Bangladesh garment makers are urging the government to lower threshold for local value addition as they are already required to add more local value to be eligible for the European Union’s proposed new generalized scheme of preferences (GSP) framework.

As per trade economists and industry insiders, henceforth Bangladesh garment makers will have to increase value addition to their exports by 40 per cent in order to avail GSP benefits. In case of lower local value addition, woven manufacturers will not get duty-free access to the EU market after Bangladesh’s graduates from the least developed country status by 2026.

Value addition of 20 per cent, as demanded by Bangladesh Garment Manufacturers and Exporters Association (BGMEA), will discourage local industrialization, believe experts.

No incentives for firms failing to add value

Stakeholders and analysts recommend stripping the firms of incentives if they fail to add enough local value to their products. They believe, 20 per cent value addition should be allowed for new manmade fabric-based items except for five major ones, which account for about 70 per cent of Bangladesh apparel export earnings.

As Mohammad Abdur Razzaque, Chairman, Research and Policy Integration for Development (RAPID) Society points out, though prices of raw materials are increasing, the prices of final products are not increasing, making it difficult to maintain the value addition ratio. However, the industry should still emphasize on value addition to negotiate better prices with brands and buyers, he adds. Buyers are offering prices calculating the fiscal incentives. However, exporters are not getting these benefits,

Lower value addition may cause loss of EBA facility

If apparel makers insist on only a 20 per cent value addition, they will not be able to meet the new GSP double transformation condition for exports to European countries. This may cause Bangladesh to lose the opportunity to export to the EU market under the Everything But Arms (EBA) facility, while exports to India under South Asian Free Trade Area (Safta) and even to China will require 40 per cent value addition.

Faruque Hassan, President, BGMEA, has urged the government to relax the value addition condition for apparel exporters for two years. He hopes, Bangladesh will be able to add more value to woven products before the LDC graduation as a number of companies are investing in high-value yarns and accessories. Moreover, the government also provides policy support for this. He recommends, a 10 per cent cash incentive on MMF-based new products to encourage local value addition in high-value products.

According to the Bangladesh Bank Quarterly Review on RMG, the apparel sector's value addition reached 64.98 per cent during the first quarter (July-September) of the last fiscal year. It had remained static between 60 and 64 per cent for almost a decade before that, as per data from TBS.

Exporters recommends 25% wastage rate for knitwear

In January this year, the BGMEA and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) had sent a proposal to the commerce ministry to increase the maximum wastage rate to 40 per cent.

However, a committee formed by the commerce ministry to verify the actual wastage rates in garment factories, recommended setting the maximum wastage rate by averaging the amount of wastage of similar factories. It proposed a 25 per cent wastage rate for basic knitwear including T-shirts, polo shirts, trousers, shorts, skirts, pajamas; 28 per cent for specialized items like rompers, tank tops, dresses, gowns, hoodies, and lingerie items; and 3 per cent for items like jumpers, pullovers, cardigans, vests, and socks.

The US will impose an anti-dumping duty on imports of polyester textured yarn (PTY) from Indonesia, Malaysia, Thailand and Vietnam. The justification is that these are being sold in the United States at less than fair value. The aim is to give new hope for domestic producers and their workers as fair pricing will be restored to the market.

PTY is a synthetic multifilament yarn that is manufactured from polyester (polyethylene terephthalate) and produced through a texturing process, which imparts special properties to the filaments of the yarn, including stretch, bulk, strength, moisture absorption, insulation, and the appearance of a natural fiber.

In October 2020, two major US synthetic yarn producers—Unifi Manufacturing and Nan Ya Plastics Corporation—filed petitions with the commerce department and the USITC alleging that dumped imports of polyester textured yarn from the above four countries were causing material injury to the domestic industry. The department initiated the investigations in November 2020, and the USITC preliminarily determined in December 2020 that imports from the four countries were harming the domestic industry.

The imposition of fairly large import duties makes filament yarn more expensive and becomes a burden for importers in the US. So to continue to boost export market growth, the textile and textile products industry in Indonesia is now focusing on expansion to develop products in accordance with the wishes of buyers, which are currently more focused on green and functional products.

Turkey’s garment exports increased 25 per cent year over year in the first three quarters of 2021, reveals Turkish Statistical Institute figures. Exports of knitted and crocheted clothes and accessories climbed 35 per cent; exports of non-knitted apparel and accessories climbed 14.7 per cent; Carpets, mats, matting, and tapestries exports increased 34 per cent; exports of used clothes, other textile goods, and rags increased 19.7 per cent. Meanwhile, Turkey’s cotton, cotton yarn, and cotton textile imports surged 34.2 per cent.

