Given how poor visibility on demand is, few firms are able to see where revenues are headed and analysts are trimming earnings estimates across the board. While the damage to revenues and profits was limited in the March quarter, India Inc is bracing for a tough 2020-21. The commentary continues to be very cautious, even bordering on the pessimistic, given how the lockdown has crimped cash flows in the June quarter so far. Given how poor visibility on demand is, few firms are able to see where revenues are headed and analysts are trimming earnings estimates across the board. It’s not surprising the Larsen & Toubro management observed it doesn’t expect any revival of capital expenditure in the private sector this year. The company said the sales missed so far because of the disruption from Covid-19 were around Rs 15,000-17,000 crore. At InterGlobe Aviation, the capacity utilisation is just about a fifth of that available and occupancies are expected to climb slowly since international travel is some time away; despite gains from lower fuel prices and lower expenses on employees, the airline is expected to report a loss of close to Rs 7,000 crore in FY21. The crash in prices of commodities has hit producers as seen in the staggering Rs 15,269-crore loss before tax reported by Vedanta for Q4FY20, triggered by an exceptional loss of Rs 17,132 crore on account of impaired assets, primarily a steep fall in crude oil prices. At BPCL, inventory losses were high and the sharp rise in debt, albeit partly duet o one-off factors, has analysts worried. The stress had set in even before the pandemic did, given the rise in consumption spends has been decelerating for close to two years now. At Maruti Suzuki, Ebitda crashed 32% due to higher-than-anticipated other expenses; net revenues fell by 15% y-o-y led by a 16% y-o-y drop in volumes. At TVS Motor, for instance, the Q4FY20 Ebitda fell a sharp 21% y-o-y despite reasonably good ASPs and measures to rein in costs. At Dabur, volumes increased by just 4.6% y-o-y in the first two months of Q4FY20, despite the weak base and consolidated revenues declined 12% y-o-y. For Godrej Consumer Products (GCPL), FY20 was the third straight year of decelerating growth in revenues and operating profits, and analysts believe Q4FY20 would have been an indifferent quarter, even adjusted for the Covid-19 impact. The sluggish macro economic environment was already hurting businesses like those of Havell’s which reported a 1% y-o-y fall in revenues for M9FY20; the lockdown exacerbated the stress.
Source: Financial Express
Union textile ministry officials said the demand was at an all-time low with even the government was unable to sell its own stock. The apparel sales have plummeted to a historic low of 84% because of the Covid-19 pandemic and the lockdown imposed in late March to check its spread, a Clothes Manufacturing Association of India (CMAI) survey of around 1,000 factories has found. Only 22% of the factories were functioning by the May end while 40% of them manufactured personal protection equipment (PPE). Over 83% of the factories surveyed with global marketing research firm’s AC Nielson’s help reported sales of under 5% sales in May compared to the same month last year. Rahul Mehta, the chief mentor of CMAI, cited the survey and said the apparel market was worth Rs 6.5 lakh crore in 2019 and they estimate it to shrink by 15% this year to around 5.85 lakh crores. He added in the April-June quarter, most brands and retailers would be unable to achieve over 15- 20% of their 2019 first-quarter sales. Mehta said the industry, which contributes 4 to 5% to India’s GDP, employs close to 12 million people. “It is our estimate that approximately 50% of the labour force is migratory,” Mehta said. Union textile ministry officials said the demand was at an all-time low with even the government was unable to sell its own stock. A textile ministry official said there is no demand right now. “Only 10% of the stock has been sold in the last 15 days. The export market is dwindling as well. Luxury products are not selling.” The official said the ministry has not conducted any assessment of the losses but added stocks were piling up at mills even as the Centre on May 30 released details of the first of a three-phase plan--Unlock 1.0--to lift stringent restrictions imposed to stop the Covid-19 spread. The official said National Textile Corporation Limited, under the ministry, has a stock worth Rs 130 crore but no takers. “Rs 70 crore worth raw material is also lying unused.” The official said mills are unable to dispense with the stocks because the “market is at a stalemate”. “This may change by July. There are sectors that are worst hit like construction... Right now people are not spending money, but that will change.” Indian Technical Textile Association chairman Dr Sundaram said the Centre’s order for 20.2 million PPE kits has helped some offset huge loses. “At Rs 635 for a [PPE] suit, the order for 2.2 core [20.2 million], has pumped [Rs] 1,400 crore into the sector over the last three months.” He added this is nothing compared to the overall losses. South India Mills Association secretary-general K Selvaraju said the industry lost about 5,500 crore daily during the lockdown and the road ahead does not look easy. That nearly 70% of the workers employed in the industry are migrants has added to its woes as the lockdown led to their massive exodus from cities. Selvaraju said there will be at least 30 to 50% fall in consumption. “Most migrants have returned home and will only be back after the monsoon. It is likely that a semblance of normalcy will return to the industry in September...” Former Confederation of Indian Textile Industry (CITI) secretary-general D K Nair said there will at least 50% revenue loss and restarting the industry will be especially tough. He said the business would only get tougher if the number of Covid-19 cases in Mumbai, Chennai and Delhi do not reduce. “They are the main trading centres and right now, they are [Covid-19] hotspots. Nothing is moving there,” said Selvaraju. “Production across the industry, whether it is in spinning, garments, yarn, has come to standstill.” Selvaraju said exports make up for 30% of the revenue and most orders have been cancelled or deferredNair said the export demand is likely to fall further as the largest exporter, the US, is also facing anti-racism protests along with the pandemic. He added the US and Europe account for 60% of exports from India. CITI has written to Indian Banks Association and sought a series of measures, including an extension to the moratorium on repayment of term loans until March 31, 2021, to help the industry. Nair said many would be unable to tide over the revenue dip as medium or small scale enterprises account for 80% of the industry.
