FW
The China-Australia Free Trade Agreement (ChAFTA) is vitally important for cotton growers, their employees and the rural communities they support. More than 99 per cent of Australia’s cotton crop is exported, much of it to China. The agreement would deliver important tariff cuts that would greatly benefit cotton growers. Unfavorable weather conditions in Australia have subdued cotton production for the past two years. Growers in many areas have been hard hit, so the passing of the FTA would be a shot in the arm for them and the industry as a whole.
Around 65 per cent of the annual Australian cotton crop is exported to China. Australian cotton exports to China are more than the combined value of Australia’s exports to the United States, Germany, the United Kingdom, South Korea, France, Canada and all of South East Asia. Australian farmers across all sectors rely on trade and international markets to generate $42.4 billion for the Australian economy each year, with $9 billion in earnings from China alone.
China is Australia’s largest export market for both goods and services, accounting for nearly a third of Australia’s total exports, and a growing source of foreign investment. The China-Australia Free Trade Agreement was signed in June 2015.
Six readymade Bangladesh garment factories have been upgraded to international standards by Alliance as they have finished all correction work. Alliance for Bangladesh Worker Safety is a North American buyers’ association. In the absence of effective government monitoring, brands and retailers are taking greater responsibility for fire and building safety. In some factories, safety issues are so serious that inspectors have recommended that production be suspended because of risk to workers.
Inspections are an important first step in making factories and workers safe, but they are not enough. There is no authoritative figure for the number of factories producing for the export market. One estimate is that there are some 1,800 factories but this is felt to be too low and another guess is that it could be closer to 5,000 or 6,000 factories and facilities.
Indirect sourcing plays a big role in meeting the demand for high volumes of low cost garments. Indirect sourcing is not necessarily a bad practice but subcontracting facilities have to be kept under watch, and there is little evidence that this is happening in practice. Conducting inspections and identifying factory safety hazards are important. But brands and retailers should work with Bangladeshi manufacturers, the government of Bangladesh, foreign governments, and development organisations to advance a comprehensive approach – underwritten by significant funding – to upgrade the entire export garment sector.
Algerian-Turkish joint venture Tayal aims to meet local clothing demand. Tayal will invest an estimated 150 billion dinars (1.3 billion euros) and the project will commence in November, 2015. The industrial project will be carried out in accordance with the 51/49 rule governing foreign investment in the country. The shareholders of the JV are public enterprises Apparel & Clothing (30 per cent) and Texalg (21 per cent) from the Algerian side. The Turkish company Intertay, a subsidiary of Turkish group Taypa holds the remaining 49 per cent stakes. The aim, to meet the local demand for clothing with 40 per cent of its production for the domestic market.
This textile complex also has a training school and is expected to generate more than 25,000 jobs. As per Federation National textile and leather, it also tends to revive a moribund sector between 1990 and 2000 affected by the disappearance of more than 25 businesses and 250 000 jobs. Moreover, since the 2000, the sector has been facing competition from Chinese textiles. The project partners plan to allocate 60 per cent of the production exported. Work will begin in November 2015 and should be completed by 2018.
Vietnam's fledgling wool manufacturing industry is all set to buy greasy wool from the Australian Wool Innovation (AWI). The organisation identified Vietnam, one of the fastest-growing exporters of textile products, to set up a supply chain, three years ago. Jimmy Jackson, AWI general manager of product development and commercialisation says the aim was to create new business opportunities in different geographical areas, and reduce Australia's heavy reliance on China.
Jackson said Vietnam was politically stable, had skilled textile workers although they were using synthetics rather than wool, pending free trade agreements, which now are signed with Japan, Korea, the European Union, the European Union Satellite Countries, and was close to signing the Trans-Pacific Partnership. The country also hss low labour costs, almost one-third of China.
The spin-off from AWI's presence in Vietnam is a new market for Australian Merino garments. Jackson said that they called the campaign ‘Out of Vietnam’ because they thought it was a manufacturing base and it would all be exported. He added that they didn’t expect wool to be used in a country there the temperature is often 42C degrees in the shade. However, he added that in North Vietnam, a couple of months around Christmas and Tet (Vietnamese new year), the temperature drops quite significantly.
