FW
Cambodia expects garment exports this year to grow by three or four per cent. A top garment-making hub, Cambodia is now the sixth fastest-growing economy in the world over the past two decades, with an average GDP growth rate of 7.6 per cent, thanks largely to garment exports.
Around 30 per cent of its garments are destined for the European Union. The country’s growth in the EU market was largely the result of preferential treatment under the Everything But Arms agreement, which allows its garment products to enter the EU market duty-free due to its status on the list of least developed countries.
Last year, minimum monthly wage of workers in Cambodia’s textile and footwear industry was raised by 11 per cent. Cambodia’s new minimum wage is more than double the minimum wage for garment workers in Bangladesh. The country expects purchasing orders in the garment sector in 2018 to be higher than in 2017.
Cambodia is the fifth biggest supplier of garment and textile products to the European Union. It’s behind China, Bangladesh, Turkey and India. There is a lot of room for progress in the garment sector and many opportunities for the government and buyer companies to work together towards a better future for the industry.
The European Union and Mexico have reached a new agreement on trade, part of a broader, modernised EU-Mexico Global Agreement. Practically all trade in goods between the EU and Mexico will now be duty-free, including in the agricultural sector. Simpler customs procedures will further benefit the EU’s industry, including in sectors like pharmaceuticals, machinery and transport equipment. The agreement also lays down progressive rules on sustainable development.
Among other things, the EU and Mexico have committed to effectively implement their obligations under the Paris Agreement on climate change. It will also be the first EU trade agreement to tackle corruption in the private and public sectors. With this agreement, Mexico joins Canada, Japan and Singapore in the growing list of partners willing to work with the EU in defending open, fair and rules-based trade.
Since the previous EU-Mexico trade agreement came into force in 2000, trade between the EU and Mexico has risen at around eight per cent per year, resulting in an overall increase of 148 per cent in trade in goods over the period. Agricultural exports from the EU are set to benefit the most, such as poultry, cheese, chocolate, pasta, and pork. When it comes to customs procedures, the new agreement will bring in new rules to simplify and speed up paperwork and physical checks at Mexican customs.
Italy-based Garmon Chemicals has launched a Stretch Care collection. In January, the company was acquired by Kemin, a global ingredient manufacturer committed to improving the quality, safety and efficacy of feed, food and health-related products.
Garmon, has set benchmarks in the textiles auxiliaries business. It has been creating special relationships with top denim and sportswear brands, affirming itself as a key player able to offer a fashion-forward approach toward textile chemistry. Now the aim is to become a truly glocal company, make the business more efficient and more eco-friendly by reducing its carbon footprint and saving energy.
Consisting of all eco-sustainable and Green Screen certified products, Stretch Care is a real green package, offering avant-garde solutions. It is a set of truly responsible tools to give the garment a unique personality. In this way the line offers many alternatives and an incredibly flexible product range. Thanks to a special formulation, the Stretch Care collection develops a full range of product treatments with extraordinary characteristics. It minimizes the loss of elasticity, for superior shape retention and recovery performance. It protects fabrics and accessories from damages, greatly improving garment quality and provides the garment with a special personality and extraordinary contrasts. Finally it makes the garment feel incredibly softer to the touch.
The tragedy of Rana Plaza collapse has improved the world’s emphasis on the appalling conditions endured by garment workers in Bangladesh and elsewhere, and put public pressure on western brands to do more to ensure safety and labour rights in their supply chains.
It led to the inception of Accord on Fire and building safety in Bangladesh, an independent, legally binding agreement between brands and trade unions to protect workers. The Accord has 222 signatory companies and is estimated to cover two million workers it has covered 1,600 factories, 767 of which have mostly completed safety remediation.
The agreement also gives greater legal power to workers to ensure brands are protecting them. Earlier this year, the Accord was used by garment worker unions to reach a landmark $2.3m settlement with a multinational apparel brand accused of delays in remedying life-threatening hazards at its factories. As per a Oxfam report an alliance of 13 well-known Australian brands are dragging their feet.
Just Group, Just Jeans, Peter Alexander, Fast Future, incorporating Valley Girl and Temta are among the businesses that did not sign the last Accord and are yet to sign the 2018 Accord. Oxfam Australia chief executive, Helen Szoke, advised the companies to live up to their responsibilities to workers. She stated signing the Accord is about safeguarding the absolute basics in the rights of more than two million garment workers and 70 per cent of whom are women in Bangladesh. She is expecting all suppliers to follow to the ethical sourcing policy to make sure ethical, safe and lawful manufacture and supply of merchandise.
Rural panchayats have opened up ready-made garment manufacturing centers in Tamil Nadu. These centers are jointly promoted by the Tamil Nadu State Rural Livelihood Mission and the Social Welfare Department in Selleppampatti and Thattiengarpatti village panchayats. The manufacturing units were inaugurated by electricity minister P Thangamani and social welfare minister V Saroja on April 22, 2018.
RMG centers will benefit 30 members of women self-help groups in each village of the two panchayats. Thangamani said, a Rasipuram-based firm has signed a contract and will place orders for procurement of ready-made garments. The total outlay of the project is slated to be Rs 3.30 crore.
After the country lost its position as the world’s top supplier, foreign buyers of Philippine garments are looking for a revival of the garments sector. Robert Young, President, Foreign Buyers Association of the Philippines (FOBAP) stated the group will push for the immediate conclusion of a free trade agreement (FTA). Currently, Philippine garments going to the US are taxed 15 to 20 per cent.
