Cotlook A Index - Cents/lb (Change from previous day)

05-09-2019 69.65 (-0.45)

03-09-2018 92.15

04-09-2017 81.90

New York Cotton Futures (Cents/lb) As on 09.09.2019 (Change from

previous day)

Oct 2019 58.55 (-0.61)

Dec 2019 58.43 (-0.69)

Mar 2020 59.10 (-0.72)

09th September

2019

Textile secretary assures TUFS application clearance soon

Two export schemes may shift out of Commerce Dept to ease process

RCEP asks India to make up its mind on staying in group

Govt to roll out new tariff policy, UDAY 2.0 for resolving discoms losses

China’s trade with U.S. shrinks as tariff war worsens

Bangladesh stands to gain more from Dhaka-Beijing FTA: Chinese expert

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Oct 2019 19430 (-50)

Cotton 12940 (+290) Nov 2019 19190 (-40)

Yarn 20830 (+380) Dec 2019 19200 (-20)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- Textile secretary assures TUFS application clearance soon

Two export schemes may shift out of Commerce Dept to ease process

RCEP asks India to make up its mind on staying in group

Govt to roll out new tariff policy, UDAY 2.0 for resolving discoms

losses

Is the economic slowdown for real?

Exporters still face various problems

Indian consumers remain confident despite economic slowdown:

Nielsen

NIFT, Bhubaneswar to collaborate with Indonesia to promote

sustainable fashion

GI tag accorded to Mizoram's handloom products

Now buy handicrafts from Jharkhand’s artisans online as Flipkart

signs MoU with state to benefit MSEs

-------------------------------------------------------------------------------

China’s trade with U.S. shrinks as tariff war worsens

Bangladesh stands to gain more from Dhaka-Beijing FTA: Chinese

expert

Philippines: Export or fall deeper into debt

Pakistan: Textiles languishing by the wayside

Cambodia to host Southeast Asia textile and apparel expo

Self-powering smart fabric to change the future of wearable tech

--------------------------------------------------------- ----------

NATIONAL

---------------------

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

Textile secretary assures TUFS application clearance soon

(Source: Times of India, September 08, 2019)

Surat: Powerloom weavers are elated after textile secretary, ministry of textiles assured

industry stakeholders that pending applications for Technology Upgradation Fund

Scheme (TUFS) would be cleared within two months.

About 6,000 applications from the city are yet to be cleared under TUFS scheme for the

last two years due to technical reasons. About Rs800 crore funds under TUFS thus are

stuck since a long time.

Industry sources said a stakeholder meeting was recently held in Ahmedabad under the

leadership of textile secretary, Government of India, Ravi Kumar where representatives

of Southern Gujarat Chamber of Commerce and Industry (SGCCI), Federation of Gujarat

Weavers’ Association (FOGWA) and Federation of Indian Art Silk Weaving Industry

(FIASWI) participated.

SGCCI president Ketan Desai said, “We have been given assurance by the textile secretary

that the pending applications under TUFS would be cleared within two months. If the

subsidy amount is cleared then it will boost modernization in the textile sector in Surat.”

Surat has lead over other clusters in Gujarat when it comes to taking benefits under TUFS

scheme. Textile entrepreneurs have taken benefits under TUFs making full payments for

upgraded machineries. But for the past one-and-a-half-year, the entrepreneurs are still

awaiting subsidy amount to be released under the scheme.

Home

Two export schemes may shift out of Commerce Dept to ease process

(Source: Kritika Suneja, September 08, 2019)

Moving RoSCTL, advance authorisation schemes to revenue dept may help boost slipping

exports

The government is contemplating a revamp of the Department

of Commerce and certain incentive schemes that fall under it,

as it aims at administrative easing to boost exports and

domestic manufacturing.

The commerce and industry ministry and finance ministry are

discussing the idea of bringing the new exports incentives scheme — Rebate of State and

Central Taxes and Levies (RoSCTL) — as well as the existing Advance Authorisation

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4 CITI-NEWS LETTER

Scheme, within the remit of the drawback committee under the revenue department, said

people aware of the matter.

At present, the Advance Authorisation Scheme is with the Directorate General of Foreign

Trade (DGFT), an arm of the commerce and industry ministry. RoSCTL is a replacement

of the DGFT’s Merchandise Exports from India Scheme (MEIS), which was challenged by

the US last year for violating global trade rules. It will allow reimbursement of duties on

export inputs and indirect taxes through freely transferable scrips.

“There is a feeling that making the revenue department solely responsible for these

schemes will help in ease of doing business and reduce transaction time for exporters,”

said an official, who did not wish to be identified. The restructuring plan comes in the

wake of 0.37% decline in outward shipments in April-July to $107.41 billion, while

imports contracted 3.63% to $166.8 billion. Separately, the government has also

discussed putting the external affairs ministry in charge of India’s trade negotiations,

which at present is the core function of the commerce department.

However, Biswajit Dhar, professor, Jawaharlal Nehru University, said, “Any such move

will only pit ministries against each other because while the finance ministry looks at

revenue foregone, export targets and exporters’ concerns are the commerce department’s

responsibility.” Restructuring DGFT was on the agenda earlier as well, and the

government had engaged private consultants to conduct an in-depth analysis. DGFT,

which is involved in regulation and promotion of foreign trade, was known as the Chief

Controller of Imports and Exports before 1991.