Turkey is also facing a high rate of inflation. The nearly 20 per cent annual inflation rate is driven by food, services, housing and transportation prices, leaving consumers with little money for their clothing needs. So people are purchasing only the minimum necessary textiles for their daily needs. The decrease in domestic demand will impact manufacturing as textile-apparel companies will cut down on their production. Accompanying high inflation is the weakening currency. Turkey’s currency lira has lost around 25 per cent of its value since the beginning of 2021. Meanwhile, in addition to the high cost of fuel and other imports, the government this month raised the price of natural gas supplied to the industry by 48 per cent, as a global price spike drove up import bills.

The fashion industry can become 80 per cent circular by 2030 with increased investment in existing recycling technologies and infrastructures, says Global Fashion Agenda. Pre-competitive collaborations can play a critical role in accelerating the industry’s transition to sustainable and inclusive growth. Major recycling technologies deliver better environmental outcomes. Plus, all technologies have the potential to be more cost effective than using corresponding virgin materials if they are scaled. Current technologies have the potential to deliver 75 per cent textile-to-textile recycling into the fashion system, and a further five per cent recycled feedstock from other industries.

Through convening influential players throughout the fashion value cycle, developing traceability of waste streams and aligning on mutual incentives, pre-competitive collaborations play a unique role in assuring supply, demand and attracting commercial investment where it is needed at pace. The necessary recycling technologies exist, deliver huge improvements in environmental impact and economics work at scale. The challenge is providing conditions for scaling. With sufficient investment, supportive policies, and by enabling pre-competitive collaborations, it is possible to create a profitable circular system and accelerate fashion’s journey to net zero. The Circular Fashion Partnership in Bangladesh is a cross-sectoral project to scale post-industrial recycling and capture textile value domestically in Bangladesh.

Fashion for Good, based in the Netherlands, has built a hub for circular fashion and a global network of entrepreneurs, designers, brands, manufacturers and investors dedicated to ripping apart the existing fast fashion model and creating a less exploitative and more sustainable industry.

To accomplish this feat requires transforming the way textiles and apparel are produced, in the places where they are produced. To that end, over the past couple of years, Fashion for Good has laid the groundwork to support the growth of sustainable manufacturing, through an accelerator program and an investment fund squarely focused on the Asian continent.

In February 2020, the organization kicked off its Asia Innovation Program in Mumbai, which provides fashion entrepreneurs help with product and business development, mentoring and connections to brands and investors. At the same time, Fashion for Good and a group of investor partners also launched the Good Fashion Fund, a vehicle dedicated to financing disruptive production technologies in India, Bangladesh and Vietnam.

Launched in March 2017, Fashion for Good welcomed the first participants in its accelerator and scaling programs that same year. While everything moved online with the pandemic, Fashion for Good typically invites 10 to 15 startups per program each year to Amsterdam for nine months.

Ecosensor is Asahi Kasei Advance’s high-tech fabric collection that implements a new generation of values, with the aim of keeping nature, body and mind in harmony. The whole collection is focused on advanced technology and environmental responsibility. Thanks to Ecosensor’s unique value-chain based on recycling technology, most part of its yarns are certified by the renowned GRS (Global Recycled Standard). Even the dyeing and finishing phases - key moments for performance wear - have been certified by international labels such as bluesign and Oeko-Tex Standard 100.

Ecosensor’s new references meet the needs of the contemporary consumer, such as durability, well-being and performance. Furthermore, they are made with certified ingredients, through a completely traceable and transparent production process and supply chain. Being capable of combining active climate control, exquisite touch, lightness and comfort with sustainable values, Ecosensor stands out as a unique eco-high-tech performance proposition in its market.

Featuring a total of 36 fabrics, the collection is composed of seven outerwear fabrics, 22 sportswear fabrics and seven innerwear fabrics. Dominant are the recycled polyamide and polyester yarns. The stretch component present in 22 articles of the collection is based on Roica EF by Asahi Kasei - the sustainable recycled stretch yarn made from pre-consumer waste.

Indonesia’s export volume is expected to approach pre-Covid levels only by next year. The export-oriented textile industry’s average utilization rate has surpassed 100 per cent, with a number of corporate operators even boosting capacity. As a consequence of unresolved global logistical issues, Indonesia’s garment exports did not see price revisions. Several exporters use a freight on board plan, which entails the buyer’s paying the container expenses.

For the third quarter Indonesia’s textile and apparel industry contracted 3.34 per cent. In the first quarter the textile and apparel industry contracted 13.28 per cent. In the second quarter there was a 4.54 per cent decline. As for last year, the textile industry contracted 8.88 per cent.

