The government had decided to discontinue MEIS--its largest export promotion scheme--after the WTO said it distorted trade. A scheme to promote exports will be extended till March 31 this year though the government had decided to discontinue it under pressure from the World Trade Organization (WTO), a business association has said. The government has not officially announced extending the Merchandise Exports from India Scheme (MEIS) but it will stay till the new Foreign Trade Policy begins on April 1, said the Federation of Indian Export Organisations on Thursday. The government had decided to discontinue MEIS--its largest export promotion scheme--after the WTO said it distorted trade by providing direct subsidies. The organization, in November 2019, ruled against India in its trade dispute with the US and asked it to stop all export promotion schemes within four months. Finance Minister Nirmala Sitharaman announced in September a new scheme named Remission of Duties or Taxes on Export Products (RoDTEP) to replace MEIS for all goods exports. Government officials said RoDTEP, would also be based on MEIS and is estimated to cost Rs. 50,000 crore in tax rebates but the rates are yet to be decided. Indian industry had opposed withdrawing MEIS, arguing they needed government support to ride out a global slowdown blamed on a trade war between the US and China. "The issue of MEIS benefits on specified products of apparel and Made-ups (is that the word?) is likely to be resolved soon and thereafter exporters would be eligible for benefits till 31 March along with Rebate of State and Central Taxes and Levies (RoSCTL) benefits,"said FIEO president Sharad Kumar Saraf. Benefits under the RoSCTL have been provided to the two sectors since is in place since March. MEIS—introduced in 2015 by merging five schemes—incentivises merchandise exports of more than 8,000 items. Exporters earn duty credits at fixed rates of 2 per cent, 3 per cent, and 5 per cent, depending upon the product and country. The exporters federation said that certain products, for which additional MEIS benefits of 2 per cent had been removed on 7 December, will also have their benefits reinstated till March 31.
Source: Business Standard
The two-day meeting is expected to focus on ways to boost growth as well as private investment and help India turn into a $5-trillion economy by 2024, as envisioned by the Prime Minister. Prime Minister Narendra Modi on Friday reviewed the state of the economy and other crucial issues with the council of ministers and key secretaries, with a focus on vision documents of various ministries for the next five years, an official source told FE. The meeting will continue on Saturday as well. The interaction follows a series of meetings that the Prime Minister held with various stakeholders, including captains of industry, electronics players and textile and garment companies, in recent weeks to seek their inputs on the economic slowdown and what can possibly be done to catapult India on to a high growth trajectory. He is learnt to have sought specific inputs on what policies are working and what are not. The economic expansion plunged to an over six-year low of 4.5% in the September quarter, with analysts predicting a prolonged phase of slowdown. Sources had earlier told FE that as many as 10 “sectoral groups” comprising secretaries of several departments were to give presentations before the Prime Minister and other ministers over two days through Saturday. Key ministers, including home minister Amit Shah, finance and corporate affairs minister Nirmala Sitharaman and commerce minister Piyush Goyal, are understood to have attended the meeting, among others. Some of the ideas presented in these vision documents may find mention in the next Budget. The two-day meeting is expected to focus on ways to boost growth as well as private investment and help India turn into a $5-trillion economy by 2024, as envisioned by the Prime Minister. The raft of measures taken by the government recently to perk up growth — including the corporate tax rate cut, push for credit offtake, recapitalisation of state-run banks, a WTO-compatible scheme to boost exports, and a Rs 25,000-crore fund (including contributions by LIC and SBI) committed for housing – is believed to have been reviewed. Steps required to ensure “ease of living” are understood to have also featured in the discussions. The economy is going through a critical phase. Already, citing growth concerns, Moody’s recently trimmed India’s sovereign rating outlook to “negative” from “stable”. Industrial production shrank in September to an eight-year low, while eight core infrastructure industries witnessed their worst contraction at least since April 2005 in September. Exports declined in five of the first eight months of this fiscal, and banks’ non-food credit growth has been hovering around a two-year low. The Modi government had first set up the sectoral groups in 2016 on key areas, including finance and corporate affairs, commerce and industry, agriculture and allied sectors, transport and communications, energy and environment, health, sanitation and urban development, education and social development, governance and crisis management.