Home

RCEP asks India to make up its mind on staying in group

(Source: Kritika Suneja, Economic Times, September 08, 2019)

Talks are on for instantly ending tariff on 28% of traded goods, 35% in phases. India is

likely to give Asean the steepest cut and China the least.

Members of the Regional Comprehensive Economic Partnership (RCEP) have asked India

to decide if it wants to remain a part of the proposed trade grouping, as pressure mounts

to conclude the deal this year.

The demand came amid discussions India immediately eliminating tariffs on more than

a fourth of traded goods once the agreement comes into force. RCEP includes China, with

which India has a burgeoning trade deficit. “Some countries have asked India to make up

its mind if it wants to stay in the grouping,” an official aware of the negotiations said.

Talks were on for India to immediately eliminate tariffs on 28% of the traded goods and

more than 35% of the goods in phases. Another official said, “Nothing is decided on tariff

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5 CITI-NEWS LETTER

cuts for China as yet. That is still uncertain.” India is likely to extend the steepest tariff

cuts to the Asean and most conservative offers to China. India’s trade deficit with China

– $53.6 billion in FY19 – is feared to widen if the pact is inked.

With other non-free trade agreement (FTA) partners — Australia and New Zealand —

there are competing interests in agriculture, horticulture and dairy that are sensitive for

India. “These are pressure-building tactics for India to give up its interests and conclude

the pact soon,” said a New Delhi-based expert on trade issues. In India, there is

apprehension among government departments and industry that a trade deal on the

current terms will lead to China dumping goods in India. The ministries of steel,

agriculture and chemicals, and executives of industries such as dairy, steel, copper,

textiles, aluminium, engineering, pharmaceuticals, leather and food, have expressed their

reservations.

Separately, a round of discussions on investment issues is likely due to lack of

convergence on the crucial subject. India’s proposal on investor-state dispute settlement

— advocating exhaustion of local remedies before an investor can take the state for a

dispute — had found support from ASEAN and New Zealand. India has been opposing it

strongly at RCEP, fearing loss of sovereignty due to third-party arbitration in a backlash

similar to Cairn and Vodafone. “Attended the plenary session of the 7th RCEP Ministerial

Meeting in Bangkok today,” commerce and industry minister Piyush Goyal tweeted on

Sunday.

Negotiations on the agreement are in the final stages in Bangkok. “India holds a

significant place in the global economy and its role in the discussion will provide for stable

growth in trade and investments,” he said in the tweet. The Prime Minister’s Office was

briefed last week about RCEP, whose negotiations began in November 2012.

CRITICAL MILESTONE

RCEP has said developments in the global trade environment may affect their individual

positions as talks reach a “critical milestone.” “The ministers recognised that negotiations

have reached a critical milestone as the deadline for conclusion of negotiations draws

near,” members said in a joint statement issued after the ministerial meeting on Sunday.

They also noted that “certain developments in the global trade environment may affect”

countries’ individual positions in the course of the negotiations.

Home

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6 CITI-NEWS LETTER

Govt to roll out new tariff policy, UDAY 2.0 for resolving discoms losses

(Source: Economic Times, September 08, 2019)

The government is in the process of rolling out a new tariff policy and UDAY 2.0 to

address the issue of losses of discoms, which is the "only difficulty" in ensuring round the

clock electricity supply for all, Power Minister R K Singh said.

According to the PRAAPTI portal, the total outstanding of the discoms to gencos as of

July this year stood at Rs 73,425 crore, including the overdue amount of Rs 55,276 crore.

The dues to discoms become overdue after 60 days of non-payment of the bill, allowing

gencos charge penal interest on that.

"There is a capacity to transfer (supply) any quantum (of power). There is no reason why

24X7 power cannot be given. The only difficulty in this (24X7 power for All) is losses to

some distribution utilities. They don't have money to pay for power," Singh told PTI.

About the steps being taken by the government, the minister said that the central

government has already made it mandatory for discoms to open letters of credit for

getting supply from gencos, excluding state government power plants from August 1,

2019. He was of the view that the mandatory opening of letter of credit, would take some

time to reduce stress on power generation companies.

He said that new tariff policy has already gone to the Cabinet for vetting and approval

while the power ministry is working on the UDAY 2.0 scheme which would be launched

this fiscal only. He said that under the new tariff policy, the discoms would have to pay a

surcharge for delayed payment, which would be equal to the commercial rate of interest.

Elaborating further he said, "After the rollout of tariff policy and UDAY 2.0 scheme, if a

discom would not take steps to reduce losses, then Government of India would not give

any grant or loan." About empowering the consumer in the new tariff policy he said, "We

have recognised consumer rights in the policy. Earlier those were not recognized. We are

saying that it is a service. One thing we are saying that discoms would be penalised if they

do load shedding." On the under-recovery of cost of supply of power, he said, "Discoms

cannot put the burden of their inefficiencies on consumers. Earlier they used to charge

under-recovered power supply cost to other consumers. Around 70 per cent consumers

used to pay for 100 per cent consumers. This is injustice."

