FW
Sri Lanka has cut reduced the value added tax (VAT) on imported fabric from 15 per cent to 5 per cent considering the requests made by stakeholders in the fabric industry. The ministry noted that 5 per cent rate had been set for the industry on Aug. 16. But smaller companies not covered by VAT appealed, saying the tax would have a negative impact on them.
The ministry then decided to reduce the VAT on imported fabric to 5 per cent in order to lend helping hand to proposed small-scale industrialists under the Enterprise Sri Lanka Program. This is a subsidised loan plan introduced by the ministry to help medium and small-scale manufacturers obtain fabric at a lower cost.
As per the Sri Lanka Apparel Export Association, the country’s apparel exports grew by 4 per cent to $2.8 billion for the first half of the year compared to the same period a year ago. U.S. apparel imports from Sri Lanka declined by 12.15 per cent to 28.93 sq. mt. equivalents in July compared to a year earlier. For the year through July, apparel imports from Sri Lanka reduced by 4.65 per cent to $1.84 billion worth of goods, giving the country a 4.65 per cent market share.
Fashion and textile companies in Norway have come together for the fourth year on a collaborative textiles campaign. They include recycling giants and rental and repair companies. Led by the Varner Group, Lindex, H&M, Pierre Robert Group, Bergans, KappAhl and Kid Interior, joined forces with conversation organisations, recycling-giants Fretex and UFF and rental and repair companies for the 2018 campaign – Tekstilaksjonen. While previous events have focused on recycling, this year’s key themes are textile reduction and prolonged use.
Rental, co-ownership, sharing and swapping are the recurring themes and seen as business models for the future – also for the major retail brands who are painfully aware that business as usual is no longer an option. Several companies who otherwise are fierce competitors are now cooperating on sustainability initiatives. To make the commitment more binding, this year’s textile campaign culminated with all participants signing a five-point manifesto, where environmental footprint reduction was at the top of the agenda.
Companies are looking at cutting down the number of styles for each season so that retailers do not end up with excess stock. They have also increased prices, in order to make it economically viable to use better and more expensive raw materials. Apparently customers are willing to pay for better quality. Norwegians have increased recycling from 59 to 79 per cent. A campaign asks them to hand in their used underwear and socks.
Italy-based Itema believes that weavers worldwide always deserve the latest and the most advanced technology available in the market. The company will present its latest weaving solutions at upcoming ITMA Asia 2018 in Shanghai next month.The second generation Itema denim-dedicated rapier weaving machine, the R9500²denim, provides denim weavers extraordinary advantages. Unparalleled cost savings, superior fabric quality and outstanding user-experience are the key words of the R9500²denim, which features breakthrough devices. It saves energy consumption and is equipped with the iSAVERTM, a revolutionary device, which eliminates waste selvedge on the left-hand side of the fabric.
The R9000² also leads to significant energy savings. The machine’s ergonomy guarantees an outstanding user-friendliness by facilitating machine accessibility for the weaver when carrying out daily textile operations.
The R9500 terry is the champion of the worldwide high-end terry weaving market. The continuous roll-out of customized special versions tailored for technical fabrics, as well as dedicated devices for each application, make the R9500 the perfect machine for the manufacture of the full range of technical textiles, including ones with the finest monofilament yarn, multifilament yarn with high tenacity, and multiple pick insertion fabrics. A sustainable approach to fabric production is possible thanks to a significant reduction in resource use and waste.
Itema, is the world’s largest privately held provider of advanced weaving solutions, including best-in-class weaving machines, spare parts and integrated services.
The Italian fashion industry has responded to a scathing New York Times report published last week highlighting the plight of Italy’s underpaid and undeclared home garment workers. NYT, in its report titled ‘Inside Italy’s Shadow Economy,’ had described the fashion industry in Italy as a distressed labor market” where thousands of low-paid home workers create luxury garments without contracts or insurance with some earning less than 2 euros per hour and working up to 18-hour days sewing luxury garments that retail 1,000-times that amount.
