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News Clips 22 August, 2013

 Govt takes various measures for increasing exports, NA told ]
[ BD: textile, social accountability ]
[ Dhaka, Delhi eye bigger textile coop ]
[ China buys 140 million-kg yarn from India in two months, crisis-ridden textile industry cheers ]
[ Philippines applying for EU GSP ]

Govt takes various measures for increasing exports, NA told   [ top ]

DAILY TIMES, Ijaz Kakakhel, August 18, 2013
ISLAMABAD: The National Assembly on Friday was informed that the government has taken various measures including active trade diplomacy for increasing country’s exports.

The legislators were told that through active trade diplomacy, the government is trying to get better market access for the local businesses in international markets by concluding Free Trade Agreements (PTAs) and Preferential Trade Agreements (PTAs) with different countries.

Steps have been taken to improve export of Pakistani products to the new and existing markets of different regions.

Americas: In order to improve export of Pakistani products, Commerce Division in collaboration with United States Trade Representative (USTR) Office have conducted one seminar and three web-based interactions during the last 12 months to educate exporters on the opportunities available under US Generalised System of Preferences (GSP) Scheme. Second US-Pakistan Business Opportunities Conference was held on June25-26, 2013 in Dubai, UAE. The conference provided an opportunity to US and Pakistani businessmen and investors to interact and enter business deals.

With the approval of Federal Cabinet Commerce Division has forwarded draft text of Memorandum of Understanding between Ministry of Commerce Pakistan and Ministry of Foreign Affairs, International Trade and Worship of the Argentine Republic in the field of trade promotion and technology transfer in international trade. The MoU would be signed during the next high-level visit from either side. The Commerce Division has constituted a Joint Study Group (JSG) with Chile to explore possibilities of FTA between the two countries.

Agreement on South Asian Free Trade Area (SAFTA): To enhance regional trade, SAFTA was signed on April 11, 1993 in Dhaka to provide preferential tariff concession on regional imports of member countries. Later, the agreement on SAFTA was signed during the 12th SAARC Summit held in Islamabad on January 6, 2004. The agreement was enforced from July 1, 2006. Presently, SAARC member states are in the process of reducing their sensitive lists under SAFTA. A sub-group on Non-Tariff Measures (NTMs) has also been established in order to effectively address the issue of NTMs including standards, testing and certification.

Pakistan-India trade normalisation process: Pakistan and India are in the process of normalising bilateral trade relations under resumed Composite Dialogue. As a first step, negative list of 1,209 tariff lines has been notified. With the phasing out of negative list by December 31, 2012, complete trade normalisation with India will be in place subject to the removal of the non-tariff barriers by the Indian government.

Pakistan-Sri Lanka FTA: Pakistan concluded an FTA with Sri Lanka on August 1, 2002, which is effective since June 12, 2005. Under the bilateral FTA, both sides have agreed to establish a Free Trade Area through elimination of tariffs on the movement of goods. The future roadmap to enhance cooperation includes incorporation of the following chapters in the agreement to be called as; i) Trade in Services, ii) Investment and, iii) Customs Cooperation.

Pakistan-Bangladesh trade: A MoU has been signed between the erstwhile Export Promotion Bureau, Pakistan (now TDAP) and Export Promotion Bureau of Bangladesh on February 13, 2006 in Islamabad. Under the MoU, both countries had agreed to exchange economic and commercial information as well as assistance in organising trade fairs and trade delegations. Under the said MoU, Export Promotion Bureau of Bangladesh has been providing a complimentary pavilion to TDAP in Dhaka International Trade Fair every year.

Pakistan-Nepal trade: The decision to commence negotiations on the proposed FTA between Pakistan and Nepal was taken during visit of the prime minister of Pakistan to Nepal in 2004. Subsequently, the cabinet accorded approval for negotiation with Nepal on FTA in 2005. A meeting of the Joint Expert Group to commence negotiations on Pak-Nepal FTA is proposed in August 2013. Simultaneously draft agreement, no concession list and offer lists are also being prepared in consultation with stakeholders.

Middles East and African Region: Pakistan is a member of Preferential Trade Agreement among the D-8 Muslim countries comprising Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, and Turkey. The cabinet in its meeting held on December 8, 2011 approved the ratification of the agreement.

Currently Pakistan and Mauritius have an operational PTA leading towards an FTA. Since 2008 three meetings have been held to convert this PTA into an FTA.

