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News Clips 1 April, 2013


[ Amnesty scheme: Textile units deposit over Rs2bn to avoid action ]
[ India offers concessions for apparel exporters ]
[ China manufacturing index shows new growth ]
[ Unrest in Bangladesh may push garments to Cambodia ]
[ Myanmar textile exports surpass $1b ]

Amnesty scheme: Textile units deposit over Rs2bn to avoid action    [ top ]

BUSINESS RECORDER, Sohail Sarfaraz, March 31, 2013
ISLAMABAD: The Federal Board of Revenue has received a very positive response from textile sector to the amnesty scheme: till Saturday, the units deposited over Rs 2 billion to avoid penalty/additional tax, default surcharge and criminal proceedings from April 1, 2013.

Sources told Business Recorder here on Saturday that banks remained busy in entertaining textile units’ owners rushing to the banks to deposit sales tax throughout the day that generating over Rs 2 billion from amnesty scheme. There was an overwhelming response of the textile sector to the amnesty scheme and all relevant banks were jam-packed to avail the benefit of amnesty scheme at the earliest possible. Textile units preferred to clear their liabilities instead of facing special squads who would arrest the defaulters. Similar, positive trend was expected on the last day of the amnesty scheme as textile sector is all out to clear their liabilities at a lower rate of 2 percent instead of 16 percent. From April 1, 2013, sales tax would be recovered on the basis of standard rate of 16 percent with default surcharge and penalty besides prosecution.

In order to facilitate taxpayers in five leading export sector to clear their sales tax liabilities, the FBR has allowed registered persons to deposit sales tax at lower rate of 2 percent in banks by March 31, 2013 and avail facility of filing special return under SRO 179(I)/2013 beyond deadline of March 31.

Sources said that the registered persons, who would deposit sales tax in banks through computerized payment receipts (CPRs) by last date of March 31 under SRO.179(I)/2013, can submit special sales tax return later. As a special case, the FBR will treat the special returns as valid in cases where due amount has been deposited through CPRs in banks by March 31.

“Textile units having difficulty in filing special returns, but if they deposit sales tax by March 31, shall still be entitled to amnesty under SRO.179”, FBR announced.

Sources said that the textile sector has positively responded to the amnesty scheme and deposited over Rs 2 billion till March 31. The scheme has attracted a number of textile units which has overburden the normal working of the banks on Saturday. Most of the textile units are interested to clear their past sales tax liabilities under SRO 283(1)/2011, SRO 1058(1)/2011, SRO.1125(1)/2011 on payment of 2 percent sales tax without any default surcharge or penalty.

Sources said that a number of textile units visited banks across the country to despot the sales tax at lower rate of 2 percent. The FBR has witnessed an encouraging response of the textile units which are ready to clear their past liabilities at a lower rate of sales tax. It is expected that the same trend would continue on March 31 (Sunday) and textile units would avail opportunity of paying sales tax at a lower rate of 2 percent.

Sources said that the FBR has issued instructions to the Regional Tax Offices (RTOs) to constitute special teams to initiate criminal proceedings against the defaulted units from April 1, 2013. The FBR has decided to charge standard rate of 16 percent sales tax during recovery drive against the defaulted units. The Board would register FIRs against the textile units which would not avail the scheme till March 31 and initiate criminal proceedings against them. The FBR will also impose standard rate of 16 percent sales tax during recovery action against the units which failed to avail the amnesty scheme.

According to the amnesty scheme, all registered persons, who claimed zero-rating on supplies made by them in terms of SRO.283(1)/2011, dated April 1, 2011, S R O 1058(1)/2011, dated November 23, 2011 and SRO.1125(1)/2011, dated December 31, 2011, during the period from April 1, 2011 to February 28, 2013 may, with respect to all or part of such supplies on which due tax has not been paid and irrespective of the past or present registration status of the buyers, pay sales tax at the rate of 2 percent of the value of such supplies through a special sales tax return to be prescribed by the Board, along with details of all sales tax invoices against which such payment is being made, without any default surcharge or penalty, provided that such payment is made on or before March 31, 2013. The notification shall not entitle any person to claim refund or adjustment against any sales tax paid on such supplies at a higher rate, SRO 179 (I)/2013 added.