Source: Hindustan Times
Shiromani Akali Dal (SAD) on Sunday demanded immediate waiver of fixed charges for all industrial and trade establishments for three-month lockdown period besides allowing both sectors to retain State share of GST for the period. “I have started a series of meetings with representatives of trade and industry on the directions of party president Sukhbir Singh Badal and the overwhelming consensus was that in case, the Congress Government did not extend any concessions to the industrial sector, it would go back by 20 years,” said SAD spokesperson and SAD’s Beopar Wing’s former president NK Sharma. “Punjab, which had earlier faced indebtedness amongst its peasantry, will now experience this amongst the trade and industry. Small traders, including petty shopkeepers, hardware sellers and professionals like photographers and barbers have been most affected. A cycle shop owner has already committed suicide and there is a sense of utter despair amongst the trading community at large,” he said. Stating that instead of helping the industry, the Congress Government was playing cruel jokes with it, Sharma said that the Government had promised not to levy fixed power charges on establishments which had been closed during the lockdown but had not kept its word. “Similarly, instead of waiving power bills of shopkeepers whose shops had been shuttered for two months, the Government has issued power bills to them on average basis,” he said. Akali leader said that the least the Government can do is to give relief where possible including allowing the industry and trade sector to retain State GST share for three months. “Similarly, the government should not charge rent from shops leased out by Municipal Corporations and Committees during this period. Water charges as well as Property tax for this three-month period should also be waived off,” he demanded. Alleging that there was great resentment among the people forgiving Rs 673 crore relief to liquor contractors and Rs 150 crore to sand mafia instead where needed, Sharma said that this was the reason why as many as 32,000 industrial units had not restarted their operations till yet. “Bicycle and textile industry of Ludhiana have been most affected although the effect is felt all over the State,” said Sharma adding that instead of offering some package to these units so that they could restart operations, the Congress Government was asking them to take loans from Rs 20,000 crore subordinate debt fund announced by the Centre which has demoralized the entire sector as most industrialists are unable to pay their present instalments and are in no position to take further loans. Sharma assured the trade and industry that the SAD would raise their voice in appropriate forums including approaching the State Governor on this issue to force the Congress government to resolve their grievances and extend due relief to them.
Source: Daily Pioneer
The government has modified public procurement norms to give maximum preference to companies whose goods and services have 50 per cent or more local content, a move aimed at promoting 'Make in India' and making the country self-reliant. The revised Public Procurement (Preference to Make in India), Order 2017, has introduced a concept of Class-I, II and non-local suppliers, based on which they will get preference in government purchases of goods and services. Class-I local suppliers will get the most preference in all government purchases because their domestic value addition is 50 per cent or more. They will be followed by Class-II suppliers, whose value addition range is more than 20 per cent but less than 50 per cent. "Class-I local supplier means a supplier or service provider, whose goods, services or works offered for procurement, has local content equal to or more than 50 per cent," according to the revised order. Companies with less than 20 per cent of domestic content in their goods or services will not able to participate in most of the government tenders and they are categorised as "non-local suppliers". "In procurement of all goods, services or works in respect of which the nodal ministry/department has communicated that there is sufficient local capacity and local competition, only Class-I local supplier, shall be eligible to bid irrespective of purchase value," it has said. It also said that for purchases of goods/services with an estimated value of less than Rs 200 core, global tender enquiry will not be issued except with the approval of the competent authority as designated by the Department of Expenditure. Earlier, only local suppliers were allowed to bid for procurement orders worth less than Rs 50 lakh. Only Class-I and II local suppliers "shall be eligible to bid in procurements undertaken by procuring entities, except when global tender enquiry has been issued," it said. In global tender enquiries, non-local suppliers can also participate along with Class-I and II suppliers. The earlier order had defined a local supplier as one whose goods/services offered for government procurement had a minimum local content of 50 per cent. There was no categorisation of local suppliers. Local content means the amount of value added in India, which shall be the total value of the item procured (excluding net domestic indirect taxes) minus the value of imported content in the item (including all customs duty) as a proportion of the total value, in per cent. Further, it said that if a ministry or department finds that for any particular item, the definition of local content is not workable or has limitations, it may notify alternate suitable mechanism for calculation of domestic content for that product. For verification of local content, the Class I and II suppliers shall be required to indicate percentage of local content and provide self- certification that the item offered meets the local content requirement norms. "Concept of Class-I supplier has been introduced so that in cases where local suppliers are to be given the order, even within that group we should give first preference to the ones whose domestic value addition is significantly high. "Basically it's like domestic will be preferred over foreigner wherever possible. And even within domestic, Class-I will be preferred since they add more value in India as compared to Class-II," a source said. In general, under the Public Procurement (Preference to Make in India) Order, it was envisaged that all central government departments, their attached or subordinate offices and autonomous bodies controlled by the Government of India should ensure that purchase preference will be given to domestic suppliers.
