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Nearly 70 Indian textile and garment companies are looking for opportunities to invest in Vietnam’s garment and textile industry especially in production and supply chains of materials for the sector. Advantages for Indian firms investing in Vietnam include: fairly developed infrastructure, abundant and cheap workforce, and stable security. Specific textile projects are calling for investment in central Vietnam with advantages relating to location, procedures and services supporting investment in industrial parks.
India has a plan to provide such enterprises with an assistance package worth $100 million. Indian firms have however expressed their concern about credit loans for investment in Vietnam and the possibility of forming bonded warehousing in the country.
Vietnam is also looking to Indian investment in new business sectors where India has advantages -- infrastructure and power generation and distribution, IT, education and pharmaceutical research. Vietnam is now one of the leading investment destinations in Asean. It is now one of the top three Asean exporters to the US, ahead of Thailand and Malaysia. Vietnam accounts for 20 per cent of Asean exports to the US, and, if present trends continue, it will have a market share of more than 30 per cent by 2020.
Reliance Industries has temporarily shut down its purified terephthalic acid (PTA) and polyethylene terephthalate (PET) plants at Dahej, Gujarat, due to shortage of water at the complex. Reason: lower release of dam water, and significant increased in salinity of water supply to manufacturing complex, there is shortage of the right quality of industrial water at the Dahej complex. As a response, RIL is running on reduced capacity in some of the plants and has temporarily shut down its PTA and PET plants.
RIL has a 2.3 million metric ton per annum (MMTPA) of PTA capacity and 650 kilo ton per annum (KTPA) of PET capacity at its Dahej manufacturing complex. Reliance Industries has initiated alternative arrangements for water and is closely monitoring the situation. The company has also used the current situation to carry out planned maintenance and reliability activities. It is in a state of readiness to resume full supplies as soon as the water availability and water quality issues are resolved.
Meanwhile, Reliance Industries is ensuring a continued supply of PTA to the domestic market from its Hazira and Patalganga manufacturing complexes. The PET plant consists of two lines with a combined manufacturing capacity of 650 KTA.
The South India Garment Fair will be held in Bangalore, July 21 to 23, 2016. This is an important event for the domestic market, especially in South India. The fair will feature top Indian brands that who will display their latest collections while new and upcoming brands get a chance to showcase their creativity. It will act as an ideal platform for brands and they will get a chance to book orders from dealers, wholesalers and retailers who will be visiting the show.
The fair has a collection which covers everything from wedding apparels to casual clothes. This includes apparels, lingerie, undergarments, accessories, mannequins. So there are jeans for men and women, wedding apparel which includes sherwanis, lehengas and heavily embroidered saris, T-shirts, pullovers, trousers, silk shirts, formal shirts, casuals.
The event is being organised by the South India Garment Association (SIGA). SIGA was formed more than a decade ago. The vision behind its formation was to create a platform for manufacturers, distributors, agents as well as retail traders.
The Autumn/Winter 2016 collection for men, women and kids will be displayed and visitors from many states will visit the fair. The last edition which was visited by 1200 buyers was highly appreciated.
An apparel and garment making center has opened in Mizoram. The growth of the garment industry in Mizoram will also provide a fillip to traditional sectors like handlooms, handicrafts and silk etc. and help them to convert traditional designs into modern garments.
Mizoram has been sanctioned six projects across sericulture, handlooms and apparel and garmenting with a total project cost of Rs 114.82 crores, with the Government of India’s share being Rs 102.90 crores. The aim is to achieve convergence across all the projects so that an ecosystem of an integrated value chain with the requisite backward and forward linkages is created.
The apparel and garment making center in Mizoram is one of the eight such centers being set up in the north east. Such centers have already opened in Nagaland and Tripura. Each apparel and garment making center is estimated to generate direct employment for 1,200 people. Each state will have one centre with three units, each having 100 machines. For local entrepreneurs with the requisite background, the required facilities to start a unit will be provided in the plug and play mode. Once such entrepreneurs get established, they can set up their own units, allowing the facility to be provided to new entrepreneurs.
"The US Congress last July gave the President fastrack authority, or Trade Promotion Authority (TPA), which led to the conclusion of negotiations over the TPP in February this year as the most positive step so far. In other words, US lawmakers will give the trade pact an up or down vote, without any amendment."
