FW
With exports falling nearly 65 per cent in April 2020, the textile industry in Pakistan is on a shaky ground. Exports during the month, declined to $404 million, against exports of $11,139 million during the same month previous year. The outlook for May 2020 too is not very optimistic as nearly 75 per cent of the present installed capacity is reserved for exports and the large erosion of makes the market situation in the country quite alarming.
The EU and the US are the two largest apparel markets for Pakistan. Total annual exports to these two countries exceed $10 billion. However, with COVID-19 pandemic, a large number of customers from these two regions have either cancelled orders or simply reneged their contracts. The total value of orders either being cancelled postponed amount to almost $1.3 billion. Falling prices of domestic and global yarn and cotton further add to the uncertainty in the country.
Future prospects of Pakistan’s textile industry
This situation in future is likely to lead to serious cash flow and liquidity constraints in the country. The liquidity crisis is likely to be so severe that many companies may find it
impossible to maintain operations resulting in both bankruptcies and massive layoffs.
To combat this liquidity, the Pakistani government needs to ensure liquidity/solvency of the Pakistani firms. This can be done by either increasing the national ceiling of export refinance available to the exporting firms, dropping the multiple of exports to refinance to a ratio of 1:1, restoring zero-rating with immediate effect and reducing the interest rate on export refinance to 3 per cent.
The government can also freeze interest and defer repayments for one year on all LTTF loans availed by the exporting firms. It can remove supply chain bottlenecks in order to improve competitiveness. To ease the SOP for export manufacturing operations, it can restart production on other modalities such as forward currency bookings, late payment penalties, etc. Lastly, the government can take up these cases at the ministerial and embassy levels to appeal to them or use state’s leverage to see to it that they honor their commitments and agreements.
Though recovery of Pakistan’s textile exports depends largely on the recovery of the EU and the US markets, it also depends on how serious the Pakistani government is in saving textile exports industry from being dismantled and to what extent it helps to tide over the crisis.
Zalando, the Sustainable Apparel Coalition (SAC) and Higg Co, have announced a new collaboration to accelerate a global sustainability standard in the fashion industry. Zalando is the first retailer to use the SAC’s updated version of the Higg Brand & Retail Module (Higg BRM) to make sustainability assessment mandatory for brands selling on its platform.
As part of this push toward industry-wide change, Zalando will gather comparable sustainability data from its partner brands to understand where the challenges of the industry are both individually and collectively. Higg BRM data will help Zalando identify trends and explore how to develop solutions to drive meaningful and lasting improvement in collaboration with its partner brands.
The Higg BRM is a tool that provides brands and retailers with a comprehensive way to assess their performance around ethical and environmental parameters such as human rights, fair wages or carbon dioxide emissions. Users can organise their sustainability priorities based on the results. All SAC brand and retail members will eventually use the Higg BRM to measure their sustainability performance and progress, making it possible for the apparel industry to compare sustainability at the brand level.
The SAC is the leading sustainability association for the apparel, footwear and textile industry. The coalition’s 250 global members collaborate to develop the Higg Index, a suite of five sustainability tools that assess social and environmental sustainability performance, identify areas for improvement and enable the environmental and social transparency consumers want. Higg Co develops the technology platform that hosts the Higg Index.
Carolyn B. Maloney, a member of the US House Financial Services Committee, alongwith various stakeholders introduced the Pandemic Risk Insurance Act of 2020 (PRIA). The legislation will create the Pandemic Risk Reinsurance Programme, a system of shared public and private compensation for business interruption losses resulting from future pandemics or public health emergencies.
The act would be an important step in Congress’s prevention efforts against economic losses from future pandemics by both requiring insurance companies to offer business interruption insurance policies that cover pandemics, and creating a Pandemic Risk Reinsurance Programme to ensure that there is sufficient capacity to cover these losses and protect our economy in anticipation of a resurgence of COVID-19 and future pandemics, the Congresswoman said in a statement.
Like the Terrorism Risk Insurance Act (TRIA), the federal government would serve as a backstop to maintain marketplace stability and to share the burden alongside private industry.
The Lycra Company, an innovator in the apparel industry and wool spinner Südwolle Group, have partnered to bring the ‘next level of sustainability’ and unique performance into the wool market with a ground-breaking new technology. As the first of its kind, the new GRS certified cationic dyeable Coolmax EcoMade long staple yarns can be perfectly processed with wool without compromising its unique properties.
Among the existing types of recycled polyester that can be blended with wool, Coolmax EcoMade technology distinguishes itself by its cationic dyeability. This property considerably facilitates the dyeing process in piece or cone dyeing and enables a gentler dyeing process at lower temperatures using less energy. This not only helps to ensure that the touch and handle of the wool are not impacted but is also a positive development for sustainability within this market. Furthermore, generally, a cationic dye process tends to deliver better colour and colour fastness.
The new Coolmax EcoMade fibre is the perfect partner to wool, combining the performance of uniquely engineered cross-sections of Coolmax fibres, offering better breathability and moisture management, with the natural attributes of wool,” explains Jim Sweeney, Business Development Director for The Lycra Company specialty polyester.
In order to highlight the new innovation’s unique qualities, as well as challenge the presumption that sustainable fibres compromise on performance, Südwolle blended the Coolmax EcoMade fibre with its Merino yarns to develop a range of sports and outdoor samples. They then invited several of their key customers on a winter sports weekend to launch the products.
The Lycra Company and Südwolle Group are both continuously looking at ways to improve their offerings both to address customers’ needs and for a more sustainable future and this new development highlights this commitment.
As many brands and retailers struggle to find their place amidst the COVID-19 pandemic, Asos Marketplace is seeing a surge in brand, traffic and sales growth.