Source: Economic Times
Chennai and Bengaluru customs will begin faceless assessment of cargo in the first phase of the national rollout of the program. The first phase will begin from June 8 and will be implemented across the country by the year end. “The Board has decided to begin Faceless Assessment in phases beginning with Customs stations which already have the experience of the pilot programs,” the Central Board of Indirect Tax and Customs (CBIC) said in a circular. To begin with, imports covered by Chapters 84 and 85 of the Customs Tariff Act, 1975 which includes machinery, mechanical appliances, electrical equipment and parts, will be allowed for faceless assessment while going through customs. The Customs Automated System will assign Bills of Entry filed for imports of these materials. “The phased rollout plan envisages that Faceless Assessment shall be the norm pan India by December 31, 2020,” the Board added. Faceless assessment of cargo is part of a string of next generation reforms called ‘Turant Customs, which is aimed at speedy clearance of goods at air and sea ports, which in turn will benefit ease of doing business in India. CBIC has put into effect a proposal mooted in February to restructure existing commissionerates into to set up National Assessment Commissionerates (NACs) with the mandate to examine assessment practices of imported articles across Customs stations and suggest measures to bring about uniformity and enhanced quality of assessments. “The NACs would be put in place as and when Faceless Assessment is rolled out in phases across the country,” CBIC said while notifying the proposal on June 5. Principal Chief Commissioners or Chief Commissioners concerned have been directed to set up dedicated cells called Turant Suvidha Kendras, in every customs station manned by custom officers to perform various functions, primarily, accepting Bond or Bank Guarantees, generating test memo and forwarding the samples, processing request for fee waiver for late filing and carrying out any other technical function. “COVID-19 has put the digital India initiative in the spotlight and there is an expectation from all the revenue collectors to become 100% online and automated,” said Rajat Mohan, senior partner at AMRG Associates. The CBIC has introduced various reforms earlier such as single window interface for facilitating trade, e-Sanchit (e-Storage and computerised handling of indirect tax documents), and direct port delivery, among others. However, India’s export-import trade has often flagged issues of seaports carrying out their own assessment and examination which varies from port to port, and divergent practices being adopted by authorities.
Source: Economic Times
The government had last month announced loans worth Rs 3 trillion for an estimated 4.5 million MSMEs that are facing a liquidity crunch since last year. As small businesses and start-ups line up to register as micro, small and medium enterprises (MSMEs), most do not stand to benefit from the government’s relief package, say officials. The government had last month announced loans worth Rs 3 trillion for an estimated 4.5 million MSMEs that are facing a liquidity crunch since last year. While the term loans — that are collateral-free and automatic — have been made available till October 31, only businesses that have outstanding loans of up to Rs 25 crore would be eligible. This saw a surge in start-ups and small businesses across the country logging in to the MSME Ministry’s registration portal — Udyog Aadhaar — hoping to get a shot of liquidity through the loans, as well as other benefits.
Experts, however, say the loan scenario looks bleak.
“These new loans are categorised as ‘additional working capital finance’ for firms which have already been granted loans and those with a turnover up to Rs 100 crore. These will amount to a maximum of 20 per cent of the firm’s outstanding credit as of February-end. Also, the outstanding credit needs to be at least 60 days past due as of that date,” a senior government official pointed out. The loans have elicited massive response since the units will not have to provide any guarantee or collateral of their own, the official added. The amount will be 100 per cent guaranteed by the government. “The ability to access this fund has nothing to do with whether an entity is registered through the government’s MSME website or not. Only entities with an outstanding loan are eligible,” said Anil Bhardwaj, secretary general of Federation of Indian MSMEs.