He further said, "Now we have given an option of 15 per cent. Now we would allow

recovery of up to 15 per cent under-recovered power supply cost from the tariff of other

consumers. If your loss is beyond 15 per cent then discom or state government would pay

for that. This is the consumers' right." Under the new tariff policy, a provision for

standards of service which would provide timeline for various services like time period

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7 CITI-NEWS LETTER

for replacing a burnt transformer etc. Singh said that the tariff policy provides that the

Central Electricity Authority (CEA) would set standards of service and there would be a

penalty for not meeting those standards. On the UDAY 2.0, he said, "We are coming out

with a project under which we would reduce losses of discoms. We will be giving funds to

discoms to reduce losses by taking steps like opening new police stations for power theft."

He also said that UDAY 2.0 provides that the funds from the Centre would only be

released if the discom takes steps to reduce losses. He said, "They would not get any grant.

They would also not get loans from PFC and REC. These are incentives and disincentives

to reduce losses. You may call it UDAY 2.0. It is aimed at reducing losses of discoms and

strengthening the distribution system. We want to roll this out this fiscal year." The

Centre in November 2015 had launched the Ujwal DISCOM Assurance Yojana (UDAY) to

bring about operational and financial turnaround of debt-laden power distribution

companies.

Finance Minister Nirmala Sitharaman in her budget speech in July had said, “Our

government launched UDAY in 2015 aimed at financial and operational turnaround of

DISCOMs. The government is examining the performance of the scheme and it will be

further improved.”

About bringing investments in the power sector he said, "There should be demand. We

have provided in tariff policy that discom would tell regulator about power demand in

their area every year and we have arranged for that supply. The demand would translate

into PPA (power purchase agreement) and it would bring investment into power

generation."

He also said, "Investors would invest in the power sector only when there would be

payment for power supplied. We have fixed that by making the opening letter of credit

mandatory for getting power supply by discoms from August 1, 2019. "This would give

surety to power gencos about payment of power supply. So there would be demand and

payment would be made for power supply. These two issues are fixed now. We are

bringing fundamental changes.

Home

Is the economic slowdown for real?

(Source: Satya Sontanam /Lokeswarri Sk, The Hindu Business Line, September 08, 2019)

There were visible signs of the economy decelerating in the first half of 2019. But the

decline can be contained to some extent by improving credit availability, addressing the

pain points in some sectors, and stepping up capital spends

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8 CITI-NEWS LETTER

It has been a torrid two months for Indian investors with financial markets getting

extremely turbulent since Budget 2019. Market sentiment worsened significantly

thereafter with President Trump ratcheting up the trade war with China. And macro data

has only added to investors’ woes…………

Home

Exporters still face various problems

(Source: TNC Rajagopalan, Business Standard, September 08, 2019)

Hopefully, the government will take note and make life easier for exporters

Last week, Manmohan Singh, the former prime minister and noted economist, expressed

worry on the economic situation. And, asked the government to engage with thinking

minds to take it out of a man-made crisis.

He mainly blamed demonetisation and hastily implemented Goods and Services Tax

(GST) for the current slowdown. Also saying India had not been able to increase its export

to take advantage of the opportunities that have arisen in global trade due to geopolitical

realignments. Leaving aside the politically oriented parts of his statement and responses

from the establishment, the ...

Home

Indian consumers remain confident despite economic slowdown: Nielsen

(Source: Viveat Susan Pinto, Business Standard, September 09, 2019)

Notwithstanding the slowdown, Indian consumers seem confident about the future, the

data from market research agency Nielsen shows.

India topped the global consumer confidence index in April-June at 138, the highest in

six quarters, coming at a time when domestic economic growth has fallen sharply. The

Nielsen findings are in contrast to the Reserve Bank of India’s (RBI’s) consumer

confidence index and gross domestic product growth numbers released by the

government last week, which showed that India’s economy had slowed to 5 per cent — a

steady decline over a ...

Home

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9 CITI-NEWS LETTER

NIFT, Bhubaneswar to collaborate with Indonesia to promote sustainable

fashion

(Source: Times of India, September 08, 2019)

Delegates from Indonesia at NIFT, Bhubaneswar campus on Saturday. BHUBANESWAR:

A delegation from Indonesia headed by Mangku Pastika former governor of Bali and

president of World Hindu Parishad visited National Institute of Fashion Technology

(NIFT), Bhubaneswar and explored academic exchange and collaborations between the

two countries to promote sustainable fashion and tradition of handloom.

"We need to strengthen the historic ties further and NIFT Bhubaneswar can play a pivotal

role in this. We share one of the greatest traditions and culture through handloom,

particularly Ikat. We have a common heritage. Today when the entire world is talking

about sustainability, we can re-establish our ties and work for the cause of sustainable

development," said Mangku Pastika. The civilisational and cultural contact between

Kalinga/Odisha and Indonesia is well known that can be seen through heritage products

of Ikat handloom and handicrafts we make in both the places, he added.

Pastika also proposed to set up chairs in the name of Indonesian leader at NIFT to

promote research, debate and discussion on the historic ties through sustainable fashion.

The delegates visited the campus and interacted with the management and students.

While taking a round of the campus they were impressed to see the Aal Tree that yields

red dye. "Aal dye predominantly used today in two places one in Kotpad in Odisha and

the other in Bali. This is the testimony to our historic relationship and share culture," said

director of NIFT, Bhubaneswar, Binay Bhushan Jena.

The NIFT has planned to set up Centre for Sustainable Fashion that will promote and

popularise use and production of natural and organically produced fibres and dies in the

campus.