India's knitwear exports to Japan made up just 0.3 per cent of the total knitwear products imported by the country in 2014. Interestingly, India enjoys duty free access to Japan. Indian knitwear exporters need to come out with innovative designs that suit the taste of Japanese. They have to improve product quality and display better adherence to delivery schedules.
Though Chinese textile exporters do not enjoy duty free access in Japan, almost 80 per cent of the total range of textile products imported into Japan is from China. India's share in wovens garments to Japan stands at 1.45 per cent. It is not just pricing that works in Japan, the color and design for a particular season is very important. Fashion trends in Japan change every 40 days. By the time Indian exporters ship the readymade garments, they are already out of season in Japan.
One way out is for Indian apparel makers to seek the help of Japanese fashion designers who can offer color and fabric forecasts to help Indian apparel exporters understand Japan’s changing styles in clothing. And as it happens, Japan is trying to reduce its dependence on Chinese clothing. India can seize this opportunity to make inroads.
Karnataka, and especially Bangalore, will see a lot of investments in the textile sector. With a cumulative outlay of over Rs 2,000 crores, the projects are estimated to provide direct employment to more than 5,000 people, mostly women. Among the big investments is Himatsingka Linen which will spend Rs 1,500 crore to set up a plant to manufacture bedroom linen and other fabrics. Himatsingka is a vertically integrated home textile major.
Shahi Exports will set up an unit in Bangalore. It is estimated to create over 1,000 jobs. Jockey will invest Rs 132 crores in Hassan to manufacture inner garments. It will have an employment potential for 700 persons. Indo Count, one of the world’s biggest producer of bedspreads, has shown interest in setting up a unit in Dharwad, with an investment of Rs 250 crores. Indo Count is vertically integrated right from spinning to finished made-ups. The company takes pride in being India’s third biggest exporter of bed linen.
Bangalore is home to several topline clothing brands and is a favored location for garment companies. Also a mega silk park in Mysore will cater exclusively to the integrated silk textile sector, ranging from silk rearing to manufacture of silk garments.
The textile processing park at Cuddalore in Tamil Nadu would generate direct employment to 5,000 people and indirect jobs for 25,000 people within two years. The project is eco-friendly and the park and the technology for the treatment and disposal of effluents have been approved by the pollution control and the maritime boards. It’s a model park with latest technology and 10 leading textile group companies in Tamil Nadu are all set to establish their processing units in the park.
The processing units predominantly use common salt for dyeing cotton fabrics, which is harmless when discharged into the sea. The textile processing does not involve any toxic chemicals. Effluents would be treated and discharged under marine standards. Fears about depletion of groundwater are groundless as the processing units would tap groundwater below a 1,000 ft.
The project has a 50 per cent grant under the Integrated Processing Development Scheme to install and operate eco-friendly and cost effective technology. There is a proposal for implementing a marine discharge technology. An online monitoring system would be implemented and monitored by a competent third party agency under the supervision of the Pollution Control Board.
In the sea discharge method, effluent water is treated and colors are removed. Hard water (which is saline) is then thrown into the sea. This causes no harm to the ocean as sea water is already salt heavy.
Northern Textile Mills (Nortex) ramped up production by 100 per cent since it relocated from Zimbabwe to Botswana. A number of companies have exited Zimbabwe citing tough business environment following the introduction of the Indigenisation and Economic Empowerment Act.
Nortex was established in 1990. It has captured a significant market share in the Southern African Development Community region including Zimbabwe and South Africa. It is currently targeting export markets in Asia, the European Union and the United States of America and is set to be a force to reckon with in the global market in cotton towel products. It offers a broad range of terry towels, napkins, beach towels. It manufactures both woven and warp knitted snag free towels.