Tough luck
Earlier this week, the Cabinet approved a Rs 20,000-crore subordinated debt for 200,000 MSMEs which have been tagged a non-performing asset or are stressed. Under this, the government will disburse Rs 4,000 crore to the Credit Guarantee Fund Trust for Micro and Small Enterprises which allows MSMEs to secure bank credit without the hassles of collaterals or third-party guarantees. The government will, however, guarantee the entire Rs 20,000 crore. Current NPA norms don’t allow restructuring of MSMEs which are categorised as stressed, MSME Minister Nitin Gadkari had earlier said. Banks are expected to provide the subordinated debt to promoters of such MSMEs equal to 15 per cent of their existing stake in the unit. The loan amount will be limited to a maximum of Rs 75 lakh and interest will be kept to a minimum, Gadkari had said.
Source: Business Standard
Gross direct tax collections for 2019-20 fell almost 5% at Rs 12.33 lakh crore against the previous year’s Rs 12.97 lakh crore, the Central Board of Direct Taxes said on Sunday. “This fall in the collection of direct taxes is on expected lines and is temporary in nature due to the historic tax reforms undertaken and much higher refunds issued during the FY 2019-20,” CBDT said in a statement. The board attributed the fall in collections to a combination of factors, including 14% yearonyear increase in refunds issued, cut in the corporate tax rate to 22%, reduction in minimum alternative tax (MAT) to 15% for existing units, reduced rate of 15% for new manufacturing units, increase in standard deduction to Rs 50,000, and income tax exemption for people earning up to Rs 5 lakh a year. It said the measures taken under the tax reforms had direct impact on tax collections with Rs 1.68 lakh crore of revenue foregone, including Rs 1.45 lakh crore for corporate tax and Rs 23,200 crore for personal income tax. Further, refunds of Rs 1.84 lakh crore were issued in FY20, higher than Rs 1.61 lakh crore issued the year before. This is the first time in over a decade that tax collections have dipped on-year. The board also dismissed reports that tax buoyancy compared to GDP growth had reached negative. If the effect of tax reform measures and higher issuance of refunds during the FY20 was excluded, the buoyancy of total gross direct tax collection came to 1.12 and almost 1for corporate tax and 1.32 for personal income tax, it said. Tax buoyancy is used to assess the efficiency of the tax system. “The higher growth rate in direct taxes as compared to GDP even in these challenging times proves that recent efforts for the widening of the tax base undertaken by the government are yielding results,” CBDT said.
Source: Economic Times
Garment and knitwear hubs across the country from Ludhiana to Tirupur are facing shortage of tailors and finishing personnel as hundreds of thousands of migrant workers who were engaged in these jobs have left for their hometowns amid the national lockdown. While a section of the industry is trying to woo the migrant workers by offering incentives, others are approaching governments of states such as Uttar Pradesh, Bihar, Jharkhand and West Bengal, where these workers come from, to convince them to return, industry insiders said. “There is an acute shortage of those who stitch garments and also those engaged in ironing and pressing of the garments,” said Rahul Mehta, chief mentor of Clothing Manufacturers Association of India (CMAI), the country’s oldest garment industry association based in Mumbai, as factories start to reopen after more than two months of Covid-19 lockdown.
Source: Economic Times
Given promoters’ ability to infuse fresh capital remains limited, firms must raise money from institutions and do so well before their very survival is at stake, Kotak says. Exhorting companies to raise capital before their survival is at stake, CII president Uday Kotak says the disruption due to the pandemic could see a host of inefficient businesses sinking, triggering widespread consolidation. Kotak believes the long-elusive private-sector capex may turn the corner “anytime between the next six and 12 months”. The CII chief says India Inc must shun excessive obsession with short-term growth pangs and look at raising capital to tide over the pandemic and reap medium-term gains. Given promoters’ ability to infuse fresh capital remains limited, firms must raise money from institutions and do so well before their very survival is at stake, Kotak says. With economies across the globe unleashing stimulus, the good thing is liquidity unparalleled. It’s no longer ‘helicopter money’, it’s a Dreamliner full of money,” Kotak said. “Don’t be excessively obsessed with how much capital you have yourself, you need capital as a buffer and for your core ability to grow. So, don’t worry about the percentage of ownership, etc, at this time. Go out there, raise capital, dilute and don’t be excessively fussy about the (equity) price,” Kotak