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MARKET WATCH 16 JUNE, 2021

 NATIONAL

INTERNATIONAL

 

Commerce department for RoDTEP budget hike to Rs 20,000 crore

“This risks RoDTEP scheme being dragged to the World-Trade Organisation (WTO) abinitio,” the department wrote in its recommendations to the committee of secretaries for RoDTEP, accessed by ET. The Department of Commerce (DoC) has recommended increasing the budget of the Remission of Duties and Taxes on Export Products (RoDTEP) scheme to ₹20,000 crore to cover all 11,310 tariff lines and allay any legal concerns that it is a mere replacement of the WTO non-compliant Merchandise Export Incentive Scheme (MEIS). The Department of Revenue had set the annual financial outlay at ₹13,000 crore to include 7,910 tariff items, which were covered under MEIS. But DoC suggested that such a move will give an impression that RoDTEP is just a reinstrumentation of the MEIS. This risks RoDTEP scheme being dragged to the WorldTrade Organisation (WTO) ab-initio,” the department wrote in its recommendations to the committee of secretaries for RoDTEP, accessed by ET. Limiting the outgo of the scheme to ₹13,000 crore would have required either imposition of cap per exporter per annum, as was done under MEIS last year, or exclusion of certain sectors or scaling down the remission rates. A cabinet note is likely to be floated this week and the final announcement may be made in 15 days, people close to the matter told ET. DoC has suggested increasing the financial outlay by ₹7000 crore will provide benefits to all the 11,310 harmonised system (HS) code lines including companies approved under the ProductionLinked Incentive (PLI) scheme, advance authorisation beneficiaries, special economic zones and export-oriented units without putting a large fiscal pressure on the government. HS is a code assigned for every single item which is traded, from components to finished goods. This would fully delink RoDTEP with MEIS and allay any legal and technical concerns that trading partners may have.

Source: Economic Times

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Exports jump 69.35% to USD 32.27 bn in May; trade deficit at USD 6.28 bn

India''s exports rose by 69.35 per cent to USD 32.27 billion in May on account of healthy growth in sectors such as engineering, petroleum products and gems and jewellery, even as trade deficit dropped to an eight-month low of USD 6.28 billion, according to government data released on Tuesday. Exports stood at USD 19 billion in May last year and at USD 29.85 billion in May 2019, the data showed. Imports in May 2021 grew by 73.64 per cent to USD 38.55 billion, leaving a trade deficit of USD 6.28 billion for the month -- the lowest in eight months. The deficit number lower than this was recorded at USD 2.91 billion in September 2020. Imports in May 2020 were recorded at USD 22.2 billion and at USD 46.68 billion in the same month of 2019. Trade deficit in May 2020 was USD 3.15 billion. Exports during April-May this year jumped to USD 62.89 billion from USD 29.41 billion in the same period of 2020. Imports during April-May 2021 came in at USD 84.27 billion, an increase from USD 39.32 billion in the corresponding two months of 2020. The trade deficit during the period under review was USD 21.38 billion as against USD 9.91 billion in April-May 2019-20. Oil imports during May 2021 rose to USD 9.45 billion from USD 3.49 billion in May 2020. Gold imports increased to USD 679 million in May 2021 from USD 76.31 million in the same month a year ago. Exports of engineering, petroleum products and gems and jewellery in May 2021 stood at USD 8.64 billion, USD 5.33 billion and USD 2.96 billion, respectively. The other commodities which have recorded positive growth during May include handicrafts, leather, meat, dairy and poultry products, handloom, RMG (ready made garments) of all textiles, carpet, cashew, marine products, iron ore, plastic and chemicals. Items which have registered negative growth are fruits and vegetables, oil seeds, pharmaceuticals, tea and spices. Commenting on the numbers, Federation of Indian Export Organisations (FIEO) President S K Saraf said that continuing on with such a growth performance in exports during the second month of the new financial year shows signs of resilience of the exporting community. "The government must address some of the key issues including priority status to the exports sector, extension of interest equalisation scheme beyond June 2021 till at least March 2024, resolving risky exporters'' issues and continuance of seamless refund of IGST," he said. Aditi Nayar, Chief Economist, ICRA, said that the widening state level restrictions shrunk the imports of crude oil and gold, narrowing the merchandise trade deficit to an eight month low in May 2021. ''After the huge inventory build up in February-April 2021, the impact of the lockdowns on retail demand led to a sharp slowdown in gold imports. We are cautiously optimistic that domestic demand is resilient, and that fuel demand will bounce back in June 2021 as states unlock. Nevertheless, the current account balance may well revert to a muted, transient surplus in Q1 FY''2022, led by the drop in mobility and fuel demand in May 2021," she said. Prahalathan Iyer, Chief General Manager, Research and Analysis, India EXIM Bank, said that though the imports in April-May 2021 have grown by 114 per cent over the corresponding value for the previous year, in absolute terms it is lower than the import of USD 86.75 billion witnessed during April-May 2019. "This could be attributed to the lockdown restrictions in many parts of the country, and low consumer demand," he said.