On his recent visit to Vietnam President Barack Obama promoted the ratification of the TPP trade agreement. However, the moot point is, if the President will be able to make it possible on the other side of the equation - the US Congress to pass it in the remaining time of his presidency. According to the resolution made in April, Vietnamese lawmakers would enact the Trans-Pacific Partnership trade agreement (TPP) at the first sitting of the new National Assembly. The government has even assigned relevant agencies the task of revising laws and regulations to conform to the TPP.
Meanwhile, the US Congress last July gave the President fastrack authority, or Trade Promotion Authority (TPA), which led to the conclusion of negotiations over the TPP in February this year as the most positive step so far. In other words, US lawmakers will give the trade pact an up or down vote, without any amendment.
TPP faces an uncertain future
However, so far nobody can say when the US Congress would discuss TPPs ratification. And 2016 being an election year, ratification, remains a big question. As a tradition, the US administration often relies on Republicans for the passage of a trade pact because Democrats normally oppose free trade agreements of that nature. Even former Secretary of State Hillary Clinton, who played a crucial role in TPP negotiations, now a US presidential hopeful, has declared her opposition to TPP’s ratification.
Meanwhile the Republican presidential candidate Donald Trump, made it clear a long time ago that the TPP should start all over again. The fact that leading US presidential candidates have turned their back on the TPP also means that US lawmakers would not ignore it if they want to win support from voters who want to reinstate protectionism.
Consequently, what Obama could do, is to manage and bring about the discussion and ratification during the “lame duck” session, meaning when new Congress has been elected but has not taken office, ratification by incumbent lawmakers may not influence the prestige of every of them. Whether Obama could make this possible remains unanswered, at least as far as his Democrats are concerned.
The TPP can be effective without the ratification of all 12 members. Within the next two years, if at least six countries accounting for 85 per cent of the trade pact’s gross domestic product (GDP) could ratify it, then the agreement would take effect after 60 days (after the two-year term ends).
The US however, alone makes up 62 per cent of the TPP’s total GDP while Japan accounts for 17 per cent. The trade pact will never materialise if one of these two countries does not endorse it. Furthermore, in the case of Vietnam, main benefits from the TPP are from trade with the US. Everybody expects 98 per cent of the value of Vietnam’s agricultural and fishery exports and 75 per cent of industrial exports stateside to be exempted from import tariffs as soon as the TPP becomes valid. Likewise, up to 95 per cent of tax lines effective on textile and garments will be exempted or slashed with the TPP validity.
‘Rule of Origin’ vital for eligibilty
To be eligible for TPP favorable tax rates, Vietnam’s textile and garment exports have to meet the ‘yarn forward’ rule of origin. That’s why Vietnam has welcomed foreign-invested projects in weaving and dying industries. Despite frowns of concern over the environmental effect, the ‘yarn forward’ phrase may have gained enough weight to partly impact endorsements of these projects. One could conclude that whatever Obama would say or whatever the American political scene could be, the environmental factor will be the decisive factor, not the urge from somebody or industry.
Pakistan’s textile mills have welcomed the announcement of the zero rating regime for the textile industry. Tariq Saud, Chairman, All Pakistan Textile Mills Association (APTMA) hailed the government specially the FM and said in a statement that reintroduction of Zero Rating or No-Tax and No-Refund Regime for the textile sector which is the major export oriented sector and contributes more than 55 per cent of foreign exchange earnings through exports is a positive step toward the restoration of viability of the ailing textile sector. He said that APTMA was demanding zero-rating regime and met the Finance Minister last Sunday in this regard and convinced him that the viability of textile industry is must for the economic growth of the country.
Now they want local taxes and levies on exports to be returned to ensure a complete zero rate regime otherwise the textile industry would remain unviable. They also want the complete zero rating regime to be extended throughout the value added chain. All taxes and levies should be either removed or returned in actual, not incremental form, under the Drawback of Local Taxes and Levies (DLTL).
The value-added textile industry has also welcomed the reduction in export refinance and the introduction of the zero rating regime. It says the introduction of the zero rating regime would be beneficial to the cottage industry of Sialkot, which is facing the problem of liquidity cash flow. However it says four per cent DLTL should be offered to all export items to bring growth to the sector. The reduction in the refinance rate to three per cent has been welcomed. Regarding duty free import of machinery, the value-added textile industry says there should be duty free import of spare parts to make this offer more comprehensive and ensure modernisation of the value-added industry. It wants payment of all stuck-up refunds by August 31 to resolve the liquidity issue.