The Ministry of Commerce is also pursuing PTA with Tunisia, Morocco, Jordan, Libya, South African Customs Union and East African Community. Trade Preferential System of Organisation of Islamic Conference (TPS-OIC) has been signed and operationalised among OIC-member states during 2011. Pakistan being a member of Organisation of Islamic Conference (OIC) signed the Agreement of Rules of Origin in September 2008 and the same was ratified by the Cabinet on December 2, 2011. Pakistan is negotiating an FTA with GCC and two rounds of negotiations have been held already. TDAP is undertaking various export promotional activities through trade exhibitions and delegations in the countries of our export interest.

BD: textile, social accountability   [ top ]

THE NATION, Dr Kamal Monnoo , August 21, 2013
Pakistani entrepreneurs have been looking very closely at the recent developments in Bangladesh. With the Western customers now visibly concerned about the dismal condition of the Bangladeshi workers, the very low factory payouts to its mostly ‘piecemeal’ labour, and the sub-human work environment (per se) in the Bangladeshi garment factories, not only have their orders with Bangladesh slowed down, but they are also now seeking improvements in the safety and pays of the workers before engaging with the country again. This, of course, means cost of production going up and (at least, on the face of it) Bangladesh’s traditional competitive edge of cheap labour somewhat being compromised.

There are mixed reactions on this amongst our own textile players. While some are viewing it as an opportunity or an opening to capture a good part of the global markets moving away from Bangladesh, the other (more serious minded) players are wanting to assess (more deeply) the real nature of woes facing Bangladesh, in order to ensure that tomorrow they do not end up falling in the same trap. “Wages below a certain point in fact become counterproductive for a firm” (Schumpeter).

When assessing garment manufacturing in Bangladesh, one realises that the Bangladeshi garment workers, who make clothes for Western brands, such as H&M, GAP and Marks and Spencer, are literally the lowest-paid garment workers in the world. In fact, the wages are so low that an increase of 80 percent only a year back was greeted by the workers by rampaging angrily through the capital Dhaka burning cars and looting shops. In real terms, this increase in their minimum wage only took their pay from $23 to $43 per month.

Given the average food prices in Bangladeshi and taking the average size of a Bangladeshi family a United Nations study revealed that in order for the family to have access to only the minimum caloric requirements, the minimum wage needs to at least be $75.00 per month, and that also where both parents are working.

Meanwhile, the position has worsened: Bangladesh has been in the same high inflationary cycle as the rest of the South Asian economies. Living costs - including food, clothes, shelter, and medical care - have been going higher and higher.

More importantly, the anger amongst the Bangladeshi workers should be like a wake-up call for regional competitors, who look to blindly emulate the Bangladeshi export model and for the global retailers expecting to escape rising labour costs and strikes by exploiting work conditions in Asian manufacturing centres. The problem though is by no means limited only to Bangladesh. While initially starting from a cheaper base than China, Asian industrial hubs in general such as Bangladesh, Vietnam, Cambodia, and Indonesia are now facing mounting labour unrest and intense upward pressure on wages, as prices for food and other essentials rise.

Further, the demands for better pay across Asia reflects the underlying economic principle of improvement in job opportunities in economies that are growing faster than their customer (Western) markets and naturally with this the traditional ability of employers (in these manufacturing hubs) to pay very low wages is diminishing. The sheer pace of growth and dynamism in Asia is putting an upward pressure on wages.

In Cambodia, Phnom Penh recently raised the minimum wage by 21 percent - from $50 to $61 per month. This still falls below what the more activist of Cambodia’s 273 unions have been demanding and are now threatening to go on an industry wide strike. Vietnam recorded 200 strikes in 2012 by workers hit by inflation of between 9 to 10 percent.

Recently, for example, nearly 10,000 workers walked out of a Taiwan-owned shoe factory, demanding better pay. In Indonesia also - where powerful trade unions with millions of members play a crucial role in negotiating with employers - minimum wages set by regional authorities have increased by nearly 30 percent in less than two years. In spite of the minimum wage in Jakarta being in excess of $125 per month (in remoter regions of Indonesia, it is half of this), Indonesia also recorded a spate of strikes at textile factories in 2012. In India too, Nokia, the Finnish mobile phone maker, Bosch, the German car parts manufacturer, South Korea’s Hyundai, Volvo, and countless local companies have all recently faced rising industrial unrest.