Home

GI tag accorded to Mizoram's handloom products

(Source: ANI News, September 08, 2019)

Mizoram's Tawlhlohpuan and Mizo Puanchei shawl or wraparound, the most exquisite

and intricately designed handwoven textile, has received Geographical Indication (GI) tag

under the Government of India's Department for promotion of industry and internal

trade. Handloom weaving has always been an integral part of the Mizo life and it offers a

varied ethnic range of intricately designed handloom products.

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10 CITI-NEWS LETTER

The traditional attire of the Mizos is called the 'Puan' which simply

means 'cloth'. There are many kinds of 'Puans'. Every colour, motif

and design of the cloth has a traditional and cultural significance

to the Mizos. One such 'puans', that are in high demand for it's

ethnicities, are the 'Twalhlohpuan' and 'Mizo Puanchei' shawls or

wraparounds. Recently, these intricately designed textiles

received GI tag under the Department for promotion of industry and internal trade. "I am

happy to share that, Mizo Twalhlohpuan and Puanchei finally got registered under GI

tag. It is a step towards the development of the state," said a senior research official from

the Tribal Research Institute in Mizoram.

'Geographical Indication tag is an indication used on products that have a specific

geographical origin and possess qualities or a reputation that are due to the origin. Such

a tag conveys an assurance of quality and distinctiveness which is attributed to its origin.

The GI tag is like a boon for the weavers of the state as it will provide a platform to their

products in the international market, ensuring better income for them. "I am a Mizo and

weaving puan is our culture and tradition since the time of our ancestral grandfather.

Puan getting a GI tag is a big thing for us and it will surely develop our state," said

Lalduhawmi, a local weaver. It is worth mentioning that Tawlhlohpuan is a medium-to-

heavy, compactly woven, good quality fabric from Mizoram (/search? query=Mizoram).

It is known for warp yarns, warping, weaving and intricate designs that are made by hand.

Tawlhloh, in Mizo language, means 'to stand firm or not to move backwards.'

Tawlhlohpuan which holds high significance in the Mizo society, is produced all across

the state, with Aizawl and Thenzawl being the important production centres. On the other

hand, Mizo Puanchei is a colourful Mizo shawl, which is considered as the most colourful

among the Mizo handloom products. It is an essential possession for every Mizo lady and

an important marriage outfit in the state.

To weave this beautiful shawl weavers insert designs by using supplementary yarns. At

present, Puanchei is sold at Rs 1,800 per piece and Tawlhlohpuan at Rs 450 per piece

respectively.

Home

Now buy handicrafts from Jharkhand’s artisans online as Flipkart signs MoU

with state to benefit MSEs

(Source: Financial Express, September 08, 2019)

Flipkart, in July, had launched Samarth initiative to get artisans and weavers on its

platform and had partnered with five non-governmental organisations (NGOs) to help

such artisans sell online.

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11 CITI-NEWS LETTER

Walmart-owned Flipkart on Sunday announced signing a memorandum of

understanding with the Jharkhand government to help the state’s artisans, weavers and

craftsmen sell on its marketplace platform. The eligible micro and small entrepreneurs

would receive support under Flipkart’s Samarth programme in the form of time-bound

incubation support including onboarding on the platform, cataloguing, account

management, business insights, reduced commission (where eligible), and warehousing,

the company said in a statement. Products from Jharkhand government undertaking

Jharcraft — Jharkhand Silk Textile and Handicraft Development Corporation and

Jharkhand Khadi are already available on Flipkart even as multiple NGOs from the state

and artisans would be joining in a few weeks.

The agreement comes just weeks before Flipkart’s annual flagship sale — Big Billion Days

in which Jharkhand’s artisans can also participate for the first time, Flipkart said. The tie-

up with Flipkart will provide Jharkhand’s artisans, handloom weavers and craftspersons

national market exposure, according to Jharkhand chief minister Raghubar Das even as

“in course of time, other Jharkhand MSME manufacturers will also benefit out of this

association with Flipkart,” the minister said. Flipkart, in July, had launched Samarth

initiative to get artisans and weavers on its platform and had partnered with five non-

governmental organisations (NGOs) to help such artisans sell online. Flipkart’s CEO

Kalyan Krishnamurthy at the launch had said that through Samarth Flipkart is helping

traditionally underserved communities access a pan-India market and engage with over

150 million customers along with leveraging internet penetration in rural India to boost

entrepreneurship.

“With every artisan who gets on board Samarth, we’re a step closer to making e-commerce

even more inclusive for all Indians,” said Rajneesh Kumar, Chief Corporate Affairs

Officer, Flipkart Group. The company is engaged in a cutthroat battle with Amazon and

would soon lock horns with upcoming Reliance’s e-commerce venture. The company has

claims having more than 150 million registers customers and offering more than 80

million products across over 80 categories.

Home

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12 CITI-NEWS LETTER

GLOBAL

China’s trade with U.S. shrinks as tariff war worsens

(Source: The Hindu, September 08, 2019)

Chinese exporters also face pressure from weakening global demand at a time when

Beijing is telling them to find other markets to replace the U.S.

China’s trade with the United States shrank by double digits in August as the two sides

prepare for trade talks with no sign of progress toward ending a worsening tariff war that

threatens global economic growth.

Imports of U.S. goods fell 22.5% from a year earlier to $10.3 billion following Chinese

tariff hikes and orders to companies to cancel orders, customs data showed Sunday.

Exports to the United States, China’s biggest market, sank 16% to $44.4 billion.

