FW
The recent terror attacks in Bangladesh has taken a toll of the country's export business with a number of foreign buyers cancelling their scheduled business meetings in Bangladesh and asking other exporters to look for greener pastures in a third country to negotiate orders.
In a recent statement, the Bangladesh Garment Buying House Association (BGBA) said readymade garments (RMG) sector could incur a loss of at least $2.50 billion this fiscal year as many international buyers have postponed their visits to the country following the recent militant attack in the capital that claimed 22 lives, including those of 17 foreigners.
As a follow up, the BGBA has reportedly urged the government to take comprehensive steps after achieving a consensus with all political parties and business leaders in order to overcome the present crisis in the RMG sector. It believes that if the government comes forward after taking all political parties and business related people on board, the present crisis in the RMG sector could be resolved.
Up to 90 per cent of workers in Southeast Asia could face unemployment due to automation. Jobs of nearly 90 per cent of garment and footwear workers in Cambodia and Vietnam are at risk from automated assembly lines.
There are nine million people, mostly young women, dependent upon jobs in textiles, garments, and footwear within the Asean economic area, which includes Cambodia, Indonesia, Thailand and Malaysia. These are the workers most susceptible to losing their jobs.
Garment workers already tend to be low waged, overworked and susceptible to injury from lung ailments, to lost fingers, to being killed in fires and factory collapses. Adding to this list is now the risk of being replaced by faster, cheaper and less rebellious robots.
Companies are attracted to automated technology because of competitive pricing and quality, and by the mitigation of reputational risk. But for the millions of people who stitch clothes and shoes for a living, and who look set to be hardest hit by automation, robots could be an opportunity for fairer work. In a best case scenario, robots take on board the most repetitive, mundane and non-cognitive tasks of apparel manufacturing. Robots would also assume more of the dangerous tasks like mixing of chemicals.
Vietnam’s apparel enterprises are resisting any idea of a wage increase. They say any fresh wage increase would put pressure on them and that textile and garment firms cannot expand investment and production if regional minimum wages are adjusted up. They say a wage hike at this point would lead to massive layoffs as textile and garment firms are already struggling with increasingly high input costs.
The country’s export sector is struggling with tough market conditions, especially the lack of orders, which did not happen last year. Last year, the government approved a minimum wage hike of 12.4 per cent from January 1 this year.
Only eight per cent of workers earn incomes that cover their demands while also allowing them to save some money; about 20 per cent of workers have incomes that do not meet their living standards, and the rest are struggling to make ends meet.
Despite 54,500 new enterprises being registered in the first six months of this year, they met a lot of difficulties in their operations. The number of enterprises that dissolved or temporarily halted their operations reached 36,626. These enterprises account for two-thirds of the total number of registered ones, marking an increase of 17 per cent compared with the same period last year.
A recently published ‘World Trade Statistical Review’ of the World Trade Organisation (WTO) shows, India's global trade engagement in 2015 was better than most of countries in almost every segment where it has a noticeable presence. The volume of world trade continued to grow slowly in 2015 recording a growth of 2.7 per cent, roughly in line with world GDP growth of 2.4 per cent. The dollar value of world commercial services exports fell 6 per cent in 2015 to $4,754 billion, although the decline was less severe than for merchandise, the WTO report says. It attributes the weakness of global trade in 2015 to a number of factors, including an economic slowdown in China, a severe recession in Brazil, falling prices of oil and other commodities, and exchange rate volatility.
The report further says, India did suffer the pangs of global slowdown. India's exports have been on continuous decline for the 18 months until it showed a modest 1.27 per cent growth in June 2016. However, the slowdown was not as bad as most other countries, in most cases.
The WTO report points out that the ranking of the major exporters of chemicals remained mostly unchanged in 2015, with only India improving its position, from tenth to ninth place, replacing China which went down to tenth. In the case of textile exports, India maintained its third position, behind China and the European Union. In the more specific clothing exports, India showed a 2 per cent growth, to become the fourth leading country among the top 10.
