FW
"BGMEA’s roadmap gets special importance for achieving a near double-digit export growth in the calendar year, 2015. Global focus is on working conditions in the readymade garment (RMG) factories in Bangladesh. Quite clearly these essential conditions are to be addressed for the 2021 roadmap. Nevertheless, certain enabling conditions are to be addressed even for sustaining the present trend of success in export."
Ranging from infrastructural issues to impact of changes in the global trade regime, the challenges faced by Bangladesh’s RMG sector have many dimensions. On issues beyond infrastructural impediments, a coordinated approach by different stakeholders within the Bangladesh government and private sector requires to start immediately. To increase its annual export of readymade garments to $50 billion by 2021, the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) have chalked out a roadmap. A recent roundtable in Dhaka outlined the conditions to be fulfilled to attain that 'ambitious but possible' goal.
BGMEA’s roadmap gets special importance for achieving a near double-digit export growth in the calendar year, 2015. Global focus is on working conditions in the readymade garment (RMG) factories in Bangladesh. Quite clearly these essential conditions are to be addressed for the 2021 roadmap. Nevertheless, certain enabling conditions are to be addressed even for sustaining the present trend of success in export.
Second sustainability compact review
In January the second review of Sustainability Compact was held in Dhaka. Senior officials of the ministry of commerce, labour and employment and ministry of foreign affairs and senior officials from the European Union (EU), US and International Labour Organisation (ILO), along with representation from the governments of Canada, the Netherlands and UK participated in the meeting. The review meet recognised the need for further improvement in six areas of which four are on the rights of workers and two on inspections and remediation of RMG factories identified with different degrees of fault in their structures. Clearly this finding stressed more on improvement in the legal regime protecting the rights of the workers. With 85 per cent share of total RMG export from Bangladesh (woven and knit with equal share) going to the EU, US and Canada, the Compact mechanism deserves highest importance to plan any ambitious target.
Perils of moving up development ladder
Bangladesh’s exports to the EU will face new challenges as it is graduating from the LDC status. First, Bangladesh will lose unilateral duty-free access and come to be within the general GSP. Secondly, Bangladesh will miss relaxed rules of origin enjoyed as an LDC. For the RMG sector, it means, importers will pay most part of the standard duty when importing from Bangladesh. Again, GSP is given for RMG products, only if the fabric is produced in Bangladesh. Even if Bangladesh applies for GSP+ and starts receiving duty-free access, the rules of origin for general GSP will be applicable; unlike the relaxed rules for the LDCs. Bangladesh will also be required to comply 27 UN/ILO Conventions instead of 15 for the LDCs.
Another immediate challenge before Bangladesh RMG exports is the new GSP administration in export to the EU. Currently, Export Promotion Bureau (EPB) is the only competent authority to issue GSP certificate for RMG factories. From 2017 or 2020, depending on the decision of Bangladesh, all GSP certificates for the EU will be issued by the exporters.
Worries before RMG sector
Bangladesh’s RMG sector is worried that its competitors like India and Vietnam will benefit more with free trade agreement (FTA) with the EU. The Trans-Pacific Partnership (TPP) is also causing apprehension that RMG exports to the USA will be negatively affected. Bangladesh does not enjoy any preferential access under GSP or any other system in the USA for apparel products. But losing out to Vietnam in export to the USA and EU under FTA is unlikely to happen in the short term. The ‘Yarn forward Rules of Origin’ in the TPP will be a major impediment for Vietnam to enjoying duty-free access for its apparel products. It means all products in a garment factory from the yarn stage forward must be made in one of the countries that are party to the TPP agreement.
As a condition to boost exports to reach the envisaged target by 2021, Foreign Direct Investment (FDI) in RMG sector has been identified at the BGMEA Roundtable. However, BGMEA and BKMEA have been lukewarm towards encouraging FDI in the RMG sector. During the Multi-Fiber Arrangement (MFA) trade regime under the World Trade Organisation (WTO), Bangladesh discouraged FDI in RMG sector to prevent its competitors to use the quota enjoyed by Bangladesh.
The sooner Bangladesh takes over its exclusive responsibility in monitoring, coordinating and enforcing the 'National Tripartite Plan of Action on Fire Safety and Structural Integrity in RMG sector', it will be easier to withstand pressure which are perceived now as unfair.
Jaya Shree Textiles (JST) is looking at increasing its linen business by 8 to 10 per cent in 2016. JST a part of the Aditya Birla group expects to earn Rs 800 crores revenue from its linen business with an EBITDA of 11 to 12 per cent while another Rs 700 crores will flow in from its woolens product line.
The company imports its linen from Europe and processes it into fabric and apparel under the brand name Linen Club. Presently fabrics contribute to 96 per cent of its revenue while the rest comes from its apparel line. Operating in the Rs 1,500 crores niche linen market, the company commands a market share of 50 per cent in pure linen textile which is pegged at Rs 900 crores.
