FW
The Pakistan Hosiery Manufacturers Association (PHMA) chairman Adil Butt has welcomed the approval of subsidy to the SNGPL for gas supply to the five zero-rated industrial sectors in Punjab. He expressed his deep gratitude to Prime Minister Imran Khan for keeping his words of reviving the export-oriented industry by announcing equal gas tariff across the country. He said the government in September had announced providing gas and electricity to the five zero-rated exporting sectors at regionally competitive rates, which was also endorsed by the Economic Coordination Committee (ECC). However, the long delay in implementation of this energy affordability initiative continued to panic the Punjab export-oriented industry.
The finance division has approved around Rs 26 billion for the financial year 2018-19 to be provided to the SNGPL for supply of gas to the export industry at $6.5/MMBTU while Rs 2.5 billion has been released for October and November in this regard. Butt also urged the government to rationalise the duties structures and minimise taxes and duties on import of raw materials and instead apply duties on import of finished/luxury goods in order to facilitate the domestic industry.
He also urged the ministry to discourage export of raw material and encourage export of value-added items. He reiterated the request of value-added textile exporters to the State Bank of Pakistan to facilitate exporters' authorised dealer to make import advance payments against irrevocable Letters of Credit (L/C) up to 100 percent of the value of the goods and up to $10,000 per invoice for the import of all eligible items without the requirement of L/C or Bank Guarantee from the supplier abroad.
The UN has banned North Korea from exporting its textiles. The ban is expected to disrupt a business largely based in China and pose compliance headaches for clothing retailers around the world. More significantly it will hurt North Koreans, create difficulties for ordinary workers and their ability to make a livelihood.
Textiles are North Korea’s biggest exports after coal and other minerals. Nearly 80 per cent of these textile exports go to China. A lot of North Korean textile trade to Europe and other places goes via China. Despite tightening sanctions, trade in non-banned goods including food and other daily necessities continues between China and North Korea carried by hundreds of trucks crossing back and forth every day. But enforcing the textile ban along North Korea’s long border with China can be difficult. Goods are smuggled across, often on boats at night. Another challenge is that clothes can be partly made in China and partly in North Korea with a Made in China label attached to the finished product. Even if a label says Made in China, the buttons may come from Italy, the cotton may come from Australia or India, the labor may come from North Korea or China, the accessories may come from Bangladesh.
Around 55 mills owners have agreed to shift their dyeing and printing mills located within Surat Municipal Corporation (SMC) areas out of the city limits to help reduce the problem of air and water pollution. This was decided at a meeting held under the leadership of South Textile Processors’ Association (SGTPA). A SGTPA delegation will meet chief minister Vijay Rupani and Industries Minister Saurabh Patel to demand allotment of land on the outskirts of the city for the mills.
About 65 mills operate in the city’s residential areas like Khatodara, Udhana, Ashwani Kumar Road, Ved Road, Bombay Market and Puna Kumbharia. Particulate Matter (PM10) level in these areas is exceedingly high than the national annual average at 184 per micrograms per cubic meter of air (UG/M3) per annum in these areas. In the past, diamond industry leaders and residents in Rustompura had organised protests to demand shifting of these polluting textile mills.
Three years ago when the original development plan of Surat Urban Development Authority (SUDA) was prepared, a plot of land in Pinjrat near Olpad was earmarked for relocation of the textile mills in the city. The plan was shelved due to CRZ and opposition from villagers. It is expected that new development plan of SUDA will have a specified area marked for the textile mills.
Subhash Deshmukh, Textile Minister of Maharastra has urged textile chains in Karnataka and Tamil Nadu to invest in the state. Maharashtra textile units have been reeling under power cuts and frequent queries from the pollution control boards in the two southern states. In its new textile policy, the Maharashtra government announced a power tariff of Rs 3 per unit for co-operative cotton mills and Rs 2 per unit for power looms, cloth processing, and garment and hosiery units in the state.
Since its launch nearly three years ago, nearly 400 textile units have been set up in the Solapur textile hub, which the government of Maharashtra plans to raise to 2,000 by 2022. The state intends to invest Rs 46.49 billion between 2018 and 23, under various schemes to be implemented under its “Fiber to Fashion” mission. This will generate 1 million jobs by 2023 besides promoting cotton, silk and other raw materials processing in the state.
Indonesia’s exports of textiles are projected to grow five to six per cent next year. The country is aggressively signing trade agreements such as the European Free Trade Association, India, Australia, Algeria, and Morocco. The aim is to increase exports to Australia, the EU, Chile, Mozambique, Tunisia, Morocco, and the Regional Comprehensive Economic Partnership. In the meantime efforts will be made to harmonize tariffs from upstream to downstream and have competitive energy prices.
Heavy import duties on purified therephtalic acid, which is a raw material for polyester and plastic, as well as on polyester mean that Indonesia’s products are less price competitive than other countries’ products. The country’s main destinations for its textile exports are Europe, the United States and Japan.