Source: Financial Express
In a significant relaxation for the ecommerce sector, the government could allow online platforms such as Amazon and Flipkart to upload e-invoice for vendors under the goods and services tax (GST) framework. As part of ongoing trials of e-invoicing, a detailed set of clarifications in the form of frequently asked questions have been issued. “Ecommerce operator can request for e-invoice on behalf of supplier,” the clarification said. The matter has been taken up by the government and could be allowed once the trial period is over, a government official told ET. “Trials are now on...It will require an amendment... The issue has been taken up.” The GST Network has issued a detailed set of FAQs. “Allowing ecommerce platforms to undertake e-invoice compliance on behalf of suppliers would go a long way in facilitating compliance for such suppliers,” said Prashanth Agarwal, partner, PwC. Given the criticality, it’s important for businesses to keep track of them. Further, businesses should participate in the testing phase as part of their preparation to go live on April 1, Agarwal said. Voluntary uploading of e-invoices on the GSTN portal kicked off from January 1, for businesses having turnover over Rs 500 crore. For businesses having annual turnover over Rs 100 crore will be effective from February 1. Only 10,000-line items per einvoice would be allowed, as per the FAQ. Foreign services providers will have to set up local entities to integrate with the invoice registration portal (IRP), as per the FAQs. Experts say these clarifications will help businesses gear up for the new system. “With specifications for e-invoice API being released to various companies, the government's intent to soon implement it is reinforced,” said Abhishek Jain, tax partner, EY. “FAQs released provide clarification on ambiguities such as no requirement of invoice registration portal validation for delivery challans and bill of supply, 10,000 line items being allowed per e-invoice, amendments in the GST law on invoicing to align with e-invoices, etc and its timely release should help businesses gear up better for this new system.” The e-invoice system of uploading invoices on government portal will be mandatorily rolled out for businesses with turnover over Rs 100 crore from April 1. Also, for B2C invoicing issued by businesses with annual turnover over Rs 500 crore, an electronically scannable quick response (QR) code will be mandatory from April 1. The e-invoice will help streamline the indirect tax system and ensure better compliance by keeping a check on tax evasion.
Source: Economic Times
The government is contemplating convening the Budget session of Parliament from January 31 and the Union budget is likely to be presented on February 1, sources said. The final dates will be notified by the government after the Cabinet Committee on Parliamentary Affairs (CCPA) recommends the dates for the session. A meeting of the CCPA, which is headed by Defence Minister Rajnath Singh, is likely to be held soon and the recommendations will be made thereafter. The budget session will start with President Ram Nath Kovind's address to the joint sitting of Parliament and the Economic Survey is likely to be presented on the same day, the sources added. The session is likely to continue till April, they said. The budget session generally has a break of about a month during which the department related standing committees discusses the demand for grants.
Source: Economic Times
The government is considering a litigation settlement scheme in the upcoming budget that will allow companies to put an end to legacy tax disputes by paying a portion of the money demanded by the revenue department, said four people with knowledge of the matter. This could help bridge the fiscal deficit gap and monetise a part of the amount stuck in tax litigation, they said. An estimated 500,000 cases have been pending in the courts and quasi-judicial forums for years and it could take a long while before the tax department sees any of the money, assuming it eventually wins. The total value of these disputes is pegged at Rs 7-8 lakh crore, said the people. A government task force had recommended the litigation settlement scheme in July last year. Such a move will also help improve ease of doing business. Separately, the Central Board of Direct Taxes (CBDT) had set up a panel to help reduce tax litigation in February last year focused on resolving pending direct tax disputes urgently. Precise details of the proposal under consideration aren’t available but it could be along the lines of the Sabka Vishwas--Legacy Dispute Resolution Scheme, which is aimed at reducing old service tax and central excise cases, said the persons cited above. The Sabka Vikas scheme could collect about Rs 30,000 crore. “There are over Rs 8 lakh crore stuck in direct tax litigation and a resolution scheme could be a good way to unlock value for the government,” said Girish Vanvari, founder of tax advisory Transaction Square. “The government should come out with this scheme where companies could settle the disputes by paying, say 10-20% of the tax demand. There are several companies that would like to avail this scheme.” The government could ask companies to pay part of the disputed amount along with interest and penalties levied on that, EThas learnt. Or it could ask them to pay 40-50% of the tax demanded. The tax rate may not be the same for every company — it could depend on the litigation amount and even the details of the case. A litigation settlement scheme in direct tax is one of ways the government can aim to bridge a part of the fiscal deficit gap,” said Gautam Mehra, partner and leader, tax and regulatory, PwC India. “While the increase in the threshold limits for higher litigation has reduced the number of cases under litigation, given the large stakes involved, it yet could have a potential of netting in good revenues for the government, while at the same time reducing the cost and effort involved in litigation at both ends.” The fiscal deficit stood at Rs 8.07 lakh crore at the end of November last year, 13% above the full-year target, as per the Controller General of Accounts. This comes as revenue collections have been below expectation. To be sure, goods and services tax (GST) collections were at Rs 1.03 lakh crore in December but the annual figure could still fall short of the government’s internal target of Rs 1.25 lakh crore. Direct tax collections were estimated at Rs 5.5 lakh crore by the end of September last year, 16% short of the internal target. Experts said the Sabka Vikas scheme had worked unlike previous ones that failed to attract companies because they offered few options. “The recent scheme in indirect taxes has met with success with estimates of over Rs 30,000 crore of revenue collections until now, which was possible since the scheme also left something on the table for the taxpayer,” said Mehra of PwC.