Young says members of FOBAP, lost 70 per cent their market from $1 billion 15 years ago due to a number of reasons, primarily the removal of quota system that led buyers to source from other countries offering same products at half the price. Inclusion of garments in the US Generalized System of Preferences (GSP) as being lobbied by the Philippines, would also be a big help but the tax privilege is subject to graduation that they could lose in two years.
FOBAP plans a campaign for FTA in the US following a proposed bill that would have given Philippine garments preferential treatment not being passed by the US Congress. This would be the third attempt to revive the industry through the US. Young however says, it is not all bad news for the industry as big brands, still source from the Philippines as they are high priced items and cannot be competed with the basic garments like T-shirts which cost twice as much to produce.
Young also says incentives offered in Philippines are not enough, as these are limited to tax holidays and bonded warehousing. Even finding an economic zone under Philippine Economic Zone Authority which offers 5 per cent tax rate and tax and duty-free importation of raw materials, is not enough.
Young admits Philippines has also lost its efficiency and factories have become outdated especially with the advent of robotics, digital cutting and sewing. FOBAP members that include big retail chains Neiman Marcus, Walmart and JC Penney, have been conducting roadshows to teach factories about social compliance on like wages, working conditions to make sure there is no child labor or sweatshops. The FOBAP’s membership too has dwindled, from 75 to 40. It targets $850 million in exports this year for all items bought by members.
Pakistan’s textile exports rose 7.2 per cent during the first eight months of the current fiscal year. Textile exports make up around 60 per cent of the country’s total exports. Knitwear exports went up 13.43 per cent year-on-year, but came down 9.11 per cent month-on-month, whereas bed linen shrank 3.27 per cent year-on-year and 5.24 per cent month-on-month.
Readymade garments stepped up 7.8 per cent year-on-year, but dropped 8.7 per cent month-on-month. Cotton cloth exports increased 13 per cent during February compared to the same month a year before, but fell 3.4 per cent compared to January. However, the country saw its total textile exports decline by 10 per cent between 2011 and 2018.
Other economies like China, India, Bangladesh, Sri Lanka and Vietnam saw their exports grow at a compound rate of 20 per cent or above during the same period.
Vietnam a relative newcomer in the sector posted a compound export growth of 107 per cent followed by Bangladesh with 61 per cent. In value added textiles, particularly garments and knitwear, Pakistan lacks the variety both in products and the types of fabrics used. The country does not produce the blended yarn and blended fabric that the global market demands.
A recent study released five years after the Rana Plaza disaster revealed, when it comes to labour conditions in supply chains, top luxury brands including Christian Dior, Dolce and Gabbana and Chanel are among the least transparent businesses. According to this year’s Fashion Transparency Index D&G, Chanel, Marc Jacobs, Versace and Giorgio Armani scored less than 10 per cent of the total available points and Dior reveals virtually nothing about where its clothes are made.
The report was published by Fashion Revolution, a campaign group set up after the collapse of Rana Plaza, a complex of garment factories in Bangladesh, which killed more than 1,100 workers. It ranked companies based on how open they were about where their clothes were made, who was responsible for conditions in their supply chain and how they dealt with trade unions.
Sportswear makers like Adidas, Reebok and Puma are the most transparent brands, while the top UK companies on the list were Marks & Spencer and Asos. Many large mass-produced brands had upped their game after attracting negative attention says Peter McAllister, executive director of the Ethical Trading Initiative campaign.
Indian exporters want the ban on letter of undertakings (LoUs) to be revoked as they say the ban will impact exports. LoUs are used by the gems and jewelry sector and by the textiles and leather industry. Gems and jewelry exports have contracted by a massive 36 per cent following the regulatory actions. And alternatives for LoUs like bank guarantees increase the cost by one or three per cent.
LoUs were banned following the discovery of the Nirav Modi scam, the biggest fraud in the domestic banking history early February. Letter of undertaking is a form of bank guarantee under which a bank can allow its customer to raise money from another Indian bank's foreign branch in the form of a short term credit.
For raising the LOU, the customer, the importer, is supposed to pay margin money to the bank that issues the LOU and accordingly they are granted a credit limit. Once the letter of credit is acknowledged and accepted, the lender (foreign branch of Indian bank) transfers money to the nostro account of the bank that has issued the LoU. Even in the labor intensive sectors, India is losing out on competitiveness to Bangladesh, Vietnam and Myanmar, which are taking the lead in apparel exports.
Worried about India’s falling readymade garments (RMG) exports, garment exporters are now demanding lowering lending rates and new incentive schemes. As per recent data released by Directorate General of Commercial Intelligence and Statistics (DGCI&S), there has been a decline of 7.60 per cent in India’s RMG export in the financial year 2017-18 as compared to 2016-17. Total RMG exports from India was Rs 1,16,554 crores in 2016-17 which has fallen to Rs 1,07,698.80 crore in 2017-18.
Alarmed over the fall, prominent garment exporters of Ludhiana held a meeting organised by Apparel Exporters Promotion Council (AEPC) and discussed their next course of action. Harish Dua, president, Knitwear and Apparel Exporters Organisation, and executive member of AEPC, said in nine months, India’s RMG exports has decreased because of the non-seriousness of the Union government to solve issues regarding garment exporters. No new initiatives have been taken by the government to revive exports.
He further added that the ministry of commerce will start new schemes to encourage the exporters and also introduce incentives to support the sector. Narinder Chugh, a permanent invitee to AEPC, stated from the past one year, growth of garment exports has decreased but it can be overcome if the government takes some initiatives such as reduction of interest rates on bank loans for exporters to 2 per cent; solving the issue of delay in GST refunds and bringing new schemes for TUFS can change the whole situation.