Apart from its focus on the domestic market, the linen fabric maker is also eyeing for expansion into Bangladesh, Sri Lanka and the Middle East. Linen Club has 127 exclusive stores, which will increase to 134 by March 31 this year while another 40 will be added during 2016-17. Apart from increasing its exclusive store count, the group is also aggressive on the retail outlets. It has been adding 300 to 500 stores every year and will continue at this pace.
www.jayashree-abnl.com/
Cambodia’s garment and footwear exports recorded a growth rate of nearly 6.7 per cent when compared with the year before. Nearly 80 new garment and footwear investment projects were approved in 2014. These investments represented 28 per cent of the total newly approved investment in fixed asset value in 2014. However there was a slight drop in investment during the first half of 2015, when compared with the same period in 2014.
Exports have been growing for the past 15 to 20 years in Cambodia continuously. And last year was no exception. The country’s garment exports rose to 5.7 billion dollars in 2015, up from US 5.34 billion dollars in 2014; while footwear exports generated 538 million dollars in receipts, up from 441.4 million dollars the year before. Textile exports contributed a marginal 48 million dollars.
The European Union is the biggest buyer of Cambodian exports, accounting for 2.5 billion dollars of the total. The US imported 2.48 billion dollars worth of garments from Cambodia in 2015.
The garment and footwear industry in Cambodia is expected to continue to grow in 2016. Growth in employment, exports and factory openings are all helping to dispel concerns that rising minimum wages would cause the sector to falter.
Brands and buyers in the EU want to make sure that workers in the readymade garment sector of Bangladesh are paid reasonable wages. Brands that buy from manufacturers in Bangladesh want to ensure they are buying from reputable factories and manufacturers, and consumers want to be confident that the products are made in good condition in terms of workplace safety.
Meanwhile, Bangladesh too wants to send out an emphatic message that remediation plans are in place after the series of workplace accidents and that the most dangerous factories are now closed. Europe is following the progress in the readymade garment sector, which it recognises as an immensely important industry for both Bangladesh and the EU. A team from EU has also asked Bangladesh about what has been done on labor rights in the export processing zones.
The European Union has been a very strong supporter of necessary changes in the readymade sector. Its desire is to play a part in making sure that a fair price is paid. The EU is Bangladesh’s main trading partner, accounting for around 12 per cent of Bangladesh’s total trade. EU imports from Bangladesh are dominated by clothing, accounting for around 90 per cent of the EU’s total imports from Bangladesh.
Weak demand from mills in Pakistan pushed cotton prices down by about three per cent over the week. Prices also declined due to poor export demand. Cotton exports in December were good but reversed in January, giving back the fiber to domestic mills. Prices are expected to decline further in the coming weeks.
Cotton was ruling at Rs 33,200 to Rs 33,500 per candy as against Rs 34,500 a week ago. Kapas prices too fell six per cent during the week. International cotton futures also tumbled to a one-year low due to sluggish demand that had an adverse impact on domestic demand and thus prices declined. Furthermore, mills were seen buying only as per their needs which will pressurise cotton prices more in coming days.
Cotton markets in India continued to reel under demand pressure. In India, cotton production is pegged at around 33 million bales for the October 2015-September 2016 crop as against 38 million bales last year. India is likely to harvest 35.2 million bales in the 2015-16 season, down 3.6 per cent from its previous estimate.
In New York, cotton for March delivery dropped 2.3 per cent, the weakest level for a spot contract since January last year. Expectations of weak demand in China led to the downfall in global markets.
Woolmark is connecting with its partners across the manufacturing, merchandising and fashion industries. Woolmark licensees include Shingora, SM Textiles, Ambassador Shawls and Apollo Shawls. These licensees are driving the sales growth of shawls and stoles across India. Shingora has been associated with Woolmark since 1990.
Leading fashion designer Nachiket Barve displayed an exclusive collection of stylish Australian merino wool shawls and stoles at a fashion show. Shawls and stoles are seen as utilitarian garments but the collaboration with Nachiket Barve has showed they can also be used as a fashion accessory. Barve has fashioned statement pieces out of the wool shawls and stoles sourced from the licensees.
The Woolmark brand is the best-known textile quality brand and wool content label in the world. Its purpose is to act as an independent quality assurance of every wool product it adorns.
Woolmark works with textile and fashion industries at every level, developing better wool textiles and driving consumer demand. The Woolmark logo has adorned wool products for 50 years, showcasing the extraordinary versatility and innate luxury of wool. The logo was established in 1964.