Source: Economic Times
Confederation of All India Traders (CAIT) has announced that it will be hosting a three-day national traders’ convention from January 6-8 here. Thousands of traders are expected from all states of the country to participate in three days convention. The aim of this convention will be to discuss role of trading community in achieving 5 trillion dollar economy goal of Prime Minister Narendra Modi and various issues of the trading community. CAIT Secretary General Praveen Khandelwal while addressing a press conference on Friday informed, ''various critical issues of the trading community will be discussed during the convention includes onslaught of E Commerce Companies on retail trade by their malpractices & violation of FDI policy and to seek immediate steps by the Government to make them obligatory to comply with FDI policy or else leave the Country.''Apart from these, the focus will also be on early introduction of a comprehensive e commerce policy, Reforms needed for E Commerce market of India, formation of a Regulatory Authority for E Commerce or E Commerce Ombudsman, linkage of 7 crore traders of the Country with e commerce under Digital India program of the Prime Minister Narendra Modi, ban on cash on delivery (COD) said Khandelwal. 'Payment system in e commerce will be elaborately discussed and future action plan will be chalked out. Similarly, problems arising out of implementation of GST, Simplification & Rationalisation of GST Tax structure, removal of disparities and anomalies in different GST tax rate slabs, blockage of refund with the Government and ways & means for aggregation of 2 crore traders under GST will be discussed at length,'' he added. Khandelwal further said that Union Defence Minister Rajnath Singh will inaugurate the Convention on 6th January. Ministers of the Government including Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, Urban Development Minister Hardeep Puri, Health Minister Dr. Harshvardhan, Environment Minister Prakash Javedkar, Textile Minister Smriti Irani, Agriculture Minister Narendra Singh Tomar beside CEO of Niti Aayog Amitabh Kant and several other senior Ministers, bureaucrats, economy experts shall also be attending the Convention during different sessions to be held on all three days of the convention will also mark their presence.
Source: KNN India
The CBDT has extended till January 31 the last date for taxpayers to avail a “one-time” facility to apply for compounding of income tax offences, an order issued on Friday said. The earlier deadline was December 31, 2019. In I-T parlance, compounding means that the taxman does not file a prosecution case against the offender or tax evader in court in lieu of payment of due taxes and surcharges. The decision to extend the last date was taken “in view of references received from field formations, including requests made by ICAI (Institute of Chartered Accountants of India) chapters wherein it has been brought to the notice of the CBDT that the taxpayers could not avail the benefit of the one-time relaxation window due to genuine hardships,” the order issued by the Central Board of Direct Taxation (CBDT) said.
The order was accessed by PTI.
Final opportunity
Hence, the order stated, the date has been extended to give a final opportunity to such taxpayers and reduce the pendency of existing prosecution cases before the courts. Applications, as per the procedure of the scheme, are to be filed before the appropriate competent authority that is either a principal chief commissioner or a chief commissioner or a principal director general or director general of the Income-Tax Department “on or before” January 31, 2020. The CBDT, while launching the scheme in September last year, had said that this “one-time measure” is being undertaken to mitigate unintended hardship to taxpayers in deserving cases and to reduce the pendency of existing prosecution cases before the courts. “Cases have been brought to the notice of CBDT where the taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months,” it had said.
