial airliners. Taxes are a dampener in other luxury segments as well. Saboo of Ethos says that while the reduction from 28% to the current level of 18% GST has made the Indian tax regime comparable with many other countries, at around the same time the basic import duty was increased from 10% to 20%, so there was no net benefit. “The combined effect of this and GST is quite high.” In 2016, the government mandated that purchases above .`2 lakh need a PAN card. This and increased scrutiny by the taxman has made people wary. Many prefer to make luxury purchases overseas. That and the rise of online channels also make arriving at an accurate picture of luxury consumption a difficult task. TataCliq, Elitify, Darveys and Ajio gold are popular online channels for luxury. Nakul Bajaj, founder of, says business has been strong. “There has been an 18% growth in our business and it is accelerated by customers who were earlier buying full price from flagship stores,” says Bajaj. Going strong Some luxury brands have demonstrated growth. Reliance Brands, which operates the largest number of luxury brands in the country, reported an operating profit of Rs 378 crore in FY19, up from Rs 336 crore the previous fiscal. Aditya Birla Fashion & Retail’s The Collective, a retail chain that houses a number of international brands such as Versace, Armani, Alexander McQueen and Ted Baker, will expand through two more stores in the next 8-9 months in Pune, and one more store in Delhi. “Our businesses have done well and we have witnessed double-digit, like-to-like growth this year. We have expanded our network with brands like Ralph Lauren and Ted Baker this year. We track competition and they are taking a bit of a hit. Generally, walk-ins have been lower in malls like the Emporio and Palladium but we have a loyal base of customers,” says Amit Pande, its brand head and head of international brands at the company. Luxury companies are now betting big on the ‘high earners, not rich yet’ (HENRY) consumers with significant discretionary income and a strong chance of being wealthy in the future, Deloitte said in its 'Global Powers of Luxury Goods 2019’ report.

Source: Economic Times

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What India can learn from China's 70 years of growth

China celebrated the 70th anniversary of becoming a communist republic with much fanfare. Back in October 1949, when China was adopting the communist model of societal organisation, India was framing its constitution. Less than four months later, India was a democratic republic. The two nations in their current identities were, thus, born out of the ashes of the colonial world around the same time but adopted a contrasting system of economic and social development. After seventy years, the two nations stand at very different levels of development in terms of their economic, military and technological progress. China's prowess on these fronts is incomparable to that of India. China's rise is quite extraordinary from the Indian viewpoint as the two nations were at par with each other in 1950. In fact, China was at a disadvantage on some aspects of development. Over the nineteenth century, the two countries had been following the opposite trajectory. As per Maddison estimates, India's per capita income grew from $533 in 1820 to $673 in 1913 (in 1990 dollars). During the same period, China's per capita income declined from $600 to $552. In the first half of the twentieth century, the per capita incomes of both nations declined. Between 1913 and 1950, India's per capita income declined from $673 to $619 while China's per capita income declined from $552 to $439. Thus, in 1950 when India became a republic, it was ahead of China in economic terms. Even as recently as 1978, the per capita GDP of China was $979, and India was $966. The excesses of Mao's rule that culminated in the disastrous programmes of the Great Leap Forward and the Cultural Revolution kept economic progress of China subdued in the first three decades. However, all that changed with the coming of Deng Xiaoping in 1978. As a result, China's per capita income today is about 4.6 times than that of India. Despite all the demerits of the authoritarian rule in China, the performance of the Chinese economy in just the last four decades is noteworthy and holds key lessons for India as well. The first, and probably the most important thing that China did well right from the start was its focus on human development. Even under Mao, China's emphasis on education for all and the healthcare facilities provided by its communes helped the country perform well on human development. While the human development index (HDI) was introduced in 1990, its long run calculations have been provided by Nicholas Crafts. The HDI numbers for China and India are, thus, available for 1950 and 1973. While both the countries had almost similar HDI scores in 1950 (0.163 and 0.160 respectively), Chinaa¿s score was markedly higher in 1973 (0.407 against India's 0.289). So, the improvement in human development poised the society perfectly for the reforms that would be imposed under Deng's China. The development of a vast pool of human capital primed the economy for economic reforms and, therefore, allowed the country to maximise its gains form it. On the other hand, education and health have always been an area for concern for India. By the time India began undertaking economic reforms in the early 1980s, India's health and education levels were still poor. An average Indian died at the age of 54 in 1980 while merely 43.6 percent of its population was literate. By comparison, life expectancy in China was 64 years and its literacy rate was 66 percent around the same time. The second key difference was the focus on the type of industries by the two countries. China focussed on industries that were more labour-intensive leveraging on its pool of cheap labour. Industries like textile, light engineering and electronics received higher investment. China also introduced special economic zones (SEZs) as early as 1980, which pushed manufacturing growth and setting up of export-oriented industries. India, on the other hand, focused more on heavy industries that were capital-intensive and employed less labour. Moreover, the policy focus on attracting foreign investment through instruments like SEZ came much later. As a result, by 1998 China had FDI investments of $183 per capita as per Maddison estimates and India was merely at $14. As India hardly pushed for labour-intensive manufacturing growth, the sector never picked up and the country became a services-led economy. China, on the other hand, became the manufacturing powerhouse of the world. A similar edge is being created by Bangladesh in recent times. The export-industries that are moving out of China due to rise in labour costs and the trade war with the United States are being effectively captured by countries like Bangladesh. The country has eclipsed India's growth rate since 2017 and has become the fastest-growing country in South Asia. Most of its growth is being led by its manufacturing sector, which implies that the country will be able to create high employment for its citizens and improve their standard of living at a higher and more equitable rate than India; exactly what China has achieved over the last four decades. Thus, India has a lot to learn from the development trajectories of its neighbours. The focus on health and education parameters for long-term growth and market-oriented policies in the short term has been an effective strategy for Asian countries. Perhaps it is time that India does the same.