Source: Outlook India

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   Govt simplifies registration process for MSMEs

The government has simplified the registration process for micro, small and medium enterprises and they will now only need to furnish PAN and Aadhaar to register, an official statement said on Tuesday. Announcing the measure, MSME minister Nitin Gadkari said that after getting registered, the MSME unit will be getting priority and finance. He said there is a need to impart training to small units in fields of entrepreneurship and other related aspects. He also expressed hope that banks and non-banking finance companies will also provide full support to small businesses. The minister "announced simplification of the process for registration of MSMEs. Now only PAN and Aadhaar will be required for registration of MSMEs," it said.

Source: Economic Times

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EAM Jaishankar, FM Sitharaman to headline UK's India Global Forum

India Global Forum, organised from London as a hybrid event between June 29 and July 1, will bring together a range of worldwide experts External Affairs Minister S Jaishankar and Finance Minister Nirmala Sitharaman were on Tuesday confirmed as the headline speakers at a global event that will lay out India's vision for post-pandemic growth. India Global Forum, organised from London as a hybrid event between June 29 and July 1, will bring together a range of worldwide experts, including World Health Organisation (WHO) Director-General Dr Tedros Adhanom Ghebreyesus, former New York Mayor Michael Bloomberg and former CIA Director General David H. Petraeus, to cover India's role in vaccine and medicine manufacturing as well as cooperation in crucial areas of climate change and an equitable global economic recovery. From India, other senior ministers set to address a host of sessions include Commerce & Industry Minister Piyush Goyal, Transport Minister Nitin Gadkari and Women & Textiles Minister Smriti Irani. This year's India Global Forum brings with it a sense of urgency and impatience about the radical actions needed now to shape a post-pandemic world, said Manoj Ladwa, CEO of India Inc. Group, organisers of the forum. It's where the big global issues of climate change, economic recovery and opportunity, digital transformation, and tackling new age imperialist and fundamentalist threats get debated, he said. In line with its Future. Now. Radical Actions for the Post Pandemic Era theme, the sessions of the forum will cover Climate Action; Digital Future; Global Business; Economic Recovery; Health & HealthTech; Securing Supply Chains; and Global Leadership. From views on how the post-pandemic build back of the global economy can be used to accelerate the transition to a better and safer world, to so-called Covidonomics of navigating huge new debts, unemployment and ongoing healthcare risk, the event is being pegged as the first chance for such a high-level worldwide forum as India gradually emerges from a devastating second wave of the COVID-19 pandemic.