Vietnam’s textile and garment exports increased by six per cent in the first half of 2016. Exports to US went up by 5.9 per cent while those to Japan saw an increase of 2.9 per cent. Exports to South Korea were 15.58 per cent higher. Yet the mood among exporters is not upbeat. There has been lack of orders since the beginning of the year, triggering stiff competition among domestic manufacturers for customers. Some firms have seen a 30 per cent drop in the number of orders in the first five months of 2016, which can be attributed to a falling demand in import markets. Also export prices have plunged by 10 to 15 per cent.
Brexit and preferential trade regimes of US and EU with rivals such as Myanmar, Laos and Cambodia are among the reasons for foreign clients to turn towards countries with reduced import duties and more tariff advantages. Also, the Trans-Pacific Partnership and the Vietnam-EU free trade agreement, from which Vietnam exporters can benefit, have not yet come into effect.
Meanwhile, Vietnam plans to develop large textile and garment industrial zones to attract FDI in dyeing, and fabric and yarn production for making high-end products.
Sri Lanka's apparel exporters say Brexit might result in a level playing field as other exporting countries which currently enjoy duty-free access to the United Kingdom (UK) under GSP will also lose the facility when London walks out of the 28-nation bloc. While Bangladesh has GSP Plus which gives them duty free access and with Brexit , Sri Lanka will be able to compete better, feels Noel Piyathilake, Chairman, Joint Apparel Association Forum (JAAF).
Sri Lanka, has been losing half a billion dollars since the withdrawal of GSP facility by EU in 2010 due to poor human rights violation in the wake of armed internal conflict, will be exposed to a level playing field as the GSP plus facility will not stand for exports to UK post Brexit.
Brexit will result in Sri Lanka having to negotiate a separate trade agreement with the UK and so would other exporting countries such as Bangladesh, Pakistan and Myanmar, because GSP Plus concessions will cease to apply on exports to the UK, Piyathilake says. According to Sri Lanka's Central Bank, 29 per cent of the country's exports go to the EU and 34 per cent of this is for UK. This is slightly less than 10 per cent of the island nation's garment exports that are worth a little more than $1 billion. Apparel exports accounted for 46 per cent of total exports from Sri Lanka in 2015.
Bangladesh’s ready-made garments (RMG) exports retained its firm footing on the non-traditional markets as it has shown tremendous growth there among other destinations during the just-concluded fiscal year. The non-traditional markets include Australia, Brazil, Chile, China, India, Japan, South Korea, Mexico, Russia, South Africa and Turkey.
Bangladesh’s export to non-traditional markets rose by 10.48 per cent to $4.31 billion, which was $3.9 billion a year ago, according to the Export Promotion Bureau (EPB). During the just-concluded fiscal, Bangladesh earned total $28.09 billion from exports with 10.48 per cent jump in the apparel products. The share of the ready-made garments in the total annual export of $34.24 billion is 82 per cent. The exporters attributed the growth to the government incentives, increased capacity and productivity, entrepreneurs’ resilience and improvement of workers’ safety standards at factories.
Meanwhile, RMG export to European Union countries posted an 11.63 per cent rise to $17.15 billion, which was $15.36 billion a year ago. While the export to US market, the single largest export destination for Bangladesh, has registered 6.37 per cent growth to $5.62 billion in FY16, against $5.28 billion in the previous FY15. Bangladesh is the second largest exporter of apparel products after China and the country is taking the benefits of shifting of factories from China. Its global market share is 5.1 per cent as of 2014.
This week ‘Sustainable Brands’ will lay spotlight on SB’16 Copenhagen when it unravels its programme in preparation of the event when the Northern European business community would gather to collaborate on how sustainability-led innovation can be an essential driver of business success and value creation at the Radisson Blu Scandinavian Hotel in Copenhagen from September 26-28.
SB’16 Copenhagen will bring together senior business leaders, thought leaders and sustainability practitioners who influence the way brands innovate and communicate together to demonstrate the power of purpose-driven leadership.