In the textile sector too there are investments, especially in the intermediate or midstream sectors. Currently, some Chinese investors are interested in investing in the country and building production facilities. The third largest textile company in China is currently finalizing plans to invest in the fabric and dyeing sector in Indonesia, which is weak and needs heavy investment. The company is a producer of high quality fabrics, especially for premium brand shirts, such as Hugo Boss.
India is preparing a package for exporters. There have been challenges for the export sector over time and one big challenge is credit. There has been a sharp decline in credit to the export sector. The package would focus on labor intensive sectors such as leather, textile and marine products as they would help in creating jobs.
Another challenge the export sector is facing is related to GST. A e-wallet mechanism may be introduced to effectively address the woes of exporters who have been complaining of delays in refund of taxes under the GST regime. They get refunds over a period of time. They have to first pay upfront and in that working capital gets locked up.
With an e-wallet, exporters do not have to pay the tax first. A notional credit would be transferred to exporters’ accounts based on their past record and the credit can be used to pay taxes on inputs. To reduce transaction costs for exporters, there may be multi-modal transport, which will help enhance efficiency in the logistics sector. Each logistics company will be rated by a regulatory organisation, which will be created by the industry.
India’s exports grew by a meager 0.80 per cent in November. During April to November, exports rose 11.58 per cent.
Textile firm Arvind recently launched its greenfield garmenting facility in Ranchi. The facility, set up with an investment of Rs 300 crore, will add capacity of 16 million garments annually to the company's current garmenting operations and generate additional revenues of Rs 700 crore.
This launch is part of capacity expansion strategy where Arvind will be developing three large garment clusters in Jharkhand, Gujarat and Andhra Pradesh. Each of these clusters will employ nearly 10,000 workers. The company aims to convert 50 per cent of its fabric into garments over the next five years from the current capacity of 10 per cent. It has charted out an investment of Rs 500 crore per annum for the next five years and aims to double revenue from its textile business to Rs 12,000 crore.
Arvind currently employs over 45,000 people and once these clusters are fully operational at optimum capacity, the employment numbers are expected to more than double.
Egypt aims at increasing readymade garment exports by 10 per cent. Other goals are to increase the number of small and medium class exporters, to participate in specialised expos and promotional missions and increase the number of the sector’s workers from about one million to two million.
Egypt’s location qualifies it to be a logistical hub for the textile industries and products, imported from Africa, along with the free trading agreement that Egypt signed, linking it with a number of countries. But challenges abound. Payment of export subsidies is erratic and irregular. There has been a dramatic increase in production costs, including transport costs and energy costs, since the floatation of the Egyptian pound in November 2016. A huge proportion of raw materials has to be imported.
Some of these are being worked on. Economic reforms are being undertaken. Exporters are being offered financing and training facilities in order to double Egyptian garment exports. Exporters’ base is being expanded by attracting small and medium companies. This has already succeeded in attracting about 25 new factories to the sector. About 85 per cent of Egypt’s readymade garment exports are to the US and European countries like Spain, Germany, France and Turkey.
The European Union has fined US clothing company Guess for illegally blocking cross-border sales in Europe, part of a crackdown against illegal practices blocking e-commerce in the EU. Guess’ distribution deals with retailers restricted them from using the Guess brand names and trademarks for online search advertising and also prevented them from setting the retail price independently.
Retailers were also required to get authorisation from Guess before selling online, while the criteria for such approval was not based on any specified quality criteria. Sellers were also not allowed to sell to consumers outside their authorised areas. This system allowed Guess to partition off certain European markets, resulting in retail prices five per cent to ten per cent higher in central and eastern Europe than in western Europe.
In the 2017-18 financial year, Guess’ total operating income improved by 37 per cent. In the same period of time, its operating margin grew from 2.9 per cent to 3.6 per cent. Guess is on a steady growth track in Asia, notably in China, where it opened 25 new stores in the last quarter. China will in fact be a strong focus for the current financial year, during which the plan is to open 60 stores in Asia.
The Accord, the inspection agency of more than 200 retailers and brands, has started handing over the remediated factories to the Remediation Coordination Cell (RCC) as they have fully fixed structural, fire and electrical loopholes. The Accord will hand over all remediated factories to the RCC in phases as the newly formed entity will monitor the progress of the remediation after the departure of the Accord as well as the Alliance, another garment factory inspection body.
The Accord has been inspecting and remediating more than 1,600 garment factories to strengthen workplace safety through fixing structural, fire and electrical loopholes. Among the major loopholes, 97 percent of the Accord factories lacked safe means of egress. Locked gates, storing of materials blocking exits and inadequate exit lighting were the most common forms of hazards. Some 91 percent of factories required an adequate fire detection and alarm system.