Source: Business Standard

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Finance ministry seeks proposals for first supplementary demands ahead of monsoon session

The ministry said that additional cash demands should be avoided and only demands that require Parliamentary approval for reappropriation of funds be submitted, considering that the full budget was available with the departments since the fiscal year had only recently begun. The finance ministry has called for the first batch of supplementary demand for grants ongoing fiscal from various ministries and departments of the central government in time for the monsoon session of Parliament, according to a memorandum on Monday. The ministry said that additional cash demands should be avoided and only demands that require Parliamentary approval for reappropriation of funds be submitted, considering that the full budget was available with the departments since the fiscal year had only recently begun. “While processing proposals for supplementary grants, the grants controlling authority must invariably identify savings within the grant so that the infructuous or inflated supplementary demands are weeded out and the eventuality of surrender after obtaining supplementary grant are avoided,” it said. The ministry would consider cases where payments were needed to be made against court decrees and could not be postponed, advances from the Contingency Fund were already granted or where the finance ministry had specifically advised to propose a supplementary demand. All other cases should be held until the budget review stage for the revised estimates for FY22, it said.

Source: Economic Times

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Mauritius can be India’s gateway to Africa: Mauritian trade minister

 • There is growing interest among Indian businesses to access opportunities in the African continent, said Alan Ganoo, Mauritius minister Mauritius can be the gateway for Indian businesses to access opportunities in the African continent taking advantage of the new African continental free trade agreement, Alan Ganoo, Minister of Foreign Affairs, Regional Integration and International Trade of Mauritius said on Tuesday. “There is growing interest among Indian businesses to access opportunities in the African continent. Ours is the first trade agreement signed by India with an African country. Indian manufacturers can move part of their manufacturing processes to Mauritius and produce for the African market. We already have duty free access to 600 million consumers by virtue of our membership in Comesa (Common Market for Eastern and Southern Africa) and SADC (South African Development Community). The African continental free trade agreement which came into force on the 1 January this year opens up trade and investment opportunities of a much larger market of 1.3 billion consumers. This is in addition to the duty-free access to the European Union, Chinese and US markets. Any investor located in Mauritius will be able to access these markets on preferential terms," Ganoo said speaking at an event organised by PHD Chamber of Commerce and Industry. The comprehensive economic cooperation agreement (CECPA) between India and Mauritius came into force on 1 April. The CECPA covers 310 Indian export items, including food and beverages, agricultural products, textiles, base metals, electricals and electronic items, plastics and chemicals and products made of wood. In turn, Mauritius benefits from preferential market access to India for 615 products such as frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment, and apparel. The move will remove barriers to imports and exports, and also promote services trade. Santi Bai Hanoomanjee, High Commissioner of Mauritius to India said the CECPA also provides opportunities to Indian institutions to set up businesses in the education and healthcare sectors in Mauritius and explore the vast African market. “Mauritius can act as the platform for Indian businesses to set up their production units and export their products to African markets," she said. Hanoomanjee said Mauritius has an attractive taxation policy with a harmonized tax rate of 15% for corporate tax. “There is no capital gain tax and dividends are tax exempt. Import of machinery, equipment and raw materials are exempt of customs duty and foreign investors can retain 100% shareholding. Companies investing in manufacturing of pharmaceutical products, medical devices, high tech products, food processing can benefit from an eight-year tax holiday," she added. In FY20, India exported goods worth $662 million and imported commodities worth $28 million from Mauritius. “Trade remains below existing potential. They can be substantially increased if the opportunities of the CECPA are fully utilized. CECPA offers win-win opportunities to both Indian exporters and importers. It includes India’s access to Mauritian market by eliminating or reducing tariffs on goods and removing regulatory burden in the service sectors," Ganoo said.

Source: Live Mint

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Govt's finances won't be overstretched by Covid vax drive, relief measures: SBI Research

 Assuming a cost of Rs 400 per dose, the Covid vaccination drive to cost govt about Rs 48,851 crore of which it had already budgeted for Rs 35,000 crore, the report said. Further, the extension of the Pradhan Mantri Garib Kalyan Anna Yojana till November would put an additional cost of Rs 91,000 crore on the government’s finances for the scheme from May onwards, it said The government’s finances are unlikely to be overstretched by  recently announced measures such as free Covid-19 vaccinations for the states and free food grains for poorer sections, with a projected impact of Rs 28,512 crore, according to State Bank of India (SBI) Research. Revenue from the Goods and Services Tax (GST) and excise duty, largely coming from fuel consumption was expected to be higher than conservative.