The riders
The relaxation, however, shall not be available in respect of an offence which is generally or normally not compoundable, indicating instances of serious tax evasion, financial crime, terror financing, money laundering, possession of illegal foreign assets, benami properties or conviction by a court in the past. The CBDT circular added that application for compounding of an income tax offence can be filed in cases where: Prosecution proceedings are pending before any court of law for more than 12 months or any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months or any compounding application for an offence had been rejected previously solely for technical reasons. The CBDT, which frames policy for the tax department, had earlier said that compounding of offences is “not a matter of right” and the department can extend such a relief only in certain cases. This will be done keeping in view factors like “conduct of the person, the nature and magnitude of the offence on the context of the facts and circumstances of each case,” it had said.
Source: Business Line
Lifestyle brand Shoppers Stop on Friday announced that it has inked a memorandum of understanding (MoU) with the Telangana government for setting up a manufacturing facility in Sircilla apparel park. "Delighted that the apparel manufacturing unit of Shoppers Stop will be coming up at Sircilla. Employment opportunities to hundreds of women will be created and a huge step forward for apparel park, Sircilla," Minister for IT and Industries K T Rama Rao said. The MoU was signed by IT and industries principal secretary Jayesh Ranjan and Shoppers Stop managing director and CEO Rajiv Suri, a press release said. After the MoU-signing ceremony, the Minister held talks with industry leaders from the textile sector in Mumbai, the release said. During the meeting, he explained about the investment opportunities in the state. In another meeting, he met with the representatives of the Indian Pharmaceutical Alliance and highlighted the investment opportunities in the pharmaceutical and life sciences sector in the state, the release added.
Source: Economic Times
Nobel laureate Abhijit Banerjee has opposed further cuts in corporate taxes and advocated the need to boost demand. He said the corporate sector is sitting on cash and not investing because of the demand problem. “I would say first no more cuts in corporate taxes...the corporate sector sitting on cash, it is not investing,” he said at an event here on Friday when asked about his advice to the finance minister for the upcoming Budget. Finance minister Nirmala Sitharaman will present Budget 2020-21 on February 1. The government has cut base corporate tax rate for existing companies to 22% from 30%. Stating that many people in the corporate sector say that right now there is no market for them to sell, he said: “I think you have to get the demand side going. For that you need to get money in the hands of people who will spend it now, people who need the money, get the money in hands of poorer people”. His statement assumes significance in the wake of India’s economy expanding 4.5% in the July-September quarter, the slowest pace of expansion in over six years. The government has taken a series of steps to boost supply such as reduced corporate tax rate, released Rs 70,000 crore to state-run banks and made additional provision for lending and liquidity of Rs 5 lakh crore to increase credit flow to industries, among others. Banerjee said studies show if people are given cash, they spend it. “We don’t give cash to billionaires to check whether they spend it or not,” he said. Nobel laureate Esther Duflo, who was also present at the event, said that such a policy is possible because people have bank accounts and the infrastructure for that is there- something that this government has built. Terming farm loan waivers as klutzy instruments which are inefficient instrument, he said: “One reason they’re used is that we have underdeveloped machinery to provide support to people in distress”.
Citizenship Amendment Act
On being asked about the protests on the Citizenship Amendment Act, Banerjee said there are many things that could be worried about. “There are all kinds of issues there. I don’t think I’m the specialist. What is my experience from field work is that when you have somebody with enormous amount of power that (person) would decide whether or not you will be on this list or that list, he has a lot of power,” he said. “And just the fact that somebody is going to say that look I’m in charge of making this list, I could put ‘doubtful’ next to your name or I could not and can even make Rs 10,000,” Banerjee cautioned. “Prima facie, if I would be somebody living in a border district, I would be petrified by that thought,” he said, adding that the government’s challenge there is very severe. “And so if he is going to say, look, I’m not sure that you’re a proper citizen, forget about religion...” The Nobel laureate said care should be taken while designing institutions to make those decisions and they should not be made by quick acts of Parliament as this relates to power to take decisions that can have “passive consequences for life”.