The Italian fashion industry however disagrees with the publication’s characterisation, saying the issue of underpaid and undeclared home garment workers is limited and already being addressed. Camera Nazionale della Moda Italiana (CNMI), the Italian chamber of fashion in its official statement, reiterated CNMI’s commitment towards making the Italian supply chain resilient, fair and humane on every front. The chamber continues to implement solutions using its evidence-base and by working collaboratively.
India is raising import tariffs on items such as air conditioners, refrigerators, footwear, speakers, luggage and aviation turbine fuel. The move is aimed at reducing its widening current account deficit and tackling a sharp slide in the rupee. It could hit imports from countries like China and South Korea, which manufacture some of the high-end washing machines, refrigerators and air conditioners sold in India.
The rupee has weakened by more than 12 per cent this year and is Asia’s worst performing currency. But there are doubts if the move can rein in the rupee weakness since the demand for the high-end goods is largely price inelastic. It is felt the central bank needs to intervene more actively in the forex market to support the rupee and that tariff measures won’t help in the long term.
The decision could also sting India’s gem and jewelry sector as the tariffs have been raised on imported diamonds and gemstones. The current account deficit last stood at around 2.4 per cent of the GDP, in the April-June quarter, and it is expected to widen to 2.8 per cent for the year ending March 2019. The effective import duty may also be raised on some steel products.
Jesmina Zeliang, a woman entrepreneur from North East, who is also one of the members of Committee of Administration of EPCH has been nominated President-Reception Committee, IHGF-Delhi Fair Autumn 2018. Owner of Nagaland-based Heirloom Naga, she has given a huge boost to exports of cane and bamboo and artisanal handcrafted textiles from the Northeast regions since 1993. Zeliang is actively engaged in empowering women from marginal communities and tribes in Northeast India.
Export Promotion Council for Handicrafts[EPCH], a nodal agency for promotion of exports of handicrafts, has been organising the IHGF-Delhi Fair for the last 24 years. IHGF-Delhi Fair Autumn is expected to generate numerous enquiries and orders.
Australian wool prices are up 20 per cent. Australia controls 90 per cent of global fine-wool exports, where demand is being driven by Chinese wool mills and Italian garment makers. While wool has long been used by suit-makers, the surge in popularity is being driven by fitness and leisure clothing manufacturers looking for soft, durable and natural fibers.
But drought savaging Australia's east, where the bulk of the country's wool is produced, is hitting flock numbers, leading to lower production, threats to quality, and higher prices.
Like any commodity, wool has had its ups and downs, with sharp price spikes followed by troughs. This has prompted many overseas buyers to run down their stocks and wait for prices to fall. The wool industry in Australia has a big base of Chinese clients who mill the raw wool into fabric.
The threat of a fairly dramatic reduction in supply next year is underpinning the market. Many Australian farmers, meanwhile, are selling their older sheep to reduce their exposure to rocketing feed costs as the drought lingers, and to take advantage of high mutton prices. Lamb and sheep sales are running at around 15 per cent more than this time last year.
China will lower import tariffs on 1,585 goods including machinery, paper, textiles and construction materials from November 1, to reduce the costs for customers and companies even as its trade war with the US deepens. The combination of these and other tariff cuts this year will lower the tax burden on consumers and companies by about 60 billion yuan ($8.7 billion). The government has yet to detail how the general tariff cut will apply to US goods affected by retaliatory tariffs in the trade war.
The average import tax for some machinery will be reduced to 8.8 percent from 12.2 per cent, for textiles and construction materials to 8.4 per cent from 11.5 percent, and for paper and some other products to 5.4 per cent from 6.6 per cent, the radio station reported. This will lower the average most-favored nation tariff rate to 7.5 per cent from 9.8 per cent. China still has a higher average tariff rate than many developed economies. The US’ average applied MFN rate was 3.4 per cent in 2017.
"Nearly 7,000 RMG facilities in Bangladesh produce 16 per cent of all manufactured goods and employ 55 per cent of all workers in the manufacturing sector, says a report. Readymade garments account for 83 per cent of per annum exports. Bangladesh is heavily reliant on RMG exports and the signs can be alarming. Factors such as changes in trade relations, costs and access to shipping and logistical routes, raw material costs, and consumer tastes and attitudes can hamper growth of the industry and economy in turn."