Chinese exporters also face pressure from weakening global demand at a time when

Beijing is telling them to find other markets to replace the U.S.

China’s global exports declined 3% to $214.8 billion, a marked reversed from July’s 12.2%

gain. Imports were up 1.7% at $180 billion.

U.S. and Chinese negotiators are preparing for talks in October over Beijing’s trade

surplus and complaints about its technology development tactics. Neither side has given

any sign of offering concessions that might break a deadlock.

The decision to go ahead with talks despite the latest tit-for-tat tariff hikes on Sept. 1

encouraged global financial markets.

Talks are due to take place in early October, later than initially planned, but the two

governments have yet to set a date. Investors were unsettled by a report officials were

struggling to agree on a schedule.

The latest Chinese figures reflected the possible delayed impact of a U.S. tariff hike on

July 6. Forecasters had expected that to depress July sales to the United States.

Home

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13 CITI-NEWS LETTER

Bangladesh stands to gain more from Dhaka-Beijing FTA: Chinese expert

(Source: Nurul Islam Hasib, BD News, September 09, 2019)

A Chinese expert has suggested that a free trade agreement (FTA) between Beijing and

Dhaka will benefit Bangladesh more by cut the trade deficit that heavily favours the Asian

economic giant.

China-Bangladesh FTA agreement can bring more Bangladeshi products into the scope

of tax exemption, effectively alleviate the bilateral trade deficit between Bangladesh and

China,” Prof Cheng Min of the Institute for Bangladesh Studies of the Yunnan Academy

of Social Science, Kunming, says.

“On the other hand, it also lays a good foundation for promoting the construction of

"Bangladesh, China, India and Myanmar" economic corridor,” she said, speaking at an

international conference on the belt and road initiative (BRI) in Dhaka on Sunday.

She tried to give an overview of the feasibility and countermeasure analysis of the signing

of the China-Bangladesh FTA and allay possible concerns.

“At present, China's competitive advantages in steel, non-ferrous metals, building

materials, railways, electricity, chemical industry, automobiles, communications,

construction machinery, aerospace ships and marine engineering will hardly impact

Bangladesh, because Bangladesh's industries are just starting.

“According to Liszt's theory of infant industry, a lot of imports and foreign investment are

needed at this time. Due to the rising labour costs, it is also difficult for China's

homogeneous ready-made clothing products to impact Bangladesh,” Prod Min said.

Bangladesh does not have free trade agreement with any country.

In October 2016, during Chinese President Xi Jinping visit to Bangladesh, the two sides

agreed to launch a feasibility study on bilateral free trade area. Bangladesh also joined his

flagship BRI during that visit.

Prof Min said Bangladesh is an “important partner” of China in South Asia, and the

establishment of the FTA will not only benefit the two countries to carry out economic

cooperation, but also will have a “positive impact” on the BRI construction.

The bilateral trade of $16.4 billion in 2017 grew with an average annual growth of 20

percent since 1975 when China established diplomatic ties with Bangladesh. It is heavily

in favour of China. In 2018, China's direct investment in Bangladesh was $228 million.

“Since the establishment of diplomatic ties, bilateral trade investment between China and

Bangladesh has been growing rapidly, but Bangladesh has been running a large deficit in

goods trade with China.

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14 CITI-NEWS LETTER

“The Trade Integration Index between the two countries also shows that Bangladesh has

a great dependence on Chinese goods and a huge export potential to China,” she said,

adding that the trade expansion effect between China and Bangladesh is “obvious”.

“The BRI has provided good conditions for the establishment of the Sino Bangladesh free

trade area. On this basis, China and Bangladesh still need to make continuous efforts to

take positive measures.”

For that, she suggested establishing a list of early harvesting projects. The first is

cooperation in the field of garment manufacturing.

“The two countries can sign the Framework Agreement on Cooperation in Textile and

Garment Industry,” she said, as clothing sector is crucial for Bangladesh's economy.

“At present, it is facing problems such as industrial upgrading, heavy dependence on

imports of raw materials and intermediate products.

“After many years of development, China's textile industry already has a complete

industrial chain and a relatively high level of processing, but it also faces problems of

rising labour costs and overcapacity.

“China's Ministry of Commerce encourages textile and garment enterprises to take the

opportunity of the "one belt and one road" to carry out industrial transfer.

“If the specific rules of cooperation between China and Bangladesh on textile and apparel

can be formulated as soon as possible, it will not only meet the practical needs of

Bangladesh, but also provide a path for the development of China's textile and apparel

industry in the context of supply-side reform,” she said. The second, Prof Min said, is

cooperation in steel, smelting, power, road infrastructure and communication networks.

“After the list of early harvested projects has been reached, detailed implementation rules

should be promulgated, including simplifying the examination and approval procedures,

clarifying the channels of appeal; establishing a cooperation fund for the list of projects

to provide financing support for its smooth implementation; and the government should

do a good job of service and publicise the cooperative projects. “It will introduce the

cooperation procedures, relevant laws and regulations, and other issues of concern to

enterprises, so as to clear the barriers for enterprises to go out.”

She said China should give Bangladesh tax-free preferential policies for more products,

including polymer products, gloves, silk, cleaning cloth, leathers, lead-acid batteries and

synthetic fibres. “The proportion of clothing with zero-tariff policy should increase from

90 percent to 100 percent in order to alleviate Bangladesh's expanding bilateral trade

deficit with China.”