Source: Economic Times
In a historic initiative taken by Khadi and Village Industries Commission (KVIC), a first Silk Processing Plant was inaugurated today at Surendranagar in Gujarat which would help cut down the cost of production of silk yarn drastically and increase the sale and availability of raw material for Gujarati Patola Sarees locally. The plant has been set up by a khadi institution at a cost of Rs 75 lack in which KVIC has contributeed Rs 60 lakh. The unit has employed 90 local women, 70 of which belong to the Muslim community. Patola, the trademark Saree of Gujarat, is considered to be very costly and worn only by the Royals or the Aristocrat. Reason being the raw material silk yarn is purchased from Karnataka or West Bengal, where silk processing units are situated, thus increasing the cost of the fabric manifolds. Chairman, KVIC Shri V. K. Saxena said that cocoons will be brought from Karnataka and West Bengal and Silk yarn will be processed in house, thus reducing the cost of production and giving a major boost to the sale of famous Gujarati Patola Sarees. Surendranagar district is a backward district in Gujarat where KVIC has invested Rs. 60 Lakhs to build the Silk Processing Plant, in order to generate livelihood and boost sales of Patola Sarees by making silk more ready available at a low cost, for the Patola Saree manufacturers in the nearby area. Traditionally, every region in India has had its own unique weave for the Silk Saree. It is quite notable that Patola Silk Saree is amongst the top five silk weaves which are desired in every Indian Saree Lover's wardrobe.
Source: PIB
Indonesia will continually strive to intensify economic relations with South Africa in 2020, Indonesian Ambassador to South Africa Salman Al Farisi noted. The ambassador remarked in a statement issued by the Indonesian Embassy in Pretoria and received here, Friday. "The economic condition in South Africa is still quite challenging for us to be able to penetrate the market deeper and bring diverse Indonesian products here. However, in 2019, we got some positive indications, ranging from the commitment of several companies in Indonesia to bring representatives in South Africa, to new investment plans from South African companies to Indonesia," Ambassador Al Farisi stated. He highlighted that some agreements, such as the Defense Cooperation Agreement and MoU in the Fisheries Sector, had almost reached the final stage. "We hope that 2020 would bring about more encouraging development," Al Farisi remarked while expressing hope for intensifying relations between the two countries. Since 2015, trade volume between Indonesia and South Africa had shown a fluctuating trend. However, the Indonesian ambassador was not overly concerned about the trade balance in 2018 that showed a surplus for the South African side. He pointed out that increased purchases of capital goods from South Africa was a good sign of productive activities in Indonesia, chiefly linked to the need for intensive infrastructure development in recent years. Moreover, he pointed to Indonesia still holding vast potential to boost its exports, such as of automotive products, palm oil, and food and beverage products, to Sub-Saharan African countries. Nevertheless, tariff barriers are still viewed as hindering trade relations between Indonesia and South Africa. Indonesian Coordinating Minister for Maritime Affairs and Investment Luhut B. Pandjaitan -- during his working visit to Cape Town on December 18-19, 2019, -- met Minister of Trade and Industry of South Africa, Ebrahim Patel. During the meeting, Minister Patel welcomed the preliminary discussion on the Preferential Trade Agreement (PTA) between both nations and expected a concrete step to begin with a study by a technical team in the start of this year. Moreover, Minister Patel indicated several investment potentials by Indonesian businesspersons, especially the relocation of the textile and footwear industry. The economic condition of South Africa and the surrounding countries, within the accreditation scope of the Indonesian Embassy in Pretoria, have influenced the Indonesian government’s strategy in its efforts to expand the African market for Indonesian products. Low spending of the household sector in 2019 has demonstrated that South African consumers are still financially cautious. With the slowing economic growth at around 0.7 percent in 2019, South Africa is facing the problem of unemployment rate of 29.1 percent, thereby making it a country with the highest unemployment rate in the world. In response to such a condition, Ambassador Al Farisi believes the investment-led model is one of the most suitable mechanisms of cooperation between both nations. He argued that Indonesian businesses must consider investing in African countries that will in turn boost exports. "Helping to accelerate the local economy through the opening of new jobs will ultimately increase awareness, demand, and purchasing power of the people for Indonesian products," Al Farisi pointed out. "This can be done by exporting semi-finished products from Indonesia, among others, while the process of finishing products should be done through partnerships with local parties," he added.