Source: Economic Times

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Many companies unable to optimise Input Tax Credit claims for FY21: Survey

A multinational company in India incurred a total loss of Rs 850 crore due to suboptimal management of claiming ITC. Nearly 83% of more than 1,200 companies surveyed by ClearTax were unable to optimise input tax credit ( NSE 0.75 % ) claims in 2020-21, forcing most of them to hold payments of non-compliant vendors, said the cloud-based taxation services startup. For instance, it said, a multinational company in India incurred a total loss of Rs 850 crore due to suboptimal management of claiming ITC. This comprised Rs 50 crore of ITC not filed and Rs 800 crore of interest loss on delayed filing by vendors.

Source: Economic Times

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KTR urged Saudi businessmen to invest in Telangana

Telangana has huge potential of high returns on investments in many sectors including agriculture, Information, and Technology, pharmaceutical, and textiles among them said IT, Industries and Municipal administration minister K.T. Rama Rao. He urged Saudi businessmen to invest in India’s younger state that is worthy to invest in diversified fields. Delivering a keynote address on the inaugural event of “Telangana Investment Meet” through a webinar on Monday, he said that the ease of doing business policies of Telangana state has led to the establishment of several multinational companies in the state. Prominent Saudi Businessmen, NRI entrepreneurs, and also a section of top Saudi officials participating in the two-day event is organized by Indian Embassy in Riyadh and the Telangana state government. He said that TS-iPASS is a certification service to establish industries, manufacturing, and services, in the state within a period of 15 days. “Telangana state is the only in the country to grant all approvals in a faster manner, Amazon has the largest warehouse in Telangana, which is larger than their headquarters, Telangana granted all permissions within 11 days”, said Rama Rao. He said that Google, Apple, and many other giants chose Telangana as their preferred choice owing to the state government’s investor-friendly policies. Minister said that it’s not only IT and industrial and other sectors such as agriculture, textile and pharmaceutical also having a lot to offer for investors. Rama Rao said that the food park that was established in Nizamabad is one of the finest examples of the state as a destination for diversified portfolio investments. Indian Ambassador Dr. Ausaf Sayeed emphasized upon the strategic partnership agreement signed by India and Saudi Arabia during the visit of PM Narendra Modi to Saudi Arabia in 2019. The accord has boosted bilateral ties between both countries, he added. The Ambassador commended the ease of doing business policies of Telangana state. The envoy said that 476 Indian companies with a worth of US $ 1.5 billion are registered in the Kingdom. Dr. Ausaf Sayeed also revealed that Saudi Sovereign Wealth Fund has invested in Indian start-ups such as Ola, OYO, Paytm, PolicyBazaar, Delhivery, FirstCry. Saudi Aramco, SABIC, ZAMIL, E-Holidays, Al Batrjee Group among few major companies that invested in India, according to Ambassador. He said that Saudi Arabia is India’s fourth largest trading partner. Highlighting the rich heritage of over 400 years, IT and Industries Principal Secretary Jayesh Ranjan said that in addition to its glorious history, it is also a modern and cosmopolitan metro city. He told in the webinar that Hyderabad has been the best city in the country for the last five years in a row. He also said that Hyderabad is the least polluted city in the country. Answering a question Jayesh Ranjan said that repatriation of profits is allowed for FDIs in a transparent manner without any hassle, however, few sectors such as defense, aerospace where some policies of the government of India will be followed. Hailing the growth of Telangana, Niti Ayog Additional Secretary Rakesh Sarwal told Saudi businessmen that Telangana is the right place as the state offering great opportunities to investors. He termed the younger state in the country as an extraordinary achievement in business. Niti Ayog official said that turmeric products produced in the food park in Nizamabad are being exported to New York. Sarwal added that “I assure and endorse whatever K.T. Rama Rao has said about the achievement of his state”. Yasser Al Dohaim, Executive Vice President of SCISP, an important arm of Saudi, Abdulaziz Qaitani, President of Saudi Indo Business Council also spoke at the event. Consul Hamna Mariam Khan moderated the inaugural season. A wide range of discussion in agriculture, food processing, IT, life sciences, pharmaceutical, chemical and fertilizers, power, energy, space, textiles sectors of Telangana is being held in the webinar.