Organizations and brands that would attend SB’16 Copenhagen include Novozymes, IKEA, GlobeScan, BASF, Kingfisher, HEINEKEN, The Body Shop, Philips Lighting, DONG Energy, L’Oréal, WBCSD and Dell among others.
At the venue, discussions will focus on the environmental, social and economic macro forces that are creating system conditions for purpose-driven businesses as well as strategies for connecting brand purpose with customer purpose.
Product and service innovation will focus on resilient and regenerative business models that are proving to be financially successful.
Initially, distinguished faculty and program highlights would have GlobeScan, SustainAbility and Sustainable Brands present results of new joint research projects surveying the landscape of purpose in terms of both consumer preferences and business leaders’ perceptions of achievement and gaps in sustainability actions by the private sector, NGOs and governments.
Secondly, IKEA, DONG Energy, Stora Enso, Marimekko and others will share how they have gone about pivoting their business models and innovation pipelines in the direction of future-proof products and services aligned with sustainability-inspired brand positioning.
Thirdly, John Elkington (Volans), The Future-Fit Foundation, BASF,Novozymes and others will bring up-to-the-minute insights on aligning the UN Sustainable Development Goals (SDGs) with brand strategy, product and service innovation, employee engagement, and corporate sustainability goal-setting.
Fourthly, HEINEKEN, L’Oréal, Sprout and Arla Foods will be among the brands that will share how they conceived and implemented successful advertising campaigns aligned with a higher-order purpose inspired by social and environmental priorities.
And finally, Novozymes, Adidas and others will dive deep into the value chain of textiles with the goal of having a co-creative series of discussions that highlight best-practice breakthrough innovation and consumer engagement along the entire value chain, pointing out a number of successful case studies along the way.
At a time when international buyers were planning to place orders for Christmas, the apparel industry in Pakistan has claimed that it has been facing severe shortage of cotton yarn.
Basically, owing to artificial shortage of cotton yarn, created by the spinning as well as ginning industry, which are holding stock in the hope of further hike in rates and the price factor, the local garment industry is not capable of entertaining the international buyers, chief coordinator of Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Ijaz Khokhar observed.
Overburdened by more than 11% multiple taxes and utility cost, the apparel industry has been demanding at least 15% special support to stay in international export market, otherwise all current businesses will out to other countries, he cautioned.
Further, the PRGMEA official rued that garment exporters were nervous to make any shipment well in time due to artificial scarcity of raw material that is forcing buyers turn to other countries that are offering lower rates.
He said that the apparel export sector was under severe pressure due to tough competition in the international market from countries like Bangladesh, Vietnam and Cambodia. Squeezing the apparel export sector will lead to decline in export earnings coupled with unemployment in the country, he warned.
Pakistan witnessed another dismal year registering 8 per cent decline in textile exports in the past year, whereas exports of non-cotton producing countries Bangladesh and Vietnam surged significantly. Excluding ready-made garments, exports of all other textile segments went down drastically in Fiscal Year 2015-16 (FY16) including raw cotton, cotton yarn, cotton cloth, and the like.
Stakeholders termed the federal government totally responsible for this worrying situation, saying that poor policies of the incumbent government had brought Pakistan’s most valuable sector on the verge of collapse. Increased sales tax led to piling up of exporters’ refunds with the tax department. Further, due to imposition of 10 per cent regulatory duty on yarn imports from India, the cost of doing business, and consequentially the price of domestically produced yarn increased manifold, they added.
Meanwhile, All Pakistan Apparel Forum (APAF) has written a letter to the Prime Minister of Pakistan appealing to revive the exemption of regulatory duty on import of cotton yarn. APAF is a joint forum of Pakistan Hosiery Manufacturers & Exporters Association, Pakistan Knitwear and Sweater Exporters Association, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association and Pakistan Readymade Garments Manufacturers & Exporters Association.
Incidentally, Pakistan is the world’s fourth largest cotton producing country.