Source: Antara News
Vietnam’s 2019 was a remarkable year for its economic growth amid a global slowdown. Gross Domestic Product (GDP) growth remained robust at about seven percent (the highest in Southeast Asia) with inflation stable at four percent. We review 2019 and major developments investors should prepare for in 2020 including regulatory changes in labor code and visa policy.
Vietnam’s rising FDI inflow
2019 marks 10 consecutive years of increase in Foreign Direct Investment (FDI) inflow into Vietnam. There is a significant rise in both the volume and the value of FDI projects. As of November 2019, 3478 new projects (28.2 percent YoY increase) brought in US$31.8 billion (3.1 percent YoY increase). Hong Kong replaced Japan this year to be Vietnam’s largest investor with US$6.7 billion. Vietnam remains a beneficiary of the US-China trade war, and the political tension in Hong Kong, which have contributed to rising investments from both Mainland China and Hong Kong. Vietnam is being chosen by investors among other ASEAN countries because of its cultural proximity to China, low labor cost and pro-investment policies. The processing and manufacturing sector attracted the highest amount of investment, accounting for 68 percent of Vietnam’s total FDI. The transition of multi-national corporations’ factories from China to Vietnam is the most important external factor. In June 2019, Apple announced its plan to start trial production of the wireless earphones Airpod in Vietnam to avoid tariff expenses imposed on China by the Trump Administration. Intrinsically, the Vietnamese government has also adopted more flexible land rental policies with ready-built and built-to-suit factories to welcome manufacturing projects. The International Finance Corporation (a member of the World Bank) expects FDI to continue to rise in 2020. Manufacturers are showing interest in the Central Region where land for industrial use is vast. However, it is critical for the government to better integrate into the global supply chain and upskill the labor force.
Rising Fintech Industry
Accounting for 36 percent of Southeast Asia’s total investment in fintech is Vietnam’s biggest milestone in 2019. These investments raise the proportion of fintech startups funded by foreign investors to 70 percent. With 90 percent of the transactions conducted in cash, electronic payment service is the industry’s priority. 60.5 percent of fintech startups operate as payment intermediaries. According to Allied Market Research, the industry’s compound annual growth rate (CAGR) can reach 18.2 percent in the 2018-2025 period. Apart from significant demand, government policies have also played a role in the industry’s strong growth. Introduced in September 2019, Circular 13/2019/ND-CP provides an overarching plan to create favorable conditions for startups as per Industry 4.0 standards. In particular, start-ups in hi-tech sectors will get a corporate tax exemption for four years and a 50 percent reduction for the nine years. According to Mr. Pham Xuan Hoe, deputy director of the Banking Strategy Institute, Vietnam’s fintech market will be worth US$9 billion in 2020, making it ASEAN’s fourth-largest market. In the upcoming decade, startups are expected to work more closely with banks to promote financial inclusion through technology platforms.
Labor code 2021
This year, the Labor Code has two major changes in retirement age and overtime hours limit. The retirement age for men has been increased from 60 to 62, and from 50 to 55 for women. The increase is inevitable to avoid labor shortages in the next decade and to address an unbalanced social insurance fund. Companies can introduce a more flexible retirement scheme whereby senior workers can choose to be freelancers, independent contractors or part-time workers. The new code also limits overtime to 40 hours a month (300 hours a year). The cap is higher than that of other Asian countries, such as China’s 36 hours a month. However, some policymakers are advocating for an increase in the cap to 400 hours in five special sectors: garments, textiles, seafood, leather shoes, and electronics because of the seasonality in their orders. Employers and workers still need to enter a voluntary agreement before working the overtime limit. These changes are still under review and will officially come into effect in 2021. By then, companies should already have a concrete plan to protect workers’ rights and to sustain their financial position.
Visa friendly policies
The amended Law on Entry, Exit, Transit, which will come into effect in July 2020, allows foreigners to enter coastal economic zones for 30 days without a visa. The zones need to have international airports, geographical boundaries and must be separate from the mainland. The exemption is hailed as a good policy for FDI firms to visit and gather information about potential economic zones. In November, the government also announced that it would extend visa exemption for citizens of Japan, South Korea, Denmark, Norway, Sweden, Finland, and Belarus until December 31, 2022, if their stay does not exceed 15 days. Japan, South Korea, and Russia are key markets for Vietnam’s tourism sector. The number of tourists from these countries has an annual increase of about 30 percent in the past decade. A flexible visa policy will entice more foreigners to come to Vietnam, thus boosting the tourism sector’s growth, bringing in foreign investments and fostering the cultural exchange between nations.