told FE. The new CII chief believes the disruption due the pandemic could result in consolidation across industries and inefficient firms may invariably sink, just as the country witnessed in the telecom sector — from 13, the count of (private) telecom firms came down to just three. “The market is saying something. We need to ask ourselves if we are looking too much at short term growth instead of what it can be, and as a country, if we need to look beyond here and now,” Kotak said. Economists have forecast a GDP contraction of up to 6.8% in FY21 versus an expansion of 4.2% in FY20, an 11-year low. However, the markets continue to rally. The Sensex rose from 30,029 points on May 18, after the government’s latest relief package, to 34,287 points on June 5, despite Moody’s downgrade of the sovereign rating last week. Kotak believes the long-elusive private sector capex may turn the corner “anytime between the next six and 12 months”, as businesses would seek to cash in on opportunities. “At CII, I am also focussing on where we must step up investments. For instance, we are woefully underinvested in healthcare and education….”Gross fixed capital formation (GFCF), as a share of GDP collapsed to 29.8% in FY20 from as much as 34.3% in FY12. GFCF contracted by 6.5%, the lowest in the current GDP series, in the January-March period, the third straight quarter of fall. While the banking sector is staring at massive losses that will potentially erode lenders’ capital base substantially, the CII chief cautioned against any liberal regulatory forberance on capital requirement, or any other aspect. “We have to be very careful about it. Forberance has to be very narrow and focussed,” Kotak, also the managing director of Kotak Mahindra Bank, says. Asked about subdued credit flow, Kotak says there is a risk aversion even among borrowers, many of whom don’t want money in times of a lockdown. Also, borrowers whose credit-worthiness is not sound obviously are finding it difficult to get loans, while some of the good companies are raisiing funds from the bond market. Credit growth has remained muted since the last fiscal and has been hovering around a two-year low. Non-food credit growth stood at just 7.3% year-on-year as of April 26, against 11.9% a year earlier. Commenting on whether the government’s Rs 21-lakh-crore relief package, consisting mostly of supply-side instruments, is enough to reverse an economic slide, Kotak points at the certain not-so-visible costs to the exchequer from various steps recently announced and the realities of an uneven global economic playing field. First, before the pandemic, the general government deficit was expected to be about 6-6.5% of GDP and now, it could be 11-12% (of course, revenue collection has petered out, etc), he says. Second, the centre will have to capitalise state-run banks to keep credit flow unhindered. Third, the hidden liabilities accruing from various recent government initiatives, such as guarantee on Rs 3 lakh crore loans to MSMEs, and from the debt levels of various government arms like NHAI, will have to be watched out for. “Now, look at the other side of the coin. Ours is not a reserve currency. Rating agencies seem to have different standards for the US and Europe than for us… If I am in the government, I would think about a medium-term strategy,” Kotak says. “Everybody wants a quick steroid, and understandably so. But if we have to sustain our medium-term growth, we need to keep the ability to spend sustainably, consistent with the medium-term goals,” he adds.
Source: Financial Express
The Narendra Modi government has focused on reviving the micro, small, and medium (MSME) sector through its stimulus packages. In an interview with Megha Manchanda & Jyoti Mukul, Union Minister of Road Transport and Highways and MSME Nitin Jairam Gadkari underscores the need for the Indian economy to remain competitive through cost reduction, while admitting that all stakeholders, including state and central governments, are in a problem. Edited excerpts: How far the change in MSME definition alone will address problems in the sector? The definition was last changed in 2006 ...
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
834.37 |
USD/Ton |
1.63% |
07-06-2020 |
|
VSF |
1284.74 |
USD/Ton |
0% |
07-06-2020 |
|
ASF |
1605.92 |
USD/Ton |
0% |
07-06-2020 |
|
Polyester POY |
784.96 |
USD/Ton |
0.18% |
07-06-2020 |
|
Nylon FDY |
1976.52 |
USD/Ton |
0% |
07-06-2020 |
|
40D Spandex |
3995.39 |
USD/Ton |
0% |
07-06-2020 |
|
Nylon POY |
2287.12 |
USD/Ton |
0% |
07-06-2020 |
|
Acrylic Top 3D |
5195.42 |
USD/Ton |
0% |
07-06-2020 |
|
Polyester FDY |
1009.44 |
USD/Ton |
0% |
07-06-2020 |
|
Nylon DTY |
1870.64 |
USD/Ton |
0% |
07-06-2020 |
|
Viscose Long Filament |
1778.87 |
USD/Ton |
0% |
07-06-2020 |
|
Polyester DTY |
988.26 |
USD/Ton |
0% |
07-06-2020 |
|
30S Spun Rayon Yarn |
1736.51 |
USD/Ton |
0% |
07-06-2020 |
|
32S Polyester Yarn |