Source: Neha, Siasat

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UAE, Pakistan can look forward to long-term economic collaborations

The UAE and Pakistan share deep bilateral relations based on a long history, trust, and respect. Bilateral trade ties between the UAE and Pakistan will continue to strengthen in the coming years, as both nations seek new opportunities to work together towards recovery from the Covid-19 pandemic, experts said at an event on Tuesday. Speaking at an event organised by the Pakistan Business Council titled ‘Business Opportunities: Bilateral Trade Between the UAE and Pakistan’, Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, said that the UAE and Pakistan share deep bilateral relations based on a long history, trust, and respect. “Bilateral trade between the two nations showed a growth even during the tough times that were seen throughout the world,” he said. “For us, Pakistan is among the top 25 important strategic global trade partners. In terms of imports, the UAE is Pakistan’s second biggest partner. Both countries also have significant investments in various sectors in each other’s economies such as real estate. The UAE recently announced the 100 per cent foreign ownership law, which has spurred economic activity and been hailed by the business community in Pakistan and around the world.” He also said that UAE looked forward to bilateral investments growing, and that the UAE was ready to “support them in every possible way.” The UAE is Pakistan’s largest trading partner in the Middle East and a major source of investments and remittances. The trade volume between the two countries amounted to around $8.19 billion in the year 2019. “Looking ahead, we see great potential in Pakistan’s agriculture sector, especially as we all continue to work towards food security,” he said. “We have started seeing major transformations lately, especially during the pandemic. Digitalisation is the most important topic that we have seen right now, and the UAE is a leader in driving the trend forward. I urge all Pakistani businessmen to look for opportunities in the UAE and GCC to help our economies grow together.” Afzal Mahmood, ambassador of Pakistan to the UAE, also highlighted several topics in his keynote, especially what the world can expect to see from Pakistan at Expo 2020 Dubai. “Our two economies complement each other, so we need to understand where the value added advantage lies and how we can support each other; we work with that spirit with the UAE. The Pakistan government has announced several initiatives that will attract the foreign business community to explore several sectors in Pakistan such as tourism, agriculture, fashion, and hospitality.” “Pakistan will be participating at the Expo 2020 Dubai with its pavilion under the theme ‘Pakistan: The Hidden Treasure’ and we encourage everyone to come and visit,” he added. “You will see everything about Pakistan’s history, culture, agriculture, tourism, and hospitality.” Shabbir Merchant, chairman of Champion Group, said that the event on Tuesday speaks volumes about the way that the UAE has tackled the challenges of the Covid-19 pandemic and ensured the safety of residents after the lockdowns. He also highlighted how both the UAE and Pakistan have worked steadfastly towards economic recovery, while building on the strength of their bilateral relations. “This event is proof of the confidence that both countries have in each other and their economic partnerships,” he said. “We have been doing our best to bring together the business community to work together towards economic recovery. Right now, our focus is on long-term economic recovery and growth.” Merchant also highlighted the confidence that foreign investors have in Pakistan today. “The new government has ensured that there are several facilities and platforms in place to help foreign investors that are interested in setting up their businesses in the country. This momentum will only continue to increase in the coming months, especially in sectors such as IT, building materials, textiles, agriculture, and FMCG.” Speaking to Khaleej Times on the sidelines of the event, Ahmed Shaikhani, president of the Pakistan Business Council, spoke about how the whole world is gearing up for an economic rebound as pressures revolving around the Covid-19 pandemic ease. “People once again have the confidence to start their own businesses, while others are looking to enhance their businesses in different geographies and verticals. As far as the UAE and Pakistan are concerned, there are several opportunities for both nations to collaborate and strengthen existing ties.” He said that both nations are already in talks to work together in segments such as agritech, healthcare & wellness, manufacturing, logistics, and IT. “Food security is a key topic that both nations are working on right now. Pakistan has a wealth of expertise in the agriculture sector which we can share with our UAE partners. Besides agriculture, there are also lots of opportunities in the healthcare sector, petrochemicals, textiles, and sports related activities. Tourism and hospitality are both sectors in Pakistan where we see the UAE playing a key developmental role.”