Amended Securities Law
In November 2019, the Securities Law was amended to suit the actual development in the scale of Vietnam’s stock market. Procedures and conditions related to Initial Public Offering (IPO) have been the main focus of the amended law. To be able to file for an IPO, VND30 billion (US$2 million) charter capital of a company is required, a rise from the former requirement of VND10 billion (US$500,000). Major shareholders must retain their ownership of 20 percent of the charter capital one year after the IPO. Public companies are also subject to stricter requirements in auditing, information disclosure, and management. Mr. Choi Ji Ung, Director of ASEAN Law Firm, applauds that the law is now close to the standards of the International Organization of Securities Commission (IOSCO) and Organization for Economic Cooperation and Development (OECD). With new regulations to enhance transparency in the investing environment, especially for foreign investors, Vietnam hopes to make the stock market’s size equal to the country’s GDP in 2020. Larger market capitalization would help Vietnam move from a frontier market to an emerging market according to the Financial Times Stock Exchange (FTSE)’s ranking.
Outlook for 2020
The World Bank forecasts that Vietnam’s economic growth would become moderate at 6.5 percent in 2020 and 2021. Banking, tourism and retail sales would continue to be the growth drivers. Vietnam’s open trade network makes it an attractive destination for FDI. However, this also makes Vietnam vulnerable to slowing global demand, which may affect Vietnam’s exporting industry. However, with the implementation of structural and fiscal reforms in recent years, Vietnam would still be able to meet growth expectations in key sectors.
Source: Vietnam Briefing
Value addition in the country’s readymade garments sector dropped by 3.31 percentage points in the July-September quarter of this fiscal year of 2019-20 compared with that in last fiscal year as the country’s exporters were losing competitive edge due to overvalued local currency and increasing cost of doing business. According to a Bangladesh Bank review on the RMG sector, the value addition in the sector dropped to 61.01 per cent in July-September of FY20 from 64.32 per cent in FY19. The sector’s value addition, however, was 60.44 per cent in July-September of FY19. Economists and exporters said a slowdown in the global economy due to the US-China trade war also resulted in a slump in consumption of RMG products. The consumption fall also forced the country’s exporters to lower prices, they said. Although economists and exporters have been demanding an immediate devaluation of the taka, finance minister AHM Mustafa Kamal recently announced that the local currency would not be devalued against the US dollar. The country’s RMG manufacturers imported raw materials worth $3.14 billion in July-September of FY20 against export of $8.06 billion in the period. The RMG sector imported raw cotton, synthetic or viscose fibre, synthetic or mixed yarn, cotton yarn and textile fabrics, and accessories for garments as inputs for the production. The import of raw materials represents 38.99 per cent of the country’s export value. In FY19, the country’s export earnings of the RMG sector were $34.13 billion. For the production of the export items, the sector imported raw materials worth $12.18 billion, representing 35.68 per cent of the RMG export value. Mentioning the RMG sector’s 83.52 per cent contribution to the country’s overall export earnings, the BB report said, ‘We need product diversification in our export basket.’ ‘Some of our competing countries have already succeeded in product diversification in last decade. Vietnam emphasised electronics and other value-added export products,’ it said. Due to Bangladesh’s high dependency on RMG in export basket, any instability in this sector in future could result in huge unemployment and trade deficit in the country, the BB report said. The central bank also suggested medium- and long-term measures to tackle challenges in the sector. ‘Factory to port communication should be developed to reduce lead time domestically,’ it said, adding, ‘We have to ensure utilities supply with reasonable price along with one stop service in trade procedure and documentation in product transaction.’ ‘Moreover, for continued progress in RMG export earnings, we can try to expand our market in emerging countries along with the prevailing markets,’ the central bank report said. Due to the global slowdown, the country’s export earnings fell for the fourth consecutive month in November of the current fiscal year. In July-November of FY20, the country’s export earnings fell by 7.59 per cent to $15.77 billion from $17.07 billion in the same period of FY19. Of the total export earnings, volume of RMG exports fell by 7.74 per cent to $13.09 billion from $14.18 billion in the same period of FY19. ‘The EPB data spots another dent in the export growth curve. Such continuing negative growth (for four months in a row) last happened in the March-June period of FY12,’ Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq said recently. She said such decline testified that the competitiveness of the RMG industry in Bangladesh was really in danger and the country was not aligned at all with the global competitive scenario; particularly the exchange rate movement of the taka against the competing currencies remained inconsistent. Rubana also said that shutting down of factories in recent months especially after the minimum wage hike in December in 2018 was taking its toll on the export industry. ‘The latest data from the official source of the US and the EU show that Bangladesh is significantly lagging behind our competitors in terms of growth during the third quarter of 2019, i.e. July-September 2019. During this period, Bangladesh registered 1.70 per cent growth in the US whereas Vietnam grew by 14.23 per cent, India 3.93 per cent, Cambodia 15.56 per cent and Pakistan 6.58 per cent,’ she said.