Launched in 2010,the marketplace has become as a way to connect Asos’ global audience with small brands selling vintage and independent fashion, has only become more relevant over the years. At the height of the global lockdown in April, the marketplace onboarded more than 80 new independent brands—a 100 percent increase from the year prior. The company waived its monthly $25 subscription fee for new and existing retailers to further support independent fashion during the unprecedented times.
Along with being a source for rare vintage denim, the marketplace has also seen an increase in year-on-year sales and customer traffic during the pandemic, specifically around loungewear. Year-on-sales in April increased 421 percent for sweaters, 119 percent for women’s hoodies and 166 percent for sweatshirts.
Customers have also been taking the opportunity to stock up on socks, particularly trendy tie-dyed versions, with sales up 1,418 percent compared to last year.
Support from global digital entities can be a savior for independent brands and retailers, which have especially been struggling as a result of store closures, high unemployment rates and inadequate loan programs. Small retailers have noted that support from alternative sources and partnerships that has been invaluable throughout the pandemic.
Tilmann Wrobel, Creative Director, Monsieur believes that sustainable denim manufacturing is in a better place than it was during the Great Recession, as both demand and awareness for better products from both the industry and consumers—is higher, and the supply chain has more sustainable solutions to adopt. Many brands and retailers are opting for either sustainable fabric at a lower price or at least at an equal cost to denim without this property. Therefore, now is not the time for mills to retreat to old habits and undo the progress they’ve made.
And as Wröbel point out, denim mills now need to find new ways to incorporate protective performance qualities to their fabrics. The need to adapt to the next big thing should be the focus.
As the pandemic is teeing up a correction in how consumers buy and how brands manufacture, it is more important to invest in sustainable practices and take care of the workers and the environments where denim jeans are being produced.
Wröbel believes the pandemic will offer designers a chance to flex their creative and strategic-thinking muscles. Monsieur-T is focusing on ideas about what could be done with the inventory that is in the warehouses around the world, and which can probably not be used before the next season.
Pakistan Hosiery Manufacturers & Exporters Association's (PHMEA) Central chairman Chaudhry Salamat Ali has demanded the government to restore Zero Rating on Sales Tax – No Payment No Refund Regime reinstating SRO 1125 in the budget terming it indispensable to surmount liquidity hardships of exports and in the national interest to enhance exports and earn foreign exchange to strengthen the economy.
Ali pointed out that due to global business slowdown and Covid-19, he pointed out that the economy of Pakistan is also in dire straits and the current volume of exports cannot be unsurpassed unless the burning liquidity problem being faced by exporters is not appropriately addressed by the government.
To achieve a great milestone in enhancement and development of exports, it is crucial that the government must facilitate the export sector introducing export-friendly policy as the five export oriented sectors have been highly aggrieved due to rescinding SRO 1125 and imposition of 17 percent sales tax on exports which government imposed in the last budget with a view to collect sales tax on domestic sales of textiles. This unilateral move by the govt penalized the export sector as their precious liquidity in shape of sales tax refund was held unreasonably with government, which also caused disruption in enhancement of exports.
Like other countries, Turkish textile industry is also playing an effective role in measures against Coronavirus pandemic. The country is producing 1 million pieces of disposable masks in a day, as well as performing the production of the masks, named N95 and N99, providing top protection used particularly by medical personnel.
Minister of Industry and Technology Mustafa Varank stated that the country can produce disposable masks upto 2 million per day and the raw materials of masks can support up to 8 million daily productions.
As a result of the R&D studies initiated by the Ministry of National Education (MEB) within the scope of the measures taken against the coronavirus (COVID-19) pandemic, the manufacturing of an automatic 3-layer wired ultrasonic surgical protective mask production machine was completed in Istanbul Küçükköy Vocational and Technical Anatolian High School. Production of 100 thousand surgical protective masks per day started in high school.
The export of technical textiles increased by 3-3.5 percent in March though the export volume decreased 17 percent. This is the result of the demand for nonwoven masks and protective clothing.
Copenhagen Fashion Week announced recently that it will move its event from August 04-07 to August 09-12 to align with the apparel trade shows CIFF and Revolver. The organizations will be among the first in the industry since the advent of the COVID-19 pandemic to host physical events.
The events, however, may have a more local flavor this season. Since the lockdown, event organizers and industry organizations Dansk Fashion & Textile, and Wear have discussed various options available for the upcoming fashion week.
Other fashion events have mused alternatives, too. Both London Fashion Week and Paris Couture Week, which were slated to take place in July, are planning to digitize their events, while others like Pitti Immagine Uomo and Project New York are postponing their events to September.
Bangladesh Textile Mills Association (BTMA) recently urged Finance Minister AHM Mustafa Kamal, Commerce Minister Tipu Munshi and Textiles and Jute Minister Golam Dastagir Gazi to impose anti-dumping duty on Indian yarn imports to protect the $8 billion domestic textile industry.
The backbone of Bangladesh readymade (RMG) industry, the primary textile sector annually produces yarn worth $12 billion and the local millers supply 85 per cent raw materials to the knitwear sector and 35 per cent to the woven sector. According to BTMA, Bangladeshi millers sell the widely consumed 30 carded yarn at a price between $2.80 and $2.90 per kg, whereas the same quality Indian yarn is sold between $2.60 and $2.70 per kg in Bangladesh.
The letter also asked the authorities to scrutinize import prices of yarn at land ports along the Bangladesh-India border.
BTMA President Mohammad Ali Khokon said in the letter, Bangladesh exported $566 million worth of garment items to India in the fiscal years 2017-18 and 2018-19 but imported $7.74 billion worth of textile-related items including raw cotton, cotton yarn, cotton fabrics and textiles during the same period this year.
To cushion the COVID-19 impact,primary textile millers urged for a 10 per cent increase in cash incentives from the existing 4 per cent.