1404.74 |
USD/Ton |
0% |
07-06-2020 |
|
45S T/C Yarn |
2174.17 |
USD/Ton |
0% |
07-06-2020 |
|
40S Rayon Yarn |
1581.22 |
USD/Ton |
0% |
07-06-2020 |
|
T/R Yarn 65/35 32S |
2018.87 |
USD/Ton |
0% |
07-06-2020 |
|
45S Polyester Yarn |
1905.93 |
USD/Ton |
0% |
07-06-2020 |
|
T/C Yarn 65/35 32S |
1680.04 |
USD/Ton |
0.85% |
07-06-2020 |
|
10S Denim Fabric |
1.12 |
USD/Meter |
-0.25% |
07-06-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
-0.22% |
07-06-2020 |
|
40S Combed Poplin |
0.94 |
USD/Meter |
-0.30% |
07-06-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0% |
07-06-2020 |
|
45S T/C Fabric |
0.64 |
USD/Meter |
0% |
07-06-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14118 USD dtd. 07/06/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Vietnam on Monday ratified a significant trade deal with the European Union, which is expected to boost the country''s manufacturing sector and exports, as it recovers from a dip caused by the coronavirus pandemic. Lawmakers approved the agreement as they met in the National Assembly for the first time since the pandemic began. The deal was signed in Hanoi last June and was ratified by the European Parliament in February. When it takes effect next month, the EU will lift 85% of its tariffs on Vietnamese goods, gradually cutting the rest over the next seven years. Vietnam will lift 49% of its import duties on EU exports and phase out the rest over 10 years. The implementation of the EU-Vietnam Free Trade Agreement "can''t come at a better time for Vietnam when it''s on the path of economic recovery after several months of closure due to COVID-19,” said economist Pham Chi Lan, former adviser to several of Vietnam''s prime ministers. Vietnam prioritized public health and safety when the coronavirus started to peak in China. It closed the border with China in January and with the world in February while imposing a social shutdown that lasted until the end of April. The tough measures contained Vietnam''s outbreak to just over 300 cases with no deaths and no local infections have been reported for almost two months. Still, its economy has dipped because of the illness and containment measures elsewhere, and the manufacturing sector has been hit by restrictions in the movements of goods and people. The pandemic revealed shortcomings in its manufacturing sector. While Vietnam''s own factories were safe to open, they could not operate because they sourced their materials from China, particularly for major export products in textiles, footwear and electronics. “COVID-19 has given Vietnam a hard lesson about being dependent on China,” Lan said. “It also showed other countries, including the EU, the negative impacts of relying too much on China in their product value chain and the EVFTA comes in the right time as all parties realize they need to pivot and restructure to diversify the supply chain.” Following the trend of manufacturing shifting from China to other countries, accelerated first by the China-US trade war then COVID-19, the agreement is expected to raise Vietnam''s competitiveness in attracting investors. Vietnam is the EU''s second-largest trading partner in Southeast Asia, with the trade turnover reaching $56 billion last year, according to the national general statistics office. With Singapore being the only other country in Southeast Asia holding a free-trade agreement with the EU, Vietnam will have an edge regionally. “EVFTA will add to the positive momentum drawing manufacturing to Vietnam,” said Michael Sieburg, a partner of YCP Solidiance, a corporate strategy consulting firm focusing on Asia. “Manufacturers looking to locate in the region and seeking a more competitive access to EU markets will be more inclined to shift manufacturing to Vietnam as a result of EVFTA,” Sieburg said. Foreign direct investment in Vietnam reached over $38 billion in 2019, marking a 10-year high. With about two-thirds of it going into manufacturing, the agreement should help sustain the trend, Sieburg said. Lawmakers also ratified a second pact that protects investors. They had been negotiated since 2012 and give EU companies equal treatment with domestic bidders in competing for public contracts in Vietnam. They also commit Vietnam to standards for sustainable development, including improving its human rights record, protecting labor rights and upholding its pledges to deal with climate change under the Paris accord. More than 30 years since carrying out economic reforms to integrate with the global economy, the country with a population of 95 million, is emerging to be one of the world''s next factories. “Vietnam has to attract (investment) from countries with high technologies and upholding good corporate governance, gradually replacing the partnership with countries having outdated standards. The free trade agreement with EU will help Vietnam raise its skills and standard. It is a great opportunity for Vietnam to excel,” Lan said.