Still, Bangladesh is a bit of a unique case since wages have been dramatically low and local food prices have been rising at about 16 percent per annum. Workers in general have just been playing ‘survival catch-up’ over the last decade and now the anger cum frustration seems to be at a tipping point.

To make matters worse, Dhaka in its policy matters has instead come across as being more concerned about the interests of the garment factory owners, of whom 29 sit in the 300 seat Parliament, while many other lawmakers also have indirect stakes in garments factories through friends, relatives, and family. Critics say these interests leave the government unwilling to genuinely address the real issues. There are no ‘industrial relations’ and the attitude borders on being arrogant and feudal. This unprofessional approach and prevailing mindset in the industry represents the actual underlying problem, threatening the future of this Bangladeshi industry, which has so far been in the forefront in leading the Bangladeshi export surge.

For anyone or any country (Pakistan included) seeking to capitalise on this slipping global market share of Bangladesh in garments’ exports, they need to keep in mind that their efforts at home, without first addressing the garment industry’s sensitive underlying issue on social accountability, will not bear much fruit.

Dhaka, Delhi eye bigger textile coop   [ top ]

BD NEWS24, Senior Correspondent, 2013-08-16
Bangladesh and India will ink a deal on promoting bilateral cooperation in the textiles sector. The Indian High Commission in Dhaka on Friday said a Memorandum of Understanding (MoU) would be signed during the visit of Textiles and Jute Minister Abdul Latif Siddique to New Delhi on Aug 19.

He will be visiting on the invitation of his counterpart KS Rao and the two would hold ‘extensive talks’ on issues involving the textile and jute sectors.

The MoU will provide cooperation in fashion technology, skills exchange, and productivity enhancement.

It also aims to foster cooperation on techno-commercial collaboration in development of textiles including upgrading and enhancing production efficiency, management techniques, training, research and development; cooperation and facilitation in participation in trade exhibition and buyer-seller meet; making a provision for supply of agreed quantum of jute and jute goods from Bangladesh to India every year.

Jute and textiles contributed more than 50 percent of Bangladesh’s exports of $ 563.96 million to India in the last fiscal.

While the overall growth in Bangladesh exports to India in the last fiscal has been 13.15 percent compared with earlier fiscal, export of raw jute has grown by 17.5 percent to $133.9 million from $ 113.9 million.

In the same period, export of jute goods has grown 6.7 percent to $ 78.2 million from $ 73.3 million.

After the removal of duty and quota on readymade garment in September 2011, Bangladesh exports of woven and knitwear RMG to India had registered an increase of 53 percent in the 2011-12 fiscal. In the last fiscal, exports in this sector again grew by 36.7 percent.

China buys 140 million-kg yarn from India in two months, crisis-ridden textile industry cheers    [ top ]

ECONOMIC TIMES, SANGEETHA KANDAVEL & SANJAY VIJAYAKUMAR, August 16, 2013
China is becoming uncompetitive in yarnmaking with the currency appreciation and high labour costs there.

CHENNAI: Prospects for India's crises-ridden textiles industry, a labour-intensive sector that contributes 4 per cent to GDP, have brightened for the first time in many years, cheering hitherto wary lenders who could now consider lending more.

A major reason for the change in fortunes of the sector, which in recent years has hurtled from one crisis to another, is the huge appetite that China is showing for overseas yarn.

In the past two months alone, China has bought 140 million kg of yarn from India, about 75 per cent more than usual, says K Selvaraj, secretary general of the Coimbatore-based industry body Southern India Mills Association.

India's neighbour is becoming uncompetitive in yarnmaking with the currency appreciation and high labour costs there. R Rajendran, director of finance at textile machinery maker LMW, says the China factor isn't an aberration.

"Unlike India, China is known to keep its policy consistent longer. So we can expect the import of yarn to continue," he says. The rising Chinese demand is the latest in the rush of recent uplifting news for a sector that had to contend with everything from volatile cotton prices and power crisis, to weak overseas demand and the emergence of new rivals such as Bangladesh.

But it isn't just the China factor that's working to its advantage. The US, a major market, is holding on as a consumer. Bangladesh, which was giving India's textile industry a run for its money, seems to have fallen in the eyes of global buyers after the tragic factory collapse earlier this year there.

The power situation has also improved in the textile hub in Tamil Nadu. LMW's Rajendran also anticipates the finance ministry giving a green signal to the Technology Upgradation Fund Scheme, under which companies can access funds cheap for equipment modernisation. The buoyancy isn't confined to yarn.

