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News Clips 17 April, 2013




[ Textile sector - where is the value addition ]
[ Bangladesh trade deficit narrows by 26% due to higher exports ]
[ European brands agree to compensate Tazreen victims ]
[ The WTO expects to see an improvement in clothing and textile trade ]

Textile sector - where is the value addition   [ top ]

BUSINESS RECORDER, BR Research, April 16, 2013
Cloaked by the protectionist policies extended regime after regime, Pakistan’s textile industry is a coddled child. And the outgoing government has done more than its share to fuel the industry’s incompetency during its reign.

Despite the fact that the government provided a helping hand to the textile industry on everything from agricultural inputs to the provision of gas at the cost of holding other industries hostage, the sectors inherent inefficiencies coupled with the energy crises debacle and double-digit inflation have pushed up the prices of Pakistani textiles to uncompetitive highs.

The last five years have consequently seen softening external demand for the country’s textiles, making closures and dwindling capacity utilisation the norm.

During the PPP-led coalition, the labour and capital transfer as a result of Pakistani textile industries shifting shop to Bangladesh is another blow that needs special mention, and not just because of the obvious effect it had on the local industry.

One justification that has been extended has been that Bangladesh - with its Preferential Trade Agreements with major importing nations which allow it non-tariff access to these markets - was the right place to be at. While there may be some truth to it, if that were the biggest reason of this outflow, India and China, the biggest competitors within the region would have lost looms to Bangladesh too.

And since that did not happen, the capital flight hinges unflinchingly on the outgoing governments lack of ability to provide a cohesive environment that could direct the sectors growth in the right direction.

Another important function contributing to the sectors underperformance these past few years has been the continued lack of investments into new machinery, and technology, which has blighted the export competitiveness of the country’s textile.

And it has worsened over the course of the last few years as a result of high interest rates of bank financing which has increasingly hindered up gradation.

During the current governments reign, Pakistan has been able to add only about 2.6 million spindles and over 3,100 shuttle-less looms, taking the total installed spindles to 11.4 million and shuttle-less looms to 24,000, whereas, during 2006-11, India added 15.33 million spindles and more than 30,000 shuttle-less looms to its textile sector, taking the total to 41.27 million spindles and around 38,000 shuttle-less looms.

The outgoing government also did little during its reign to devise a cohesive plan to bring the value-added sector - which is made up of an unorganised and fragmented mass of units- up to par.

Despite a commendable initiative to devise the first ever Textile Policy in the history of the country, the last few years have seen the countrys textile make little head-way up the value addition ladder. As a result, the export of value-added made-ups- which should technically be contributing the plumpest share of foreign exchange earnings to the exchequer- have been in a steady decline.

And while export in absolute terms have climbed up during the 12 months, they have been largely at the hands of exorbitant amounts of yarn dispatches to China- which altogether speaks volumes about the foresight of both policy-makers and industry players who sit jubilant on the pile of dispatches sent out to countries like China which are now choosing to add value to its textiles from the spinning stage forward.

For a sector that had the capacity to get up and climb higher even in the post quota-era of global textile trade, the last four years performance in a nutshell is a tale riddled with a myriad of problems. And the penchant for the textile lobby to blame the government for all its woes, while not completely justified is not entirely baseless either.

Bangladesh trade deficit narrows by 26% due to higher exports   [ top ]

REUTERS, Apr 15, 2013
DHAKA (REUTERS) - Bangladesh's trade deficit narrowed by 26 per cent in the first eight months of fiscal 2012/13 compared to the corresponding period a year ago, helped by strong export growth in garments, a central bank official said.

"The increase in exports is a clear indication that the economy is moving forward," Mr Mohammed Allah Malik Kazmi, an adviser at the central bank, said.

Total exports in the first eight months of Bangladesh's July-June financial year increased by 9.4 per cent to US$17.4 billion (S$21.5 billion) compared with US$15.9 billion over the corresponding period of the last fiscal year. Garments make up more than 80 per cent of Bangladesh's overseas shipments.

European brands agree to compensate Tazreen victims   [ top ]

INDUSTRIALL, April 16, 2013
Major European retailers C&A, KiK and El Corte Inglés will contribute to a compensation plan for the victims of the Tazreen Fashions fire in Bangladesh.

The brands made the commitment at a meeting held on 15 April in Geneva to discuss a 5.7 million USD compensation plan for the victims of the Tazreen Fashions fire in Bangladesh, which killed 112 workers and injured about 120 in November 2012. The meeting was hosted by IndustriALL Global Union and attended by major European retailers, a leading Bangladesh trade unionist, the Clean Clothes Campaign and the Worker Rights Consortium.

In an outrageous display of indifference to the suffering of Bangladeshi families, major US corporations Walmart, Sears/Kmart and Disney refused to pay any compensation to the victims and failed to attend the meeting. Walmart was apparently the largest buyer from the Tazreen factory. The companies, which failed to enforce their own worker safety standards, have claimed to be deeply saddened by the deaths.

Major European retailers C&A (Netherlands), KiK (Germany) and El Corte Inglés (Spain) attended the meeting and agreed to make substantial contributions to the compensation plan for the families of the dead and for the injured. The Italian clothing brand Piazza Italia did not attend but has agreed to participate in the package.

"We have agreed on confirming the concrete amounts that each of these brands will contribute by the end of this month," says IndustriALL General Secretary Jyrki Raina. "The families and the injured have already waited far too long." Other companies that were sourcing from Tazreen and failed to attend include Hong Kong based trader Li & Fung, Teddy Smith (France), Edinborough Woolen Mills (UK), Dickies (US) and Karl Rieker (Germany). Li & Fung has however agreed to paying compensation.

The compensation plan, developed by IndustriALL and its affiliates in Bangladesh and supported by international labour rights groups, is based on the compensation formula used in other recent fires. These include the December 2010 fire at That’s It Sportswear, a factory producing for Gap and other US brands, and the fire this January at Smart Export Garments, which was producing clothes for Inditex and others. The details of the plan will be worked out in a subsequent meeting to be held in Dhaka, Bangladesh.

Says Ineke Zeldenrust from the Clean Clothes Campaign, “We once again call upon Walmart and the other major companies sourcing from Tazreen to aid the families of the dead and the injured workers. Their refusal to do so indicates a shocking lack of concern for the rights and well-being of the workers who make their clothes and who, in this case, were injured or killed in the process."

The WTO expects to see an improvement in clothing and textile trade   [ top ]

FASHION MAG, April 15, 2013
After sluggish growth in 2012, the World Trade Organization is expecting to see improvements across several sectors in 2013, including clothing and textiles.

“Most other sectors saw improvements in year-on-year growth between the third and fourth quarters, which suggest that a recovery in trade may be under way,” said the WTO in a press release. “Clothing and textiles went from –8% to –1%.”

In 2012, international trade grew only 2% compared to 5.2% the previous year. For the coming year, the WTO expects to see and improved growth rate of 3.3%. Improved economic prospects for the United States in 2013 are expected to be offset by continued weakness in the European Union.

“The events of 2012 should serve as a reminder that the structural flaws in economies that were revealed by the economic crisis have not been fully addressed, despite important progress in some areas. Repairing these fissures needs to be the priority for 2013,” Director General Pascal Lamy said.