Source: Khaleej Times

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Australia, UK agree on broad terms of trade deal

Prime Ministers Scott Morrison and Boris Johnson have agreed in principle for a free trade deal between Australia and the United Kingdom. Both met overnight in London to resolve outstanding issues in the long-running negotiations. A formal announcement would be made today. It is set to be the United Kingdom’s first major post-Brexit trade deal. It is being widely perceived as an important step towards the United Kingdom joining a wider Asia-Pacific free trade agreement. The British government says membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could offer British farmers tremendous opportunities. Australian agriculture minister David Littleproud said both governments were still "nutting out the details" of the deal. Disagreement existed over Australian agricultural exports and requirements for British backpackers to work in Australia, according to media reports from both the countries. Australian trade minister Daniel Thomas Tehan, who recently travelled to London to hold preliminary trade talks with his UK counterpart Liz Truss—with the pair agreeing there would be an in-principle deal by June—said the agreement was a "win for jobs, businesses, free trade and highlights what two liberal democracies can achieve while working together". "It will only be done if it's a good deal for Australia, and crucially in that sense is making sure that our farmers and agriculture sector get the type of export access, along with other small businesses that we expect in a trade agreement to truly open up markets and flow between two nations," Australian finance minister Simon Birmingham—who oversaw initial negotiations as former trade minister—said. Prior to entering the European common market in 1973, the United Kingdom was Australia's most lucrative trading market. In 2018, the former was the latter’s eighthlargest two-way trading partner, worth $26.9 billion. UK farmers also have concerns there will be no meaningful safeguards in place to stop farmers being undercut by cheap imports. Farmers in Australia are allowed to use some hormone growth promoters, pesticides, and feed additives that are banned in the United Kingdom. Scotland had raised worries about the farming industry being overwhelmed if the market was flooded with lower standard goods. In 2019-20, trade in goods and services between both sides was worth at £20.1 billion.

Source: Fibre2Fashion

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EURATEX urges EU, US to establish level playing field for industry

Ahead of the EU-US Summit today, the European textile and apparel industry has urged the EU and the US authorities to put their full influence to establish a level playing field for the textile industry across the globe, promoting environmental and social standards. EURATEX hopes the summit will launch a new era of closer cooperation across the Atlantic. EU-US trade in textiles and apparel have dropped by nearly 20 per cent in 2020 (just under €6 billion), while imports from other countries, in particular China, have increased spectacularly (+45 per cent into the EU). At the same time, global supply chains came under pressure, and access to certain raw materials for the industry became difficult and costly. Against this background, EURATEX, representing the European textile and apparel industry, said it does not call for protectionism, but a better functioning of global supply chains, with common rules which are applied by all. "Sustainable and circular textiles should become the norm, thus contributing to a greener planet and creating high quality jobs," it said in a media statement. "At bilateral level, the EU and US should resume their work on mutual recognition of standards and certification procedures, thus saving considerable costs for our companies while maintaining the highest safety standards. Custom procedures can be simplified on both sides, and joint research, e.g. in smart textiles, should be promoted," the statement added. Welcoming the recent progress in provisionally eliminating additional duties on several American and European products due to the Airbus-Boeing trade dispute, EURATEX said, "It is a very positive sign that EURATEX would like to highlight in a particularly difficult context for the textile and clothing industry at European, American and even global levels. EURATEX calls on both US and EU institutions to eliminate such duties permanently and build on a common positive agenda for the benefit of EU and US companies and consumers." "Both the EU and US are developing a new business model for their industry. We should make sure these models can complement and reinforce each other. If not, we risk losing global leadership, not just in terms of market share but also in terms of values and standards,” said EURATEX director general Dirk Vantyghem.