A Sakthivel, president of the Tirupur Exporters Association, a representative body of knitwear makers, says exports have gone up to Rs 4,200 crore in the past three months compared to Rs 3,600 crore in the year-ago period. However, it may be too early to conclude that the overall garment exports (made of both 'knitwear' and the 'woven' segments) might be picking up.

Data from the Office of Textile and Apparel, US, says Indian exporters have reported lower growth in the first six months of 2013 from the comparable period of the prior year, relative to the growth reported by China, Vietnam and Bangladesh.

It means the effect of the weak rupee and the Bangladesh factor haven't been yet reflected in the available data. However, the biggest garment exporter Gokaldas reported a 15 per cent year-on-year growth in revenue at Rs 258 crore for the June 2013 quarter.

Kitex Garments, another exporter, reported over a 50 per cent jump in revenue at Rs 100 crore. The lenders seem to have noted these changes. Through huge turbulences in the past, the textile industry could manage to get cheap credit from banks due to the Technology Upgradation Fund Scheme. But since the big crash in cotton prices two years back, a near halving that caused mega inventory losses, banks have been loath to lend.

Philippines applying for EU GSP   [ top ]

Manila Bulletin, August 18, 2013
The Philippine government is set to apply for the GSP+ arrangement of the European Union's Generalized System of Preferences Scheme.

The Department of Trade and Industry is spearheading this initiative, working closely with relevant agencies and stakeholders to ensure the country's successful application under the said Scheme.

The EU GSP+ arrangement is a special incentive scheme for sustainable development and good governance. It is anchored on the effective implementation of 27 international conventions on human and labor rights, environment and governance principles.

"We (the DTI) have been holding a series of briefings with stakeholders to provide them information on the requirements and processes in applying for the GSP+ scheme and its benefits," DTI Undersecretary Adrian S. Cristobal Jr. said.

Cristobal recently met with representatives from the Tuna and Garments Sectors and assured them that the DTI will assist them on non-tariff measures and rules of origin issues to maximize fully the benefits of GSP+.

"The Manufacturing Industry Roadmap identifies market access as a specific government intervention. The sustainability of the tuna and garments sectors will contribute significantly to the revival of the country's manufacturing industry since these sectors account for more than 50% of the country's industry labor force," Cristobal added.

The regular GSP, a package from which the Philippines is currently benefiting, covers 6,209 tariff lines, 3,767 of which are subject to reduced tariffs, while the rest of 2,442 tariff lines are subject to zero duty.

GSP+ offers a more generous scheme of preferences and covers 6,274 products, all of which are subject to zero duty. Sectors with the highest preferential margins between regular GSP and GSP+ are prepared foodstuff (9.3%), garments (9.0%), textile products (5.0%), live animals and animal products (4.2%), footwear, headwear and umbrellas (4.0).

In 2012, Philippine GSP exports to EU reached 1.076 billion euros. Largest users of GSP preferences are: chemical products (101.0 million euros); live animal and animal products (12 million euros); vegetable products (5 million euros); wood and articles of wood (5 million euros); and, jewelry (31 million euros).

The country's GSP exports to the EU are expected to increase as more products will be accorded zero duty when the Philippines qualifies for GSP+. Increased exports will translate to enhanced production capacity, resulting to more employment opportunities. The zero preference will benefit a range of items that the Philippines is currently exporting under the regular GSP which include: animal/vegetable fats and oils; prepared foodstuff; machinery and mechanical appliances; chemical products; textiles and garments; and plastic products.

Based on conservative DTI estimates, Philippine exports to the EU are projected to increase by 12% and create additional 270,000 jobs.

The move to apply for GSP+ is fully supported by the private sector, particularly the textile and garment and tuna sectors.

Sergio Ortiz-Luis Jr., Vice-Chairman of the Philippine Export Development Council (EDC) and President of the Philippine Exporters Confederation, Inc. (PhilExport) has also expressed optimism and support to the DTI's application to the GSP+ scheme, encouraging other government agencies to support the DTI initiative.

The Confederation of Garment Exporters of the Philippines (CONGEP), Textile Mills Association of the Philippines (TMAP), Garment Business Association of the Philippines (GBAP) and Foreign Buyers Association of the Philippines (FOBAP) indicated that the GSP+ is expected to create 40,000 new jobs in the textiles and garments sector in the first eight months after qualifying for GSP+.