Delhi-based designer Suket Dhir won the international Woolmark prize for menswear this year. His collection explored the trans-seasonal aspects of wool and the alchemic transformation of the fibrous wool into smooth, silk-like yarn, which renders the fabric light, airy, fluid and yet full and supple.
www.woolmark.com/
Synthetic & Rayon Textiles Export Promotion Council (SRTEPC), Association of Synthetic Fibre Industries (ASFI) and Association of Manmade Fibre Industries (AMFI) have urged the government for a reduction in excise duty on manmade fibers. They feel India's exports of manmade fiber textiles can increase to 10 billion dollars from the present six billion dollars if the excise duty on man-made fibers is reduced.
Even though Indian manmade textile products are preferred in international markets, these remain non-competitive owing to the high burden of excise duty. Vietnam exports $27 billion worth of textiles, which are largely produced from manmade fibers. Despite having two of the world’s largest producers of manmade fibers, India’s exports of sportswear and leisure wear are not even five per cent of Vietnam’s.
Further, some countries have got preferential access to export markets like the EU and the US. Besides discriminatory excise duties on manmade fibers, Indian manmade textiles are subjected to trade barriers in markets like China, Turkey and Canada.
Meanwhile India has made changes in duty drawback rates. New entries in the drawback schedule have been created for cotton yarns mixed with manmade fiber, both grey and dyed. The drawback caps in the case of certain manmade fabrics have been increased. Steps have been taken to implement the three per cent interest equalisation scheme smoothly
US apparel executives in Los Angeles believe China will still be the first choice sourcing destination over the next two years, but they expect the country’s lead to narrow. Among the countries apparel and textile producers will source from in 2016 and 2017, China leads the field (37 per cent), followed by Vietnam (15 per cent) and India. Beyond 2017, executives see China’s lead shrinking but remaining dominant.
A study ‘Los Angeles Fashion Industry Profile’ by the CIT Group, which surveyed more than 50 LA apparel executives from a mix of manufacturers and licensors asked what they see as the most innovative technology for the future of the apparel industry, 54 per cent of the executives say social media, nearly one in four (24 per cent) say integrated systems between manufacturers and retailers, and 13 per cent say either 3D fitting or 3D printing. And more than half say the internet represents the biggest growth opportunity for Los Angeles apparel companies.
When asked which factors would negatively impact their businesses in 2016 and 2017, 47 per cent of executives say the cost of doing business and 43 per cent say retail consolidation. It’s savvy use of social media and state-of-the-art manufacturing platform have positioned the Los Angeles region as a leading global fashion epicenter. Los Angeles companies are capturing around 18 billion dollars in revenues through its fashion industry.
Bangladesh’s Members of the Parliament (MP) from both treasury and opposition benches have expressed their firm hope that the country would achieve the second largest economic growth within 2019 because of the tremendous development carried out continuously in all sectors. They said the living standard of Bangladesh has already risen up, giving a clear indication that the country is becoming a developed one.
Lawmakers of the 10th Jatiya Sansad (parliament) were proud to say that Bangladesh's average per capita income is $1,316 at present ($547 previously) and the poverty rate has come down to 7 per cent (24 per cent previously). The MPs made these observations while they were taking part in a discussion on President Md Abdul Hamid's speech given on January 20 on the first day of the 9th session of the 10th parliament. They said the President highlighted different positive aspects in social, political and economic sectors that set Bangladesh in motion on the wheels of a faster growth.
According to the lawmakers, the present government is relentlessly working towards advancing the national economy in a faster pace by speeding up development in all sectors. The country had already achieved success in the health, electricity, education, agriculture, food, communications, science and technology, industries, women and children sectors. The law makers said, Bangladesh has become a digital country within the shortest possible time due to the farsightedness of Sajeeb Wazed Joy, son of Prime Minister Sheik Hasina and the adviser of ICT affairs to the Prime Minister.
The theme of the recently concluded China Textile Round-Table Conference 2016 was on ‘Textile supply-side reform and adjustment under '13th Five-Year Plan.’ This year too Oerlikon Manmade Fibers were the sponsor much like the last 11 years. China Textile Round-Table Forum is a major industry economic forum hosted by China National Textile and Apparel Council. Experts present at the round-table believed that supply-side reform is of vital importance for the sustainable development of China's economy, and also serves an unprecedented opportunity for the development of textile industry.
Chen Zhongwei, General Manager of Hengyuanxiang Group, expressed his views on the textile ‘Brand Improvement’ strategy and solution from the perspective of enterprise at the meeting. Reinhard Muehlenmeister, Vice President of Software Solutions of the Oerlikon Manmade Fibers segment, delivered the keynote speech on Industrie 4.0 Solution of Chemical Fiber Production, which received high attention from participants.
Held in Beijing the conference saw about 300 representatives from government agencies, China National Textile and Apparel Council (CNTAC) and other industry associations, experts and scholars, entrepreneurs from home and abroad, research institutes and media attended this annual conference. Georg Stausberg, CEO of Oerlikon Manmade Fibers segment, also attended the forum and made in-depth communication and exchange with industry leaders and experts over issues of industry situation and development.