Source: Fibre2Fashion

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Ethiopia’s economic reform drive splutters for foreign investors

When Ethiopia awarded its first private telecom licence last week, Prime Minister Abiy Ahmed hailed it as the crowning achievement of his plan to open up Ethiopia’s tightly controlled economy of over 109 million people. But for many foreign investors who feted him getting the top job in 2018, hopes of cracking one of the world’s last major untapped markets are waning, stifled by the slow pace of reforms and ossified bureaucracy. On paper, Abiy can boast of having opened up Ethiopia’s health, e-commerce and transport services sectors through a new investment law. It is a key part of his pitch as Abiy faces his first national parliamentary election on Monday – which he has billed as Ethiopia’s first free and fair polls. But foreign companies now operating in Ethiopia are struggling to repatriate profits amid a crippling foreign exchange crunch and inflation that consistently exceeds 20%. The economy is on track to grow just 2% this year after consistently topping 10% before the pandemic. Abiy heads the biggest national party, one of the few that tries to appeal beyond a particular ethnic bloc. He pledged to continue the reform process during the ceremony awarding the telecoms licence to the winning consortium. Mamo Mihretu, Abiy’s senior policy adviser, told Reuters the government would not be deterred and investors were still interested in Ethiopia. “Despite the ongoing pandemic, locust invasion and other challenges, the government is pushing through the home-grown economic reforms,” he said. Some of Ethiopia’s challenges are also home-grown. A seven-month war in the northern Tigray region has shuttered many firms operating there, although other parts of the country remain unaffected. Main roads are often closed by the military for weeks at a time and fighting is frequent. Bangladeshi textile firm DBL, which makes clothes for Swedish fashion giant H&M, is shut after the abandoned factory was looted and fearful foreign staff refused to return. Velocity Apparelz Companies – a supplier to H&M and Children’s Place – said its factory was occupied by both Ethiopian and Eritrean government soldiers for months. It was also looted, said a Velocity official, who asked not to be named. I don’t see a business climate in Tigray at this time,” the official said. The authorities have targeted Ethiopian companies suspected of working with the Tigray People’s Liberation Front, the region’s former ruling party, which is fighting the central government. Gail Strickler, president of global trade at the advisory firm Brookfield Associates, said some companies had had bank accounts frozen. “I can’t imagine who would want to invest now,” Strickler, the former top U.S. trade official on textiles, told Reuters. Neither Ethiopia’s attorney general, who has spearheaded efforts to track down companies the authorities accuse of being linked to the TPLF, nor the head of the taskforce on the Tigray crisis responded to requests for comment. The Ministry of Foreign Affairs said last week that some factories in Tigray, including unnamed textile and cement factories, had restarted operations and exporting products.

“BIGGEST ENEMY”

