FW
Pakistan has missed the cotton sowing target by 21 per cent in the current crop season. As a result, the country would miss production target of 14.1 million bales by over 25 per cent. Reasons include uncertainty of cotton prices, increased sugarcane cultivation in cotton areas, and shortage of seeds in cotton sowing.
The country missed the crop production target by around 30 per cent in 2015-16 and it remained around 10 million bales, which caused a loss of 0.5 per cent to GDP growth. The decline in cotton sowing was recorded in Punjab, which is the major cotton producing province. Punjab produces about 70 per cent of the total cotton.
Cotton sowing also declined due to lower prices of cotton nationally and internationally during the last three years that discouraged growers and they opted to cultivate maize, sugarcane and rice crops in some districts of Punjab due to their better market returns. There is still uncertainty as ups and downs are being observed in cotton prices due to which growers are reluctant to sow cotton crop. Growers faced difficulties in getting certified seed, hence this affected the sowing target. Due to the shortfall as well as the delay in cotton sowing, production would be negatively affected.
Amid rising demand for denim products in the global market, five new denim factories have come into operation in the last five years in Bangladesh. With this, the total number of denim factories has gone up to 30. Of the five factories, the four that have already commenced production are Square, Nice, Thermax and Badsha. Another five companies are in the pipeline as demand is on the rise, especially in the West, the major market for denim.
Earlier, Bangladeshi manufacturers used to produce denim products such as trousers, but now they also make shirts, bed sheets, pillow covers, home textiles, aprons and table cloths. The production capacity of denim mills in the country is more than 40 million yards a month against the demand for nearly 70 million yards. The rest of the demand is met through imports from countries like China, India, Pakistan and Turkey. It is said that in a few years from now, exports of denim products would be worth $5 billion from $2 billion a year now.
The Sustainable Production Center of All Pakistan Textile Mills Association (APTMA) conducted a study with GIZ, Eschborn, Germany-based agency on social, economic and environment developments in five textile houses. It showed that after having complied with internationally-acclaimed social standards, companies in the textile business in Pakistan have enjoyed 52 per cent surge in return on equity, 36 per cent increase in efficiency, 76 per cent jump in production and 65 per cent rise in wages.
The five textile business houses are located in Punjab. They included small, medium and large textile mills, garments makers and hosiery manufacturers. The German consultant first carried out gap analysis and noted weaknesses in social compliance initiatives that resulted in loss of interest in job and abstentions. Interestingly, foreign buyers are increasingly getting sensitive on social compliance issues. The issue was tackled keeping in view the interest of both the workers and unit owners. The immediate concern of exporters was to fulfill all workers welfare related conventions where compliance is necessary to maintain the EU’s GSP plus status.
The results achieved through social compliance measures proved that the efficiency, quality and the competitiveness of all the manufacturing units in Pakistan can be greatly enhanced if workers welfare is taken care of. The exercise in the five units revealed that the benefits were much higher in units that were fully socially compliant and lower where compliance level was lower. Social compliance improves the involvement of the worker in the enterprise. The business that neglect social compliance are in fact compromising on productivity by denying fair wages to their workers.
The consultant also suggested an improvement in production, procurement and value chain management. Increase of productivity by 76 per cent in the socially compliant garmenting units should be an eye opener for the non-compliant units. The socially-compliant units do not default on their delivery time that is vital for the buyers.
Textile investors in Bihar had a long discussion with state chief minister Nitish Kumar on investments in the sector. On hand was vice-president of Apparel Export Promotion Council, H K L Maggu who gave a presentation on the prospects of setting up textile industries in Bihar. The investors also expressed their keenness to invest in textile trade in the state. After a comprehensive discussion, the chief minister assured all help to them.
Also present at the meeting were chief secretary Anjani Kumar Singh, development commissioner Shishir Sinha, principal secretary, industries S Siddarth and the chief minister's secretary Atish Chandra. Besides Maggu, investors included chairman of Shahi Export Private Limited, Harish Ahuja and managing director of Richa and Company, Birendra Uppal.
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.