Source: Economic Times

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Vietnam's gain: Why factories leaving China aren't coming to South Asia

The fantasy that India might somehow "leapfrog" from a rural, agriculture-heavy economy straight to a services-based economy is wrong. Vietnam seems to be the consensus pick for winner of the U.S.-China trade war, as Chinese and other manufacturers shift production to the cheaper Southeast Asian nation. If there’s a loser, at least in terms of missed opportunities, it may be the countries of South Asia. To understand why, remember that the trade war has only accelerated an important trend a decade in the making. Faced with rising costs, Chinese manufacturers must decide whether to invest in labor-saving automation technologies or to relocate. Those choosing the latter present an enormous opportunity for less-developed countries, as Chinese companies can help spark industrialization and much-needed economic transformation in their new homes. There may not be another such chance this generation. The only proven pathway to long-lasting, broad-based prosperity has been to build a manufacturing sector linked to global value chains, which raises productivity levels and creates knock-on jobs across the whole economy. This was how most rich nations, not to mention China itself, lifted themselves out of poverty. Yet the evidence suggests that South Asian countries are lagging behind in attracting manufacturing investment. It’s not just Vietnam that’s racing ahead. African countries, too, are making manufacturing a top priority. Ethiopia alone has opened nearly a dozen industrial parks in recent years and set up a world-class government agency to attract foreign investment. The World Bank has lauded sub-Saharan Africa as the region with the highest number of reforms each year since 2012. By contrast, in terms of foreign direct investment as a percentage of GDP, South Asia lags both the global average for least-developed countries and sub-Saharan Africa. While South Asia’s total GDP is more than 70% greater than Africa’s, the continent received three-and-a-half times the investment from China that South Asia received in 2012, the most recent year for which the United Nations has published bilateral FDI statistics. In the last five years, the American Enterprise Institute’s China Global Investment Tracker has recorded 13 large Chinese investment deals in Africa and only nine in South Asia. Bangladesh is a striking illustration of the problem. The country needs to create 2 million jobs per year at home just to keep up with its growing population. Yet, despite a world-class garments manufacturing sector, it seems unable to cut red tape and enact the reforms needed to attract investment to diversify beyond apparel. In the past few years, Bangladesh has fallen to 176 out of 190 countries in the global Ease of Doing Business country rankings. DBL Group, a Bangladeshi company, is investing in a new apparel manufacturing facility that will generate 4,000 jobs -- in Ethiopia.