Source: New Age Business
The clothing and textiles industry is the second-largest polluter globally, behind only the oil industry in its environmental impact. And while fast fashion often gets the lion’s share of the blame, the home furnishings industry is far from innocent. Heimtextil, the largest international trade fair for interior textiles, is starting the new decade with a pledge to be more sustainable. In its “Material Manifesto,” published in anticipation of the Frankfurt fair’s 50th edition, which opens next week, the show committed to six overarching concepts, including using as many recycled or borrowed materials in its exhibitions as possible; sourcing from local resources wherever available; managing waste responsibly; and designing exhibitions with recyclability in mind. Heimtextil is doing more than just taking a pledge—the fair is also weaving the topic of sustainability throughout Trend Space, a high-profile section of the show curated by a group of forecasters that spotlights trends for the upcoming year. One environmentally minded highlight of the 2020 Trend Space will be the Future Materials Library curated by London design studio FranklinTill, which will present emerging innovations in sustainable materials. Focused on material composition and manufacturing advancements—including both recycled materials and cultivated textiles (as in, they were once living organisms)—the library aims to provide insight and inspiration for both visitors and exhibitors, complementing the exhibition of more traditional design and color trends. Each featured sample will be displayed with information about the material’s origins, the manufacturing process to create it and its potential afterlife. In late December, representatives from the Messe Frankfurt Texpertise Network, a global network of textile trade fairs that host Heimtextil, joined the Conscious Fashion Campaign and the United Nations Office for Partnerships (UNOP) at the U.N. headquarters to discuss how they can implement sustainable development goals across the textile industry as a whole. “Along with digitalization, sustainability is a topic currently exerting a significant influence on the global textile industry,” said Detlef Braun, a member of the executive board at Messe Frankfurt, during the meeting. “Messe Frankfurt has been accompanying this development with its worldwide textile events under the umbrella of the Texpertise Network for more than 10 years. It is therefore a logical conclusion that the sustainable development goals should be integrated in our worldwide textile events to generate acute awareness of the importance of sustainability in the textile industry.” During next week’s fair, Lucie Brigham, chief of office for the U.N. Office for Partnerships, will present the U.N.’s goals during the opening press conference. The objectives will also be presented and discussed at an interactive stand in the fair’s Green Village, a section of the expo dedicated to environmentally and socially responsible exhibitors. More than 250 companies will be presenting sustainably produced textiles at Heimtextil this year—the highest number of sustainable exhibitors the fair has ever had. (Though with more than 3,000 exhibitors at the fair, the industry clearly has a long way to go.) For the 10th year, Heimtextil will publish The Green Directory, an exhibitor index of sustainability minded vendors and their latest product innovations. “Materials can be the building blocks of a sustainable design agenda,” said Caroline Till, the co-founder and director of FranklinTill, in a 2018 episode of the podcast “Thought Starters.” “We’re in this linear system of take, make, discard in terms of the way we use materials at the moment. ... I’m a big advocate that design can effectively stop the majority of problems we face if we actually focus on them as a design problem … and I think brands have a massive role to play in this and can be advocates of bringing cutting-edge research into practice.” Heimtextil, the largest international trade fair for home and contract textiles, will be held January 7 to 10 in Frankfurt, Germany.
Source: Business of Home