The company is a water-based industry requiring about 4,00,000 liters of water a day. However, in view of the scarcity of the commodity, the company recovers 70 per cent of this amount through recycling. Nortex produces 7,500 kg of towels a day. It uses its capacity fully. The company used to get its yarn from Zimbabwe, since the country had the best quality, but with the drying-up of that source, it has had to look elsewhere, notably South Africa.
www.nortex.co.za/
Recommendations to help exports
The panel asked for priority in gas availability and immediate refund of all outstanding claims of sales tax, DLTL and customs rebate to reduce the cost of doing business and make the industry compatible in the region. The committee raised serious concerns about the dismal condition of textile industry with continues decline in exports despite getting GSP plus status, decline in investment, shortage of gas and high power tariff and increasing cost of doing business. Pakistan’s textile exports declined 17 per cent in July 2015 against the same period of last year.
The committee asked the government to liquidate pending refunds to textile exporters as early as possible. It further asked Federal Board of Revenue to release sales tax and customs refunds which are pending for the last three years.
Government intervention need of hour
The committee said sales of cotton crop is about to begin and the government should address textile exporters' concerns immediately. Chairman All Pakistan Textile Mills Association (APTMA) S M Tanveer urged the government to give direct subsidy to cotton growers instead of sticking to procurement one million bales. As per Muhammad Zubair Motiwala, Chairman Pakistan Apparel Forum (PAF) the World Bank projects global apparel market to touch $1.18 trillion by 2020 and $2.11 trillion by 2025. However, Pakistan is in a disadvantages position in the global market due to its wrong policies.
Various studies have shown, Pakistan’s compound growth rate textile and apparel export from 2005 to 2013 stands at 3.6 per cent against 11.3 per cent in India and 16.2 per cent in Bangladesh. Pakistan’s, value addition for every one million bale is $1.17 billion against $179 billion in India and $6 billion in Bangladesh. Pakistan’s electricity tariff is $0.15 kWh (highest among the three) against $0.13 kWh in India and $0.09 kWh in Bangladesh. Pakistan's gas tariff is $6.27 per mmbtu against $4.66 in India and $1.86 mmbtu in Bangladesh.
Pakistan's installed capacity utilisation is less than 70 per cent due to non-availability of energy on 24/7 against over 90 per cent both in India and Bangladesh. Pakistan's corporate tax rate is the highest at 34 per cent against 25 per cent in India and 27.5 per cent in Bangladesh. Pakistan is the only country whose currency appreciated five per cent during 2013-15 against 2.7 per cent depreciated in India and 0.7 per cent in Bangladesh.
To highlight the problems being faced by textile players of the country, All Pakistan Textile Mills Association (APTMA) presented a nine-point proposal to the Federal Textile Board. APTMA’s nine point proposal includes: withdrawal of various surcharges on electricity, withdrawal of GIDC and the recent hike in gas tariff, zero-rating to textile industry, long-term finance for ginning and spinning sector, export re-finance to spinning and weaving sectors, five per cent export incentive for capturing non-traditional markets, a uniform tax rate of three per cent on the whole textile value chain, cracking down on dumping and smuggling, and immediate release of the pending payments.
www.aptma.org.pk
Officials in Bangladesh are worried that any delay in forming of rules on labour law could be a crucial issue when top officials of the Sustainability Compact review progress in workplace safety of the country’s apparel sector. Top officials and representatives from the European Union (EU), US, Canada, the Netherlands, the UK and ILO will be present at the second review meeting scheduled to be held in Dhaka in November.
According to those involved in the process, Bangladesh apparently has failed to comply with some important conditions of the Compact. This includes formulation of rules to implement the labour law and extend those to the export processing zones (EPZ) or making necessary changes in the existing EPZ law, and completion of factory inspection.
Some requirements were met by the government, which included appointing 200 additional inspectors and launched publicly accessible database. However, it failed to formulate rules even two years after the law was amended and finalise the new EPZ law till date. The EU published a technical status report on the Compact, recently, which termed the adoption of the rules as a matter of ‘highest priority’.
A senior government official, when questioned, said that so far, the government has met all the requirements except the formulation of the rules, which might be the 'hot' issue in the upcoming review meeting of Compact.
Sources, though, believe that nay further delay in meeting condition might result in an unfavourable effect on the efforts to revive the GSP in the US market and continue enjoying the same benefit in the EU market.