 Red tape is also undermining the reforms. “Bureaucracy is Ethiopia’s biggest enemy,” said Frans Van Schaik, chairman and CEO of Africa Asset Finance Company (AAFC), a New York-based equipment leasing firm. The central bank granted AAFC’s subsidiary Ethio Lease a financial services licence in 2019, making it the first foreign-owned company to get one. Van Schaik said when he tried to register collateral on a new digital portal to access loans he discovered only domestically registered businesses qualified. He said attempts to form an Ethiopian company to serve as a collateral agent went nowhere. Van Schaik said he eventually gave up. Lelise Neme, commissioner of the Ethiopian Investment Commission, told Reuters that AAFC had not “made a formal application to obtain an investment permit yet” and that the commission had set up a method for investors to register grievances against a administrative decisions. “The new investment laws set clear rules and make no or little room for arbitrary discretionary decisions on investment permit requests,” she wrote, saying there were no active complaints on this issue. The central bank governor did not respond to requests for comment about registering collateral. Abiy’s reforms did allow Groupe Bollore – a French logistics company – to enter a market previously dominated by Ethiopian state-owned companies. But Bollore Transport & Logistics Ethiopia has been waiting for a year for a licence to handle customs clearance. “They asked for a custom clearance licence. They are allowed to have the licence. But we have not been able to grant them one,” said Brook Taye, a senior adviser at the finance ministry, blaming bureaucracy. Bollore declined to comment. Some international companies have welcomed the opportunity the reforms have provided. DHL Global Forwarding, the freight specialist of Deutsche Post DHL Group, signed an agreement in November with state-run Ethiopian Airlines to form a joint venture company. In a statement at the time, the company applauded the move to “liberalise key sectors of the booming economy”.

TELECOMS OPEN, BANKING CLOSED

 However, it is the telecommunications sector that best illustrates both the promise and the limits of Abiy’s agenda, some observers say. While the government opened up the sector to foreign investment, it kept a tight grip on banking and insurance. That has excluded mobile network operators from a supremely lucrative and undeveloped mobile money sector, handing it instead to the state telco. The authorities also declined to open the sector to third-party tower firms, leaving private network operators dependent upon Ethio Telecom’s creaking infrastructure. Sector insiders say those moves dampened demand for what had initially been highly sought-after licences. Ethiopia received two bids for the two licences on offer and awarded only one. The winning consortium composed of Kenya’s Safaricom, Japan’s Sumitomo and Britain’s Vodafone paid $850 million. A bid from South Africa’s MTN was rejected as too low. Announcing the award of the licence, Abiy welcomed the more than $8 billion total investment, saying on Twitter: “… this will be the single largest FDI into Ethiopia to date. Our desire to take Ethiopia fully digital is on track.” However, a sector insider closely following the process said the government’s desire to cling to the choicest pieces of the market undermined the process. “The government has competing interests,” he said. “It needs to balance these.” Senior policy adviser Mamo and the prime minister’s office did not immediately reply to requests for further comment. Ethiopia on Monday launched a tendering process for the proposed sell-off of a 40% stake in the state carrier to private investors.

Source: Thomson Reuters

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BGMEA seeks 10-year extension of GSP program in Swiss market

The discussions covered issues pertinent to the readymade garment industry in Bangladesh BGMEA) President Faruque Hassan has requested Switzerland to consider an extension of the EBA (Everything but Arms) scheme under its Generalized System of Preferences (GSP) program for 10 years for Bangladesh's smoother transition. Ambassador of Switzerland to Bangladesh Nathalie Chuard, accompanied by Thomas Baumgartner, head of political, economic and cultural affairs met the President of Bangladesh Garment Manufacturers and Exporters Association(BGMEA) at the latter’s office in the city on Tuesday and discussed the trade issues. BGMEA first Vice President Syed Nazrul Islam, and Vice President Md. Shahidullah Azim attended the meeting. The discussions covered issues pertinent to the readymade garment industry in Bangladesh, and its progress in the area of social and environmental sustainability. The BGMEA chief applauded the Swiss envoy for the transformation the industry has made over the past years. The discussants also highlighted the future potential of the industry and the need for industry up-grading particularly in the area of skills and efficiency enhancement, technological expertise, and diversification of products (especially non-cotton). BGMEA sought the support from the Embassy of Switzerland regarding the need for unified code of conduct for social audits and collaboration to promote the untold stories of the industry’s transformation. The potential of foreign investment in non-cotton and technical textiles, light engineering sector and high end apparel items was encouraged. The Swiss Ambassador expressed her satisfaction about the progress of the industry in the area of sustainable manufacturing and assured the support from the Swiss Government.

Source: Dhaka Tribune

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