Source: Outlook India
China's foreign trade volume totaled 11.54 trillion yuan ($1.63 trillion) in the first five months of this year, down 4.9 percent year-on-year, according to data released by the General Administration of Customs on Sunday. The decline was the same as that in the January-April period, the administration said. The country's exports increased by 1.4 percent year-on-year in May, compared with 8.2 percent in April, showing continuous recovery in recent months. But imports in May fell 12.7 percent. The recovery in exports over the past two months was mainly driven by surging shipments of automatic data processing equipment and its parts, textile and plastic products, face masks and medical goods, experts said, urging the country's export-oriented companies to analyze global market demand during the post-pandemic era as soon as possible in order to remain competitive. Global market demand for ventilators, face masks, protective clothing and testing kits, which are urgently needed in the COVID-19 fight, was the main contributor to boosting China's exports of electromechanical, textile and plastic goods over the past three months, said Zhang Yongjun, a researcher at the China Center for International Economic Exchanges. China exported 70.6 billion face masks, 340 million items of protective clothing, 96,700 ventilators, 225 million testing kits and 40.29 million infrared thermometers to over 200 countries and regions from March 1 to May 31, according to a white paper on the nation's battle against COVID-19 released on Sunday. But shipments of other major exports such as furniture, clothing, shoes and automobiles all dropped notably in recent months, showing that the country's foreign trade still faces downward pressure, Zhang said. Rather than cutting jobs and production capacity, Peak Sport Products Co, a sportswear company based in Quanzhou, Fujian province, joined hands with a number of international sports events and celebrities and used livestreaming to promote its latest sneakers and sportswear during the epidemic period. "We have already adopted digital channels to boost the brand's influence," said Xu Zhihua, CEO of Peak Sport, adding that the firm has followed the actual demand of the global market and adjusted its product lines accordingly. As a large number of economies have begun to resume production and services, exports of China's industrial goods and materials are expected to gradually recover, said Cai Jin, vice-president of the China Federation of Logistics and Purchasing. China's exports dropped by 4.7 percent on a yearly basis to 6.2 trillion yuan between January and May and imports fell by 5.2 percent to 5.34 trillion yuan, the Customs data showed. China's foreign trade with the Association of Southeast Asian Nations, its largest trading partner, grew 4.2 percent year-on-year to 1.7 trillion yuan in the first five months of the year, while its trade volume with the European Union fell 4.4 percent to 1.61 trillion yuan and with the United States it declined 9.8 percent to 1.29 trillion yuan. In addition to the China-Europe freight train service, the Haian logistics base of China Railway Shanghai Group Co, launched a freight train service from Nantong, Jiangsu province, to Hanoi in Vietnam on May 26 to export more than 70 containers of industrial parts, garments and photovoltaic products manufactured by companies in China's Yangtze River Delta region. It takes about 120 hours for the train to complete the 2,300-kilometer long journey. The Chinese cargo train operator plans to run the train between four and six times a month to better connect the Yangtze River Delta region and the ASEAN markets.
Source: China Daily
According to the latest DIFE data, a total of 67apparel and textile factories fired 17,579 apparel workers after -ul-Fitr, despite a tripartite agreement not to lay-off and sack workers. The Department of Inspection of Factories and Establishments (DIFE) on Sunday urged apparel and textile sector leaders to take necessary steps to stop the sacking of workers. According to the latest DIFE data, a total of 67apparel and textile factories fired 17,579 apparel workers after -ul-Fitr, despite a tripartite agreement not to lay-off and sack workers. In a letter on June 7, Inspector General of DIFE Shib Nath Roy asked the president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporter Association (BKMEA) and Bangladesh Textile Mills Association to stop the sackings. He took the move following a black and white request from several trade union leaders. After Eid-ul-Fitr, a significant number of apparel factory owners have sacked workers. According to data from the office of the deputy inspector general of DIFE, 67 apparel and textile factories located in Dhaka, Gazipur, Narayangong and Chittagong have fired 17,579 workers, said the letter. On June 1, about 2,450 workers of Tanaj Fashions and Viyellatex Garments demonstrated by blocking Dhaka-Mymensing roads. Later, with the help of local administrations, industrial policy and the Textile Department, the unrest was temporarily controlled, it added. “Considering the present situation and to stop unrest in industrial areas, we are urging you [apparel leaders] to take necessary steps to stop the firing of workers as per the tripartite agreement,” said DIFE. In a Tripartite Consultative Committee meeting held on April 25, apparel makers agreed not to terminate workers and declare lay-offs of factories. Over 18,000 RMG workers unemployed during Covid-19 deadlock As many as 18,128 ready-made garment (RMG) workers were subjected to lay-offs in the last two months, due to the coronavirus outbreak. The number of workers laid off was counted from April to Sunday, said sources at Industrial Police. So far, 117 factories under six Industrial Police units at Ashulia, Gazipur, Chittagong, Narayanganj, Mymensingh, and Khulna laid off the workers. Excluding about 800 factories inside the Dhaka Metropolitan Police (DMP) area, 7,602 factories across the country are under the jurisdiction of Industrial Police. Among the laid-off workers, a total 13,796 workers are from 81 BGMEA factories and 2,266 workers are from 13 BKMEA factories. Furthermore, 258 workers are from four BTMA factories, 47 from one Bangladesh Export Processing Zones Authority (BEPZA) factory, and 1,761 are from 14 other factories across the country. Since the Covid-19 outbreak arrived in the country, garment owners have been complaining that they are not getting new orders from foreign buyers and some previous orders were canceled. The effects of the order shortage have been felt mostly by the workers. Of the laid off workers, most had worked for less than one year at the different factories. “Factories are laying-off more of them [those who have worked for less than one year] as they need to pay them less money and other facilities,” said Mohammad Amzad Hossain, Superintendent of Police at the Industrial Police Headquarters.