However, Indonesian Textile Association expects a turnaround by the end of year, driven by high demand and recovering market. Even if this does not happen, the industry hopes to reduce contraction rate compared to last year. Utilization began to improve in October 2021 and almost reached 80 per cent. The average utilization of the textile industry in September 2021 was at 72.31 per cent. In contrast, the apparel industry reached 84.83 per cent, and the leather, leather goods and footwear industry reached 80.18 per cent.

Cambodia’s garment exports increased by 11.40 per cent from January to September 2021 compared to the same time previous year reveal General Department of Customs and Excise stats. Despite Covid, the Cambodian garment industry managed to avoid falling into negative territory. The industry has been gaining market share as a result of extraordinary hurdles stemming from political concerns and Covid consequences of rival nations. The surge in garment exports bodes well for economic activity in the country as other nations grapple with the difficult conditions imposed by the virus. This year Cambodia was lucky to receive some orders shifted from Myanmar and would have grown bigger were it not for the February 20 community outbreak.

The country is working to simplify the local investment and business climate in order to create trust in businessmen and investors as market access to a variety of nations is expanded. Cambodia has inked new free trade agreements with China, South Korea, and other markets in order to make Cambodia a more attractive investment destination. Cambodia’s garment exports fell 10.44 per cent in 2020 compared to 2019. The EU has decided to withdraw one-fifth of the Everything But Arms (EBA) for Cambodia covering Cambodia’s exports of garment and footwear products, travel goods, and sugar. Without EBA, Cambodia will find it difficult to continue the necessary transformation of the textile industry.

The global denim fabric market is growing at 4.4 per cent a year, reveals Allied Market Research stats. The availability of denim fabric at reasonable prices and new socio-economic trends are driving the growth of the global denim fabric market.

The rise of biodegradable denim fabric has opened new prospects. But price instability of cotton and ecological risks related with the use of synthetic dyes confine the market to some level. The Covid outbreak impacted overall supply chain, thereby upsetting the overall growth of the global denim fabric market. The rise in the prices of raw materials, especially cotton and cotton yarn, cut the production of denim fabric, especially during the early phase. Moreover, the dropping income of customers has given way to a reduction in the demand for premium denim products.

The Asia Pacific region got the highest revenue share in 2020, getting nearly four-fifths of the entire market share, and is projected to continue its lead by 2030. From January to September 2021 Bangladesh’s denim exports to the US registered a whopping 31.40 per cent yearly increase. As the world slowly goes back to normal, fashion item consumption is once again showing signs of growth.

To curb carbon emissions and achieve net-zero by 2050, the global fashion industry needs to introduce disruptive solutions and unprecedented actions, says a new report by Fashion for Good and Apparel Impact Institute. Sponsored by HSBC, the report charts out a trajectory for the industry to meet its net-zero ambition, mapping the integral levers such as renewable energy across existing solutions and innovative solutions such as next generation materials.

The report breaks down the required funding of $1 trillion by solution category and identifies the types of funders likely to benefit from the positive returns. Titled, ‘Unlocking The Trillion-Dollar Fashion Decarbonization Opportunity: Existing And Innovative Solutions’, the report estimates reduction in emissions of existing and innovative solutions, and calculates the finance needed to bring them to scale and drive the industry to net-zero by 2050.

ESG investments to reach $50 trillion by 2025

Majority of the $1 trillion spend is allocated to projects that offer an attractive financial, as well as environmental, return on investment. More than $35 trillion of financial capital is available globally for good return Environmental, Social, and Governance (ESG) investments, a figure expected to exceed $50 trillion by 2025 according to insights from Bloomberg Intelligence. However, critical barriers to unlocking the required financial capital remain. The report highlights these barriers and presents examples of financing opportunities.

The financing opportunity is multi-faceted and will require committed and coordinated effort by brands, manufacturers, philanthropy, government, and industry organisations. The report splits the amount of finance required per emission-reduction solution across the different financiers, appealing to different risk appetites and profiles, and providing a nuanced and detailed pathway to achieving net-zero.

Most reductions from existing solutions

The report estimates 47 per cent of carbon dioxide reductions come from implementing existing solutions while 39 per cent come from scaling innovative solutions and 14 per cent some from other solutions including reducing overproduction, material efficiency improvements, and scaling circular business models.

It evaluates seven solutions to reach net-zero in the fashion industry by 2050, including a shift to renewable energy, sustainable materials and processes, accelerating the development of next generation materials, and phasing out coal, amongst others. The total cost of implementing these solutions and achieve net-zero is $1.04 trillion, including $639 billion towards existing solutions and $405 billion towards innovative solutions