Within Vietnam there is a growing concern that FDI, including the textile sector, needs to be tempered with efforts to deter unlimited environmental pollution. Public opinion has been marred by mass fish deaths off Vietnam’s central coast, with environmentalists blaming a toxic leak from a steel mill in April receiving investment from Taiwan, a key investor in Vietnam’s textile sector.
As the garment and textile sectors are significant contributors to Vietnam’s economy and will become even more so under pending free-trade agreements, ‘manufacturing sustainability’ is especially being discussed by non-governmental organisations (NGOs) promoting development in this key emerging market.
The International Finance Corporation (IFC) and global apparel and footwear company VF Corporation and consumer products retailer Target Corporation, recently launched a program to improve resource efficiency at their supplier factories in Vietnam. In the first phase, energy and water-efficiency assessments will be conducted at around 30 factories within the first year; subsequent phases will then evaluate opportunities for use of clean energy to meet the captive power needs of the textile supply chain. The IFC will help facilitate the programme’s financing through its partner banks in Vietnam.
Independent observers, however, wonder what level of uptake IFC is going to get from the factories, given that improving energy efficiency is hardly going to be top of most garment makers’ lists of priorities for borrowing money.
The garment industry in Laos has been on the decline. Share of garments in total exports declined from an average of 36 per cent during 2001–2005 to only eight per cent during 2011–2015. Foreign direct investment in the industry has also fallen significantly.
Declining global demand is one of the key reasons for the slowdown. Most Laos garment makers provide cut, make and trim services and are usually sub-contractors of other larger companies, often located in neighboring countries. The small scale of the Laos garment industry coupled with the lack of experience and capabilities in the private sector has locked Lao garment factories into simple services with little scope for them to integrate into regional and global supply chains.
Most of the country’s garment factories base production quantities on export demand. So the slowdown in European economies and other markets has led to a decrease in orders for Laos garments.
Labor shortage is another major bottleneck in the industry. A major increase in Thailand’s minimum wage has made the Thai labor market very attractive for workers from neighboring countries, including Laos. There has also been an increase in competition for labor from other sectors in the domestic economy, such as the booming services sector as well as other manufacturing sectors. This has made it difficult for the garment industry to find and retain labor, especially in major manufacturing hubs.
According to a trade forecast, extreme sports clothing and expensive sportswear is popular in China, thanks to the government initiatives before the 2022 Winter Olympics promotional campaign.
After China implemented the one-child policy 36 years of full liberalisation of the second child, which is also expected to promote the growth of sports apparel market. According to PureGroup CEO of Hong Kong-based ColinGrant representation, the business opportunities related to health and healthy lifestyles. PureGroup in Asia’s business include gym, yoga, retail and nutrition.
Meanwhile, Dalian Wanda Group last year spent $650 million in acquisition of the World's Iron-Man company, the deal is intended to tap China's gradual warming towards sports and fitness. According to the Chinese Athletic Association, last year, China held 134 marathon and road races and, compared with 2014 year on year increase of 160 per cent. As a part of a national campaign to promote healthier lifestyles and, by 2025 China will build more than 900 000 sports venues and gym.
The BCI 2016 General Assembly on June 14 -15 in Hong Kong is poised to convene and inspire BCI members from around the world with a distinguished line-up of featured speakers. The topics include transformation in other sectors, to transformative trends in traceability, standards and agricultural research & technology. Helena Helmersson, Global Head of Production, H&M, Alistair Monument, Asia Pacific Regional Director, Forest Stewardship Council , Keshav Raj Kranthi, Director, Central Institute for Cotton Research, Nagpur, Kai Hughes, Managing Director, International Cotton Association and Karin Kreider, Executive Director, ISEAL Alliance are the main speakers at the event.
This meeting serves as a key BCI event and opportunity to inspire and motive members in their efforts to achieve scalable commodity transformation. Prior to the BCI 2016 General Assembly, BCI is hosting a recruitment meeting on June 13 in Hong Kong. This is open to the industry and a great platform for updates on the Better Cotton Standard System and global supply. Attendees will also have the opportunity to hear from members like Nike, and Dayao Textile, and network with the BCI leadership team.