India offers concessions for apparel exporters   [ top ]

TIMES ONLINE, March 27, 2013
India has offered concessions for apparel exports from Sri Lanka. The concessions were sought by Sri Lanka during the visit of Anand Sharma, Minister of Commerce, Industry & Textiles, Government of India to Sri Lanka from last year. Sri Lanka had made a request that, in respect of the export of Sri Lankan garments to India under the India-Sri Lanka Free Trade Agreement, the condition of sourcing of fabric from India for 5 million pieces be removed so that the total quota for duty free apparel exports from Sri Lanka to India becomes 8 million pieces, without any condition on fabric sourcing.

“As committed by Anand Sharma, the Government of India has approved the Sri Lankan request for removal of the fabric sourcing condition, thereby bring to 8 million pieces the number of garments that can be exported from Sri Lanka to India duty-free, under the terms of the bilateral Free Trade Agreement. The relevant notification in this regard was formally handed over to the Director General, Department of Commerce, Government of Sri Lanka’ the High Commission of India said in a press release.

“Further, the Government of India also notified SAFTA duty concessions on 6 September 2012. Under this revised SAFTA duty regime notified by India for non-LDC countries, Sri Lankan textiles exports would attract a duty of 5%, as against the earlier 11%. This is another step that will facilitate greater Sri Lankan exports of readymade garments to the Indian market”, the release said. The release also said; On 27 February 2013, the High Commission of India had informed the Ministry of Commerce and Industry, Government of Sri Lanka, regarding the decision of the Government of India to extend the validity period of Sanitary Import Permits (SIPs) for export of meat products to India. The extension was accorded in response to a request made by the Sri Lankan Industry and the Department of Commerce of Sri Lanka. As per the new notification by the Department of Animal Husbandry, Dairying and Fisheries, Government of India, the permits will now be issued for imports of processed livestock products into India for a period of one year. The validity period earlier was six months.

It may be recalled that during the 8th India-Sri Lanka Joint Commission meeting held on 22 January 2013 at New Delhi, both countries had agreed to cooperate closely to forge closer economic and trade linkages and take steps to double the bilateral trade to reach US $ 10 billion in next three years. The two sides also agreed to consider working towards increasing Sri Lanka’s export capacity. By providing greater market access to Sri Lankan readymade garments and implementing trade facilitation measures such as extending the validity of sanitary import permits, the Government of India’s commitment to facilitating Sri Lankan exports and enhancing bilateral trade is clear.

Sri Lanka’s export to India has increased substantially since the coming into force of the India-Sri Lanka FTA, reaching USD 720.89 million in the year 2011-12, according to statistics compiled by the Department of Commerce, Government of India. For the period April-December 2012, Sri Lanka’s export to India were USD 528.76 million.

China manufacturing index shows new growth   [ top ]

AFP, April 1, 2013
Manufacturing activity in China expanded at its fastest pace in almost a year last month, official data showed Monday, indicating conditions in the world's number two economy continued to improve.

The official purchasing managers' index (PMI) hit 50.9 in March, the highest since April 2012 when the figure stood at 53.3, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP).

PMI is a widely watched barometer of the health of China's economy, with a reading above 50 indicating expansion while anything below points to contraction.

The March reading improved from 50.1 in February and signalled the sixth consecutive month of expanding manufacturing activity in the country.

The rebound in PMI last month was led by increasing new orders as demand improved, driven by exports and investment, said Zhang Liqun, a government analyst, in a CFLP statement.

"The current data showed the economy generally remained stable. But we have to keep a close eye on changes that may take place in the coming months," Zhang said.

British bank HSBC- whose survey focuses more on smaller enterprises -- said its final PMI for March stood at 51.6 in March, up from 50.4 in February, when the reading dipped to its lowest since October.

"China's recovery continues, mainly driven by the gradually improving domestic demand conditions," said Qu Hongbin, a Hong Kong-based economist with the bank, in a statement.

