FW
Bangladesh's export earnings from apparel products during July-May fiscal year 2013-14 grew by more than 14 per cent over the corresponding time of last fiscal. Export receipts from apparels, including knit and woven items, stood at $22.17 billion during the first 11 months of the outgoing fiscal up from $19.31 billion in the corresponding period of the last financial year.
Export earnings from apparel products are expected to reach $24.75 billion at the end of current fiscal. Knit products showed a 16.28 per cent growth. Woven products showed a 13.46 per cent growth. If the same trends continue in the next fiscal, the country expects a lot more investment from entrepreneurs to come in. However, export of jute and jute products witnessed negative growth during the period. Earnings from leather, leather goods grew by 29 per cent.
However, apparel exports are facing numerous problems as buyers are not increasing products' prices. Many factories have closed due to western retailers' assessment programs tremendous competition from competiting countries.
Pakistan's budget for 2014-15 has raised customs duty from five to 15 per cent on import of different kinds of dyes, including sulphur dyes, vat dyes, disperse dyes and solvent dyes. A five to ten per cent duty on white oil has been imposed, with a one percent duty on indigo blue and basic dyes used by the local chemicals industry and commercial importers. The Pakistan Chemicals & Dyes Merchants Association wants the removal of these anomalies from the budget particularly, the sudden jump in customs tariff on import of dyes from 5 to 15 per cent. The association has informed the finance minister that this abrupt increase will hurt export-oriented textile industries. The addition to manufacturing cost will hit the industry’s competitiveness in the international market.
The association says white oil is routinely smuggled through Iran. If the duty were to be increased to 10 per cent and not reduced to 5 per cent, smuggling would increase and the national exchequer would suffer huge losses in terms of customs duty, sales tax and other levies.
The budget imposes a difference of 15 per cent sales tax applicable on the same goods. It is feared this would create a huge opportunity for dishonest and fraudulent elements to show excessive consumption in units which enjoy a 2 per cent tax rate facility, thereby pushing honest commercial importers completely out of business.
Bangladesh commerce minister Tofail Ahmed has urged the US to allow duty-free and quota-free access of Bangladesh apparels to its market. The aim is to boost bilateral trade between the two countries.
The commerce minister held separate meetings with US Trade Representative Michael Froman, Congressman Sandy Levin, Under Secretary of State for Economic Growth, Energy and the Environment Catherine A Novelli, Assistant Secretary of State for South and Central Asian Affairs Nisha Desai Biswal and various retailers' associations.
During the meeting he informed the US officials of the progress made in the readymade garment sector in accordance with the US Action Plan for regaining the Generalised System of Preferences (GSP) facility in the US market. Bangladesh hopes to get back the GSP facility in the US market soon as the country feels it has made much progress in the readymade garment sector.
Ahmed praised the sincere cooperation of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), International Labor Organisation (ILO), Alliance, Accord, the US and the western countries for putting the country’s apparel sector on a strong footing. He highlighted the ongoing efforts for diversifying the export items and destinations for Bangladeshi products.
The Dominican Association of Textile Industries has asked the Directorate General of Customs to investigate the large volume of goods sold in the country with ‘Made in America’ labels. There is a suspicion that the items alleged to be imported from the US may have its origin in non-NAFTA countries, because these goods have very competitive prices even though the cost of production is higher in the US. So many goods may have been manufactured in a third country with Made in America labels placed on them.
By putting labels of American origin, goods from other nations that are not part of the free trade agreement they get away without paying any tax, decrease customs’ revenue and also affect the Dominican garment manufacturing companies. Textiles and garments brought from the US or any other country with which the Dominican Republic has a free trade agreement are not subjected to taxes, but if they come from any other country with which the Dominican Republic does not have a free trade agreement, the goods are subjected to a 20 per cent tariff and 18 per cent sales tax.
The country’s textile and apparel industry comprises over 2,000 production units, including micro, small and medium enterprises in both formal and informal sectors, which employ more than 20,000 people.
The Bangladesh government is in a dilemma over making its inspection reports on readymade garment factories public. Reason: it wants to scrutinise the necessary legal and procedural aspects. Meanwhile, Human Rights Watch has called upon the government to disclose the findings of ongoing apparel factory safety inspections.
In July 2013, Bangladesh, the EU, and the ILO agreed to a contract on labor rights and factory safety, which the US government later joined, to create a publicly accessible database listing all readymade garment and knitwear factories as a platform for reporting labor, fire and building safety inspections. The database would include information on factories and their locations, their owners, the results of inspections regarding complaints of anti-union discrimination and unfair labor practices, fines and sanctions administered, as well as remedial actions taken, if any.
The Bangladesh University of Engineering and Technology has already inspected about 250 garment units but till date no reports have been published. On the other hand, Accord, an European Union-based initiative by more than 150 global apparel companies, brands, retailers and trade unions, and Alliance, another North American retailers' platform, have already made some of their assessment reports public on their respective websites. They are also in the process of uploading more reports in the coming days.
Experts say that the ready-made garments sector (RMG) in Bangladesh would miss the projected export earnings target of $34.20 billion for the upcoming fiscal year 2014-15. Experts opine that a 11 per cent rise in the earnings over the current fiscal year's export target of $30.50 billion is way above a logical and achievable forecast.