'India's overconfidence'

The fantasy, most common in India, that a country might somehow “leapfrog” from a rural, agriculture-heavy economy straight to a services-based economy is just that: a fantasy. South Asia can’t afford to lose this chance to grow its manufacturing sector. Attracting manufacturing investments will require, first and foremost, that governments in the region acknowledge the competition is passing them by. India, for example, must abandon its overconfidence that investors will come simply for its large population. Pakistan needs to stop relying on its government-to-government friendship with China. Chinese state financing of infrastructure won’t automatically lead to manufacturing investment, most of which is dominated by private Chinese companies motivated by competitive forces, not government diktats. Secondly, South Asian countries need to undertake a concerted, whole-of-government push to boost investment levels. Specifically, they need to create the conditions manufacturers need to thrive, from steady power supplies to efficient port operations and customs clearance. Moreover, they need to understand the specifics of these businesses. Factories have unique requirements depending on what they make. For example, cloth and clothing factories, despite their seeming similarities, have extremely different requirements: The former is capital-intensive, with huge amounts of power-hungry machinery churning out bolts of cloth, whereas the latter is labor-intensive and features rows of workers cutting and sewing. Countries need to analyze which manufacturing sub-sectors they are best positioned for, meet the requirements those manufacturers have in order to set up shop, and target the regions of China (and elsewhere in the world) where those types of manufacturers are to be found. The good news is that all of these measures are eminently feasible. And in many cases, the first steps are already being taken, such as with the construction of Bangladesh’s first deep sea port at Matarbari. The bad news is that unless South Asia moves faster, others may have already seized the opportunity to industrialize. Irene Yuan Sun is author of “The Next Factory of the World: How Chinese Investment is Reshaping Africa.” She is a visiting fellow at the Center for Global Development and a research fellow at the Harvard Humanitarian Initiative.)

Source: Business Standard

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Turkish firm now exporting heating fabric

A Turkish entrepreneur is now exporting a heating fabric, developed from 100% local sources, for 20 euros (approximately $22) per square meter, said executives of the firm on Saturday. The innovative new fabric can dissipate heat with a low voltage and can be used in numerous fields, such as the automotive, health, textile and defense sectors, Ayhan Prepol, a co-founder of İltema, which makes the fabric, told Anadolu Agency (AA). The firm, which works with Turkish automotive and furniture producers, made its first export delivery to Germany. The heating fabric was used for wetsuits for the German army and won significant praise, he added. Saying that İltema sent prototypes to Ireland and the U.K., he added: "Motorbike users tested the fabric in the U.K., while an Irish company wanted the fabric for an acoustic project." The fabric can dissipate heat at various ranges from 15 C to 300 C (59 F to 572 F), he stressed. "While our competitors can be used at a constant temperature, we can adjust the heat when we produce our fabric," he said. Prepol also said that the company – based in the Aegean province of İzmir – is continuing its research and development (R&D) activities and hopes to reach 2 million euros in exports in 2020.

Source: Daily Sabah

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Bangladesh: Exports dip by 7.3% in September