Declining input prices and "lingering external headwinds" -- an apparent reference to the eurozone's woes and the sluggish US recovery -- indicated that inflationary pressures were easing, he said.

China's economy expanded 7.8 percent in 2012, its slowest pace for 13 years, in the face of weakness at home and in key overseas markets.

But growth accelerated in the final three months of last year to 7.9 percent, snapping seven straight quarters of weakening expansion.

However, government figures pointed to a slowdown in retail sales growth last month, suggesting the budding recovery may be fragile.

China's inflation hit a 10-month high of 3.2 percent in February, up from January's 2.0 percent, as holiday season spending and rapid credit growth accelerated price rises.

Unrest in Bangladesh may push garments to Cambodia   [ top ]

THE DAILY STAR, March 28, 2013
The ongoing political unrest in Bangladesh continues to upset the country's garment sector as buyers are now arranging to meet apparel makers in India or China, to avoid the turbulences in Dhaka.

Many buyers have already suspended trips to Bangladesh, and some have even expressed their intention to purchase garments from other countries at higher prices due to the uncertainties in Bangladesh.

If the situation worsens further, it will be difficult to achieve the export target of US $21.53 bln at the end of the current fiscal year, exporters said.

The sector earned US$13.83 bln in the first eight months of the current fiscal year, which is around 3 per cent higher than the target set for the period.

"Buyers are very cautious now," said a European buyer operating in Dhaka. He had cancelled three trips in the last one month due to shutdowns, he said.

Failing to arrive in Dhaka, the senior officials of the company called the garment makers to meet in India or China, he added. The buyer has also decided to slash 50 per cent of its orders and shift those to other countries, even at higher prices, to cope with the lead time.

"The European buyers are now waiting and watching the situation, but some US buyers like the retail giant Walmart have already hinted at reduced purchase from Bangladesh," said a German buyer.

In January, Walmart warned its suppliers worldwide of a new "zero-tolerance" policy against unauthorized subcontracting and announced factory health and safety initiatives, Bloomberg said in a report.

The company also has a strategy to reduce its reliance on Bangladesh, it added.

If Walmart did move some of its apparel manufacturing out of Bangladesh, there are at least two other places it might go: Cambodia, where the average wage is 29 cents an hour, and Vietnam, where workers make about 55 cents an hour.

Walmart’s labor costs would go up, but it could benefit from the better infrastructure available in those countries, the Bloomberg report said.

This is the time for Bangladeshi manufacturers to receive orders from buyers for the next winter season, said Bakhtiar Uddin Ahmed, general manager at Fakir Apparels Ltd, a garment maker.

Buyers may opt for other destinations if the situation in Bangladesh does not improve, he said.

Myanmar textile exports surpass $1b   [ top ]

INVESTVINE, Arno Maierbrugger, March 28, 2013
Exports of textiles and garment exports from Myanmar have exceeded $1 billion at the end of the country’s fiscal year in March, according to the Myanmar Garment Manufacturers Association.

“Prices are up this year and foreign investors are looking to invest in the textile industry,” an association spokesperson said. Khin Maung Aye, managing director of Lat War garment factory said growth will begin surging when the European Union’s generalised system of preferences, which gives duty-free access to exports from least developed countries, is reinstated for Myanmar in June 2013.

The industry is expected to grow to 2,000 garment factories, creating about 1.2 million jobs in total, Aye was quoted as saying by Eleven Myanmar. The Myanmar Investment Commission has already said it granted approval to 10 companies to open garment factories in industrial zones this year.

Myanmar’s large and inexpensive labour market has caught the eye of global manufacturers, but it will need to upgrade logistics, improve power supply and infrastructure and ensure compliance with international labour standards, including a ban on child labour, to attract buyers from global brands, they say.

For investors in energy-consuming textile factories, it is particularly frustrating there is no immediate solution in sight to bridge the gap between electricity supply and demand. The Yangon Electricity Supply Board has been cutting electricity in several industrial zones in the Yangon region from January 1, 2013 by seven hours a day from 4pm to 11pm.