Keeping the impact of fire and building collapse tragedies that claimed several lives last year, about 200 factories have stopped operations owing to various reasons like political violence, failure to meet compliance requirements and ongoing factory assessment. Many more factories may be closed due to the ongoing inspection programs of the global brands and the government.
There is also a considerable drop in export orders with regular and major importing companies refusing to place orders with units located in shared or rented buildings. Meanwhile, production cost has gone up significantly following the recent wage hike of workers and additional costs to meet safety requirements. The inspection programs being carried out by Accord, Alliance and Bangladesh University of Engineering and Technology (BUET) are expected to end in December this year. A large number of factories will be relocated and the reforms would take at least another two years.
Experts feel that till all the changes and improvements take place, achieving the target for the next fiscal doesn’t look possible. Besides, they also pointed out that the incentive packages provided to export sectors are not responsive enough to overcome the impact of the Euro Zone economic crisis.
Exports of non-knitted apparels and clothing accessories from Indonesia has increased marginally by 1.78 per cent in the first four months of the current year, compared to the corresponding period of last year. In April 2014, Indonesia’s exports of non-knitted apparel and accessories showed an increase of 7.07 per cent over exports made in March 2014. Non-knitted garments and apparel accessories exports accounted for a 2.82 per cent share in Indonesia’s non-oil and gas exports during January to April 2014.
Indonesia’s cotton imports increased by 2.66 per cent year-on-year in January to April 2014 compared to imports made during the same period of last year. However, on a month-on-month basis, Indonesia’s cotton imports surged by 46.71 per cent in April 2014. In 2013, Indonesia’s textile and apparel exports increased by 1.76 per cent year-on-year with the US, Japan and Turkey being the main markets. Of this, garment exports accounted for 58.2 per cent.
For the current year, the Indonesian Textile Association has set textile and clothing export targets about 4.88 per cent higher than last year. The textile and clothing industry is a strategic sector that makes a significant contribution to Indonesia’s economy in the form of providing employment as well as earning foreign exchange. In recent years, the garment sector has become one of the highest foreign exchange earning sectors for the country.
More than 140 participants from the industry, research, European institutions and international organisations came together in Brussels recently to join the International Textile and Clothing Conference on ‘Free Trade and International Agreements’.
The 15 distinguished speakers from different countries and institutions made a valuable contribution to the discussion on the way textile and clothing markets have changed in the last 20 years and on the impact of the numerous free trade agreements signed across the world. Trends confirm that European companies have managed to maintain their overall position by changing their competitiveness paradigm and by favoring a competitiveness based on products with high added-value and non-price competitiveness content. Nevertheless, to maintain such a model, it is also important to strengthen the European industrial policy that should also benefit textile and clothing.
The EU’s free trade agreements currently in place absorb more than 44 per cent of the 42.2 billion of textile and clothing products exported world-wide. Globally the industry prefers multilateral trade liberalization since it is the best way to reduce costs of doing business but the second-best choice remains the free trade agreements provided they do not create a new labyrinth of rules. India felt the free trade agreement with the EU was a chance to improve the competitiveness of the Indian industry.
Bangladesh is trying to secure duty free access to the Russian market at a time when the country’s export to that market is hitting close to one billion dollars.
The Russian government offers duty-free market access to 71 products and Dhaka is looking for inclusion of garment items in that list. Bangladesh hopes the early inclusion of apparel items in the duty-free list will provide a boost to its exports.
The three-nation customs union comprising Russia, Belarus and Kazakistan shares a common market and trade and tariff policies and if a product enters one market it can move to the two other markets without restrictions.
Garment exports are on a steady rise coming out of the shadow of the disasters that hit the industry last year. Bangladesh garment exports to the US recorded a significant increase during the first 10 months of this fiscal compared with the corresponding period of the previous fiscal. Bangladesh garments enter the US market making payment of customs duties at standard rates.
Japan is another promising market. Japanese buyers are showing more interest in apparels from Bangladesh because of their high quality and low cost. Chile has agreed to offer duty free market access to Bangladesh's garment products from July 1 next year.
Good Environmental Choice Australia (GECA) has released new standards to address textile issues. These include environmental, health and social issues associated with textile products including clothing and soft furnishings.
There have been concerns regarding a number of issues for textile products including the use of carcinogenic dyes, and labor practices in developing countries. This new standard enables manufacturers to provide confidence to their customers that these issues have been addressed and that their products are environmentally and socially preferable.
Through GECA’s third-party certification program companies can demonstrate that their products meet robust criteria for reduced environmental and human health impacts and that workers involved in making the product have received fair pay and safe working conditions.
The standard considers impacts over the life cycle of textile products, including material sourcing, manufacture, packaging and use. It addresses specific issues. One is pesticide use. Pesticide run-off can contaminate local water supplies and cause harm to workers and animals. GECA’s standard places strict limits on the pesticide residues in raw materials and on certain dyes that have been classified as skin sensitisers, carcinogenic, mutagenic and reproductive toxins. It restricts the use of heavy metals (such as lead, cadmium, arsenic) and other hazardous materials (such as formaldehyde, biocides, and APEOs).
Good Environmental Choice Australia runs Australia’s only independent, not-for-profit, multi-sector eco labeling program.