While the country’s export has been experiencing slowdown for months, its major competitor Vietnam's textile and apparel export posted a 2.2% growth to $3.37 billion in August. The country’s merchandising exports have continued to plunge as work orders are shifting to competing economies, causing the exporters to lose competitive edge to their rivals. Export earnings dropped by 7.3% to $2.92 billion in September, the second consecutive month to face negative growth, amid sharp decline in apparel exports. While the country’s export has been experiencing slowdown for months, its major competitor Vietnam's textile and apparel export posted a 2.2% growth to $3.37 billion in August. According Apparel Promotion Council (India), RMG exports were to the tune of $1.26 billion in August, with a decline of 2.44% against the corresponding month of August,2018 which was $1.29 billion. In August, the second month of the current fiscal year, Bangladesh earned $2.84 billion from exporting goods, down by 11.49% compared to the same period last year. According to the Export Promotion Bureau (EPB) data released yesterday, Bangladesh earned $2.92 billion in September, down by 7.30% from the same month of last year. However, the export earnings during July-September, the first quarter of the current fiscal year, plunged by 2.94% to $9.65 billion. The apparel sector, which accounts for 84% of total exports, witnessed a 4.70% decline to $2.34 billion in September. As per the data, knitwear products earned $1.25 billion, down by 3.45%, while woven goods fetched $1.09 billion, posting a 6.09% fall. In the first quarter, exports from the RMG sector declined by 1.64% to $8.06 billion.

Why exports continue to slide

For the bleak export performance, trade analysts and manufacturers have blamed appreciation of the taka against the US dollar and slower order flow from the buyers. Commenting on the downswing in export earnings, BGMEA President Rubana Huq said: “Work orders are less and next couple of months the trend will probably be low.” “Sustained growth is not easy at this point. Vietnam is getting fair share of orders. Orders are being diverted to Pakistan and India as these countries are offering incentives and privileges to boost their exports,” added Rubana. Elaborating the state of affairs, she said the perception about Bangladesh was that we had been doing well and growing. If we took years compound annual growth rate, the growth was already dipping, she claimed. “Apparel exporters are losing competitiveness to its competitors such as China, India, Pakistan and Vietnam. This is because of devaluation of their currencies against the US dollar, while Bangladeshi Taka is very strong against US dollar,” Md. Moshiul Azam Shajal, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told Dhaka Tribune. In the face of the sharp appreciation of the Taka and rise in production cost due to implementation of new wage structure from last December, export earnings from the apparel sector were showing continuous fall, said the association leader. On the other hand, ease of doing business was another key factor for the export oriented businesses and deficiency to this was helping shift work orders to our competing countries, said Shajal, also Managing Director, Fame Sweaters Ltd. As per the Real Effective Exchange Rate (REER), Bangladeshi Taka was around 6% over valued against the US dollar, which casted negative impact on export earnings, said former World Bank Dhaka office lead economist Dr Zahid Hussain. It was said that Bangladesh gained from the US-China Trade war, which diverted work orders to Bangladesh, he mentioned, adding, “But the current export performance does not reflect it. It is assumed that diverted orders are not coming to Bangladesh.”

What is ways forward

"Devaluation of the Taka could affect import adversely. Keeping overall situation in mind, we could ask for policy cooperation," said Rubana Huq, also managing director of Mohammadi Group. In absence of policy supports, export would dip and factory closures continue, she added. “The downward trend in export earnings is likely to continue till December, while there is a possibility of a turnaround by the first quarter of next year. To prop up the export earnings, the government should devalue currency to make exporters competitive in the global markets,” Mohammad Hatem, first vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told Dhaka Tribune. He also urged the government to introduce separate exchange rate for export oriented sector to attain the export target of $50 billion from the sector by 2021.

Export performance of other major sectors

Among other major sectors, agricultural products registered a negative growth by 10% to $267 million during the period. Export earnings from the leather and leather goods also declined by 5.06% to$354.39 million, while home textile exports saw an 11.67% fall to $179 million. Specialized textile sector saw a marginal 0.64% rise to $33.24 million, while plastic exports rose by 18.01% to $31.51 million during the month. Besides, export earnings from the pharmaceuticals sector rose by 16.93% to $35 million, while live fish export grew by 12.91% to $3.41 billion but the exports of frozen fish declined by 8.870% to $10.48 million.