Source: Dhaka Tribune
The exporters of textiles and Personal Protective Equipment’s (PPEs) have welcomed the government decision of allowing exports of all PPEs, both woven and non-woven, saying that the decision would provide them opportunity to cater to the demands of world markets. The decision would provide local exporter a huge opportunity to achieve their exports’ targets that were badly affected after emergence of COVID-19 pandemic, Federation of Pakistan Chamber of Commerce and industry (FPCCI) President Mian Anjum Nisar told APP on Sunday. He said that in this regard the government had coordinated with FPCCI and the whole business community, adding, the business community was committed to support the every good step of the government. He said “where Pakistan and the world as whole were facing the challenge of COVID-19 in every sphere of life, we were creating opportunities to reshape our export regime of different items including PPEs exports.” Advisor to the Prime Minister on Commerce and investment Abdul Razak Dawood, in his tweet on Sunday, urged the local exporters to exploit huge opportunities by exporting Personal Protective Equipment (PPE) items in potential global market as its demand has risen after COVID-19 pandemic. The advisor emphasised upon the need for exploiting the huge opportunities of increasing exports in the health and safety products like PPE including protective masks, gloves, sanitizer, clothing, helmets, goggles and other garments or more innovative equipment’s designed for protection from COVID-19 pandemic. The government was committed to encourage the local exporters to seek more orders from the international potential markets and also try to explore the untapped region of the world. “A ban was imposed on export of PPE vide an SRO dated March 24, 2020, which is now being lifted after consultations among all stakeholders’ he said. Already “I have received information that some exporters have obtained large orders for face masks from United States, Canada and European Union, Razak Dawood said. The adviser said the exports to different regions has increased as the exports to Middle East went up by 36 per cent, African regions 10 per cent, while the export to Central Asian Countries especially were also on rise. He calls the exporter to go full speed ahead and capture the share of potential markets of the world including EU and China to increase the local exports.
Source: The Nation
Central bankers are likely to remain undeterred in both their credit and monetary policy support until the jobless rate gets closer to their full employment estimate of 4.1per cent. The Federal Reserve may have stoked one of the strongest corporate debt market rallies in decades, but it’s too soon to declare an all-clear for credit with the economy facing a potentially rocky road ahead. Sure, US investment-grade borrowing costs have retreated to near all-time lows, and companies have sold $1 trillion of bonds at the fastest pace on record — evidence that merely announcing a plan to pump liquidity into corporate debt markets has helped ease strains before barely a dollar of central bank money was deployed. But the Fed’s emergency pandemic lending programs are just getting started. Chairman Jerome Powell is expected to repeat that the Fed will deploy its full suite of liquidity backstops when he addresses reporters Wednesday after a two-day policy meeting — even if there is little need for some at the moment. There are also worries that the economy could drag as double-digit unemployment punches holes in consumer demand and corporate revenue growth. Even though the labor market performed better than expected in May, unemployment at 13.3per cent is well above the peak of the last recession. Central bankers are likely to remain undeterred in both their credit and monetary policy support until the jobless rate gets closer to their full employment estimate of 4.1per cent. Fed officials will publish new forecasts this week.
Not time
“What the Fed has done is prevented an economic crisis from becoming a financial crisis,” said Julia Coronado, founding partner of MacroPolicy Perspectives LLC and a former Fed economist. “They won’t say it is time to start pulling back. They won’t take it for granted when they see the playbook worked.” The Fed still has to roll out key components of its corporate credit programs, and officials could stoke the rally further if they announce a decision to ramp up Treasury purchases. Current Fed government bond buying is to ensure market functioning. But officials could shift purchases toward deliberately stimulating demand in the economy, compressing returns on risk-free Treasuries and sending investors scurrying into higher-yielding debt.
‘Belt and suspenders’
“The programs are doing a lot of work on the credit spreads, but the total cost of finance includes the spread on the risk-free rate,” said Michael Feroli, chief US economist at JPMorgan Chase & Co. He said the Fed will adopt a “belt and suspenders” approach to continued credit easing policies and announce a program of $80 billion per month in longer-term Treasury purchases sometime over its next two meetings. The Fed announced two corporate credit facilities March 23 of up to $750 billion, taking a radical step into direct finance of large companies. Since then, investment-grade and high-yield companies have gone on a record-breaking borrowing spree, taking advantage of robust investor demand that the Fed also encouraged. The Primary Market Corporate Credit facility will buy bonds directly from companies, as well as slices of syndicated loans. That program is expected to launch in the next couple of weeks, according to people familiar with the matter.
ETF buying
The Secondary Market facility buys exchange-traded funds of investment grade and high-risk, high-yield junk bonds, in addition to bonds already trading in the market. Only the ETF purchases are underway with $4.3 billion in the Fed’s portfolio as of June 2. “Before they bought a single bond or ETF, the liquidity crisis was over,” said Hans Mikkelsen, head of high-grade credit strategy at Bank of America Corp. “The Fed doesn’t need to do more. It’s a done deal.” One reason other components of the programs have been slower to get off the ground is they are complicated. For example, a company must be able to show that it has significant operations and a majority of its employees based in the U.S. for its bonds to be eligible. To obtain a direct loan, the company must also certify that it couldn’t get “adequate credit” in private markets at a normal rate.
Source: Bloomberg