Home

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15 CITI-NEWS LETTER

Philippines: Export or fall deeper into debt

(Source: Andrew J. Masigan, Business World, September 08, 2019)

The country can fall into a debt crisis if exports don’t pick up. Here’s why…

Last week, the Department of Budget and Management (DBM) reported that the national

debt will top $151 billion by the end of 2019, and $167.3 billion by the end of 2020. This

is due to massive borrowing to fund the government’s infrastructure program.

Government authorities say that acquiring more debt is a necessary evil given our need to

fill the infrastructure gap. The hope is that when these infrastructure projects are

completed, better roads, bridges and ports will translate into a spike in economic activity

and, inevitably, more revenues for government. These revenues are what will repay the

loans.

At this point, Government is not worried about its rising debt load. They say that a 41%

debt-to-GDP ratio is still within manageable levels. Besides, tax revenues have been rising

steadily. On the back of the TRAIN law, collections of the Bureau of Internal Revenue rose

by 10.6% while collections from the Bureau of Customs rose by 8.5%. Further, non-tax

revenues grew by 6.9% due to higher dividends from government-owned and -controlled

corporations and profits from PAGCOR. Government expects even more tax revenues to

flow in once the CITIRA Law (the second tranche of the tax reform program) is passed.

With tax revenues on the rise, government is confident that it will continue to maintain a

healthy balance between debt and revenues. This is true… for now. But I worry about our

current account deficit.

For those unaware, a country’s current account is the surplus (or deficit) after taking into

consideration trade in goods, trade in services, investment incomes, OFW remittances,

and travel receipts. From a surplus of $601 million in 2015, it swung into deficit territory

in 2017, clocking in at negative $2.52 billion and worsening to negative $7.9 billion in

2018. The Bangko Sentral ng Pilipinas sees the deficit widening to negative $10.1 billion

this year.

Deficits will have to be filled by debt. So unless we reduce the deficit, or, better yet, turn

it into a surplus, the country’s debt load will continue to rise.

The problem lies in our trade deficit (exports, minus imports). The gap is so wide that

foreign direct investments, OFW remittances, and tourism revenues can no longer cover

for it.

In 2018, merchandise exports dropped 1.8% to $67.488 billion from $68.713 billion in

2017. This occurred while imports grew by a whopping 13.4% from $96.093 billion to

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16 CITI-NEWS LETTER

$108.928 billion. This resulted in a trade deficit of $27.38 billion and $41.44 billion, for

2017 and 2018, respectively.

The good news is that we have an astute Secretary of Trade and Industry who is well aware

of the problem. Last year, Secretary Mon Lopez crafted a plan to accelerate exports of

both goods and services so as to minimize the trade deficit. The plan, dubbed the

Philippine Export Development Plan 2018-2022, was completed last June. It was ratified

by President Duterte.

At the heart of the plan is to accelerate exports to between $122 billion and $130 billion

by 2022 on the back of three action points.

The first is to improve the overall climate for export industries. This will be done by

removing regulatory impediments for exporters, by raising productivity and

competitiveness, by improving benchmarks of quality for export goods, by improving

access to export finance, and, by enhancing exporter’s innovative capacities.

The second is by exploiting opportunities from trade agreements. The Philippines enjoys

preferential export access and special tariff terms with certain countries by virtue of trade

agreements in which we are a signatory. Among them are the ASEAN Economic

Community, the Asia-Pacific Economic Cooperation (APEC), the European Free Trade

Association and its General System of Preference-Plus status, among others. The

Department of Trade and Industry (DTI) recognizes that the country has not maximized

its preferential export rights to many markets, thus, Secretary Lopez’ plan lays out the

ways and means to do so.

The third is to develop a new set of export winners. Products identified as having good

export potentials are electronics, processed food, fresh vegetables and beverages.

Surprisingly, footwear, textiles, yarns, fabrics, and garments were products that waned in

the 1990s but are now showing signs of a comeback.

In terms of services, the IT-BPO sector is still seen to generate the lion’s share of export

revenues. However, tourism-related services (e.g. services provided by hotels,

restaurants, travel agencies, tour operators, etc.) is growing at twice the pace of IT-BPOs.

This is a category to watch out for. Financial services, construction services, and product

assembly services are also showing healthy upticks.

In addition, the DTI finds it necessary to create a robust atmosphere for start-ups and

venture capitalists. Start-ups are trailblazers of innovation. They lead in design

enhancements and are agile enough to adjust their internal processes to gain a

competitive edge.

All these taken into consideration, it will still take much more to turbo-charge our export

industries. The prohibitive provisions of the constitution relating to foreign investment,

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17 CITI-NEWS LETTER

expensive power cost, difficulty in doing business, and government’s lack of spending on

research and development (R&D) are some of the reasons why our manufacturing sector

has not developed at the same pace as our neighbors.

These impediments need to be sorted out in order for our manufacturing sector to thrive

and for us to export more. There is a lot of catching up to do as our export revenues are

but a third of Vietnam’s.

To accelerate our industrialization, the DTI recently launched a new industrial plan called

the Inclusive Innovation Industrial Strategy, or i3S for short. Its purpose is to develop

globally competitive industries, large and small, using innovation as an enabler.

Having identified our new export winners, the goal is to enable our exporters to tap new

markets and/or expand market share either through the introduction of new innovative

products, new product features, or more competitive pricing.