Source: The Daily Star

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US funds face near-term headwinds from a range of global concerns: Experts

Experts say diversification through international funds is an important allocation strategy to deal with market volatility. US funds, which have generated robust returns year-to-date, have slipped on the performance scorecard over the last one month. US funds have given negative returns of close to 2 per cent in one month. In the same period, large-cap, mid-cap, and small-cap schemes have generated around 5 per cent of returns. According to experts, US funds have been facing near-term headwinds from a range of global concerns. "The US-China trade tensions, the impeachment inquiry against US President Donald Trump and the attack on oil facilities in Saudi Arabia have been some of the recent.

Source: Business Standard

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Zimbabwe: Private sector gears up for AfCFTA

Zimbabwe’s private sector actors say they are ready to fully seize various opportunities presented by the historic African Continental Free Trade Area (AfCFTA) Agreement. The statement was made by Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce, during a joint high-level workshop organised by the African Union (AU) Commission, the UN Economic Commission for Africa (ECA) and the government of Zimbabwe to sensitise the country’s private sector on the AfCFTA. “We are for the AfCFTA. As you know, Zimbabwe’s private sector pushed for ratification of the agreement. It is, therefore, important for us to remain seized with ensuring that our government continues to address issues to improve the ease of doing business in the country. “This will ensure that we reap the benefits that will come with the AfCFTA,” an ECA statement quoted Mugaga as saying. Mugaga also noted that the value addition of Africa’s resources would help the continent in its quest for economic transformation, which in turn would change the lives of its citizens for the better. “The value addition, coupled with increased intra-African trade and a continent speaking with one voice, will no doubt see Africa scaling to dizzy heights in terms of sustainable development,” said Mugaga. He also lauded Africa’s increasing ability to speak with one voice on global issues, as seen with the AfCFTA, saying “this is crucial if the continent is to continue transforming and become a major player in the global arena”. “We cannot afford to continue speaking with many voices as a continent. It weakens us on the negotiating table, that is why we continue to emphasise the importance of us speaking with one voice,” said Mugaga, noting that the benefits of intra-African trade could not be over-emphasised. According to the ECA, the private sector sensitisation meeting “will tackle topics that will help the business community understand the AfCFTA Agreement, the protocol on trade in goods, dispute settlement, Zimbabwe’s emerging schedule of tariff concessions (CTC), as well as understanding the protocol on trade in services and the ancillary instruments of the AfCFTA”. The national meeting to sensitise Zimbabwe’s private sector on the AfCFTA was held on the margins of the high-level AfCFTA Strategy Validation Workshop for Zimbabwe, which runs from October 2 to 3 under the theme Expanding Industrial and Trade Growth through the AfCFTA, it was noted. AfCFTA Strategy Validation Workshop for Zimbabwe, among other things, aims to review and finalise Zimbabwe’s AfCFTA strategy and its implementation plan, according to the ECA. The AfCFTA entered into force on May 30 this year for those countries that had deposited their instruments of ratification before this date. Including Zimbabwe, 27 AU member states have so far deposited their instruments of AfCFTA ratification to the AU Commission.

Source: The Standard

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Hundreds of West Java Textile Industry Bankrupt

The West Java Manpower and Transmigration Agency revealed that from January 2018 until September 2019, a total of 188 textile and textile products industries have declared bankruptcy. The bankrupt industries later relocated their business to Central Java. "As a result of the bankruptcy of 188 garment factories, as many as 68,000 laborers were dismissed," said Hemasari Dharmabuni, a member of the West Java Acceleration Team for Manpower Division of the West Java Manpower and Transmigration Agency on Friday, October 4, 2019. Hema said that the majority of the textile industry in West Java declared bankruptcy and relocated to other regions because of imported textile products from China. "And the majority of garment companies in West Java who were bankrupt originated from Majalaya, Bandung Regency," Hema said. In addition to the influx of imported textile goods from China, Hema said that another factor causing bankruptcy among textile factories in West Java, especially in Majalaya, was the inability to adapt with technological advancement. "So, in Majalaya, the industry is old and even in 2019, there are still weaving tools used by the factories that are not machines," Hema explained. Hema asserted that the West Java Manpower and Transmigration Agency has carried out various efforts to prevent the remaining textile industries from going bankrupt.

Source: Tempo

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