Nearly 7,000 RMG facilities in Bangladesh produce 16 per cent of all manufactured goods and employ 55 per cent of all workers in the manufacturing sector, says a report. Readymade garments account for 83 per cent of per annum exports. Bangladesh is heavily reliant on RMG exports and the signs can be alarming. Factors such as changes in trade relations, costs and access to shipping and logistical routes, raw material costs, and consumer tastes and attitudes can hamper growth of the industry and economy in turn. Garment workers’ unions are currently negotiating a raise in monthly minimum wages that is three times higher (Tk 16,000) than the current wage (Tk 5,300). The fact is Bangladesh’s export competency lies in its low cost labour and a wage hike would ultimately hamper trade dynamics.
To evade over dependence on garments sector, the Bangladeshi government has launched an export diversification program in the manufacturing sector. The program is the product of a larger initiative aimed at increasing overall standard of living in Bangladesh with the goal of emerging as a middle-income country by 2021. Consisting of two five-year plans (FYP6 2010-2015 and FYP7 2016-2020), the program is supported in part through financing from the World Bank and covers everything from infrastructure to education to industry to women's empowerment.
If the government wishes to achieve its 2021 goal of manufacturing, which represents 90 per cent of exports, it would have to increase output substantially and secure a 28 per cent share of the GDP up from roughly 20 per cent. This is only possible if RMG production continues to achieve double-digit growth annually.
New economic policies
The reason behind such sustained growth has been industry-friendly policies, which include duty-free import of
inputs, bonded warehousing facilities, back-to-back LC, rapid custom clearance. Part of the diversification plan is to utilise these same policies for the sectors whose export potential the government is seeking to boost.
While companies who may be looking to source apparel from Bangladesh in the long-term will need to be mindful of the changing economic landscape, this push towards diversification doesn’t mean RMG industry will not get its due importance. In fact, one of the stated elements of manufacturing diversification is to increase the quality of existing sectors, one of which would be readymade garments. The incredibly favourable economic policies geared toward maximising the competitiveness of RMG exports are not so easily undone and could easily outweigh any added cost of a minimum wage increase.
Points to ponder
Meanwhile, RMG manufacturers are increasingly being pressured to bear more costs of production, taking responsibility for purchase of fabrics, development of samples, costs of couriers, and, in some cases the holding of stock. And to do so, there needs to be improvements at every step. The first improvement should be in planning and consistency of the buyer’s business with suppliers. Lack of accurate forecasting by customers can lead to large and unpredictable orders being placed at the lowest possible cost, with insufficient time for the manufacturer to produce the goods without the use of over-time or sub-contraction of orders. If consistent forecasts can be provided by the customer, the manufacturer is able to allocate necessary man-hours and capacity to fulfill the orders. Next, they need to create awareness about the importance of design and development. The costs of these developments are absorbed by suppliers and yet the rewards can be low, given the investment in time and resources required for the development of product.
Besides, buyers should be encouraged to support and incentivise development of sustainable business practices by suppliers. The future success of global garment supply chain hinges on the adoption of fully sustainable, transparent business practices, not only in Bangladesh, but around the world. There needs to be a sea change in the buying practices and that needs to be combined with a standardised, global set of criteria that is agreed by all customers for the manufacturing of garments, regardless of the origin of the goods being manufactured.
A woman entrepreneur from North East-Ms. Jesmina Zeliang, who is also one of Members of Committee of Administration of EPCH has been nominated as President – Reception Committee- IHGF-Delhi Fair Autumn 2018. Her company M/s Heirloom Naga from Nagaland is increasing exports of cane and bamboo and artisanal handcrafted textiles from the North East since 1993 by participation in various Zeliang is actively engaged in empowering women from marginal communities and tribes in North East of India.
Export Promotion Council for Handicrafts[EPCH], a nodal agency for promotion of exports of handicrafts from the Country to various destinations of the world, has been organising the IHGF-Delhi Fair for the last 24 years. IHGF-Delhi Fair Autumn is expected to generate a large amount of enquiries and orders.