For industries that produce intermediate parts, the goal is for them to deepen their

participation in global supply chains through cost efficiency innovations.

The road is long before our export revenues can cover our current account deficit. The

good thing is that the plans have been laid-out to make it happen. Its all about the

execution now.

Andrew J. Masigan is an economist.

Home

Pakistan: Textiles languishing by the wayside

(Source: Nasir Jamal, The Dawn, September 09, 2019)

Stagnating textiles and clothing (T&C) exports have been a consistent source of concern for

the economy. The steep currency devaluation over the last one year and the reduction in

the energy (electricity and imported gas) prices for exporters have significantly helped

enhance the international competitiveness of the industry. However, the T&C exports are

unlikely to make a major headway without fresh investments in capacity expansion across

the entire supply chain, particularly in the value-added downstream industry.

The industry’s performance since 2000 shows that the growth in textiles and clothing

exports has been patchy and volatile. Pakistan’s overseas T&C shipments, for example,

rose by an average 9.9 per cent between 2000 and 2008. The growth rate dropped heftily

to 0.9pc from 2009 to 2013, and to 0.8pc during the next five years to 2018.

The last fiscal year saw the industry’s exports dip by 0.3pc in spite of a cheaper rupee,

better energy availability and affordability, and emerging opportunity in the global

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18 CITI-NEWS LETTER

market. Little wonder Pakistan’s share in the international T&C market has plunged to

1.7pc from 2pc in 2000.

The country’s dismal T&C exports in the last decade are characterised by marginal gains

in quantity, stagnant value (revenue) and reduced share in the global trade. Yet, in spite

of stagnation, the textile industry remains the most export-oriented sector of the economy

with its share in the nation’s export revenues fluctuating between 55pc and 60pc for the

last several decades.

In Bangladesh, textile exporters have their office in the prime minister’s office for quick

resolution of issues and their export cargo enjoys the same ‘right of way’ in congested

Dhaka as ambulances

That means Pakistan’s overall export performance will continue to depend largely on the

performance of the T&C sector in the near to medium term (even if the policymakers focus

on and somehow succeed in developing some other sectors for global competition).

However, the chances of the textile and clothing exporters increasing their share in

international trade — both in terms of export value and quantity — despite emerging

global opportunities are minimal because of the shrinking size of the industry.

The industry’s capacity to produce exportable surplus has contracted substantially

because of factory closures on the back of crippling energy shortages that hit the economy

in the second half of 2000s, the previous government’s obsession for an overvalued rupee,

lack of investment in new more efficient technologies and capacity, the controversial free

trade agreement with China and so on.

Textile production capacity worth $1.5-2 billion is estimated to have closed down for good

in the last five years because of the anti-export bias of policymakers. While much capacity

is inoperative owing to a variety of factors, it can still be revived.

In comparison, countries like Bangladesh, Vietnam and India have dramatically

enhanced their exportable surplus. Bangladesh alone has added 3.75 million spindles and

41,000 shuttleless looms in the last 10 years compared with Pakistan’s 2.45m spindles

and 7,600 shuttleless looms. India, on the other hand, added 20.4m spindles and 89,000

shuttleless looms during the same period.

In 2018, according to the World Trade Organisation (WTO), Bangladesh ranked third

after China and the European Union (EU) on the list of 10 largest global exporters of

garments with shipments valuing at $32.5bn and Vietnam occupied fourth place with

$31.3bn. Pakistan with garment exports of $5.5 billion couldn’t find a place on the list.

Vietnam with sales of $8.3bn pushed down Pakistan with exports $8.0bn to the ninth

position on the list of the top 10 textiles exporting countries the same year.

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19 CITI-NEWS LETTER

If anything, the poor export performance of the textile industry over the last decade is

indicative of policy inconsistency and lack of institutional support to the industry. The

government has given two textile policies in 2009 and 2014 and one special incentives

package in 2017 to boost the country’s T&C exports.

But all three incentive packages were executed only fractionally. More recently, the energy

price package announced last October has not been implemented in letter and spirit and

exporters are still forced to take the matter to the courts every month to get relief on their

inflated bills.

Further, the measures taken for enhancement of T&C exports have lacked coherence. The

export enhancement measures, which never get implemented fully, have mostly focused

on rebates, subsidies and cash incentives. No policy action has ever been taken to develop

a skilled, more productive labour force, product development or market diversification

and so on.

For countries like Vietnam and Bangladesh, export promotion is a national strategy to lift

overall economic growth. In Pakistan, it is quite the reverse. In Bangladesh, the textile

exporters have their office in the prime minister’s office for quick resolution of their issues

and problems, and their export cargo enjoys the same ‘right of way’ in congested Dhaka

as ambulances.

In Pakistan, the textile ministry did not have a minister for years and is currently clubbed

together with four other ministries under Abdul Razzak Dawood. Even in its heydays the

ministry never had much power to influence government policies that directly or

indirectly affected new investments in textile capacity expansion or development of value-

added sectors.

Similarly, the research institutes, the textile commissioner office and the Trade

Development Authority Pakistan have miserably failed to perform their jobs and become

white elephants while similar institutions in other regional countries have played a major

role in T&C export enhancement.

The textile exports will continue to suffer and fresh investment will remain elusive unless

the government realizes the need for a powerful textile ministry to offer institutional

support to the industry, and liaise between exporters and other ministries as well as

agencies for export policy coherence and consistency.

Incentives to help the textile industry cut its cost of doing business are important. But

more important is institutional support to restore business confidence and ensure policy

consistency to woo fresh investments to enhance capacity and international

competitiveness of T&C exports for sustainable, faster growth.

Home

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20 CITI-NEWS LETTER

Cambodia to host Southeast Asia textile and apparel expo

(Source: Jose Rodriguez T. Senase, Khmer Times, September 09, 2019)

Cambodia will be the venue next month of one of the biggest and most important

gatherings of stakeholders in the garment sector in Southeast Asia.

According to the official website of the event, the Textile and Apparel SEA Summit 2019

will be held in Phnom Penh on Oct 28 and 29. The venue for the event has yet to be

disclosed.

The event comes after the Kingdom hosted the 8th Cambodia International Textile &

Garment Industry Exhibition last month, which also drew foreign attendees and

exhibitors.

Bruce Zhang, a member of the organising committee, said there is much to learn and gain

from the event. The event is being organized by SZ&W Group, a leading event organiser

in Asia.

“The summit aims to provide the opportunity for industry chain stakeholders to win

textile and apparel business and ensure growth in the SEA region. It will seek the latest

opportunities and trends as well as good practice sharing to accelerate the growth and

development of the industry,” he said.

The organisers have invited industry leaders and experts from all over the world to speak

at the event, including representatives of the International Apparel Federation, US-

ASEAN Business Council, Cambodia’s Ministry of Commerce, Vietnam Textile and

Apparel Associations, Garment Manufacturers Association of Cambodia, Myanmar

Garment Manufacturers Association, China Textile Information Center, and the Textile

Association of India.

The event website says the major topics that will be discussed are: The influence of the

Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and

Progressive Agreement for Trans-Pacific Partnership (CPTPP) on the region’s textile and

apparel industry; apparel procurement; different trends in the region’s labour markets;

and the latest government policy on investment in the industry.

The organisers are expecting 100 to 500 attendees, including government officials and

representatives from companies in India, Myanmar, Vietnam, China, and other countries.

Ten to 50 exhibitors are also expected to display their products and services at the event.

Southeast Asia is among the leaders and plays an important role in the global textile and

apparel industry. The region is said to have a strong comparative advantage for

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manufacturers, including market access, low labour costs, investment incentives, and

existing industrial basis.

In the region, Vietnam, Cambodia, and Myanmar have the fastest-growing textile and

apparel industry.

In Cambodia, the textile and apparel industry is among the most important sectors of

economic activity. The industry accounts for more than 40 percent of the country’s gross

domestic product (GDP) and it employs more than 800,000 people.

Home

Self-powering smart fabric to change the future of wearable tech

(Source: Teresa Umali, Open Gov Asia, September 09, 2019)

The graphene-based supercapacitor is fully washable and can store the energy needed to

power an intelligent garment.

The researchers behind a new e-textile technology have imagined a future wherein the

next generation of waterproof smart fabrics will be laser printed and made within

minutes.

According to a recent press release, scientists from Australia’s RMIT University have

developed a cost-efficient and scalable method for rapidly fabricating textiles that are

embedded with energy storage devices.

Self-powering smart fabric

Within three minutes, the method is able to produce a 10x10cm smart textile patch that

is waterproof, stretchable and readily integrated with energy harvesting technologies.

The technology enables graphene supercapacitors, which are powerful and long-lasting

energy storage devices that are easily combined with solar or other sources of power, to

be laser printed directly onto textiles.

The researchers, in a proof-of-concept, connected the supercapacitor with a solar cell,

delivering an efficient, washable and self-powering smart fabric.

This overcomes the key drawbacks of existing e-textile energy storage technologies.

Background of the project

The growing smart fabrics industry has diverse applications in wearable devices for the

consumer, health care and defence sectors.

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22 CITI-NEWS LETTER

This includes monitoring vital signs of patients, tracking the location and health status of

soldiers in the field, and monitoring pilots or drivers for fatigue.

A researcher from the University’s School of Science, Dr Litty Thekkakara, explained that

smart textiles with built-in sensing, wireless communication or health monitoring

technology called for robust and reliable energy solutions.

According to her, current approaches to smart textile energy storage, like stitching

batteries into garments or using e-fibres, can be cumbersome and heavy, and can also

have capacity issues.

In addition, these electronic components can also suffer short-circuits and mechanical

failure when they come into contact with sweat or with moisture from the environment.

The research analysed the performance of the proof-of-concept smart textile across a

range of mechanical, temperature and washability tests and found it remained stable and

efficient.

Utilising technology

RMIT Honorary Professor and Distinguished Professor at the University of Shanghai for

Science and Technology, Min Gu, shared that the technology could enable real-time

storage of renewable energies for e-textiles. Furthermore, it opens the possibility for

faster roll-to-roll fabrication, with the use of advanced laser printing based on multifocal

fabrication and machine learning techniques.

The researchers have applied for a patent for the new technology, which was developed

with support from the University’s Seed Fund and Design Hub project grants.

The graphene-based supercapacitor is not only fully washable, but it can also store the

energy needed to power an intelligent garment. More importantly, it can be made within

minutes at large scale. Hopefully, they can power the next generation of wearable

technology and intelligent clothing by solving the energy storage-related challenges of e-

textiles.

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