FW
Structural reforms needed
Axel van Trotsenburg of the World Bank said that growth in the developing East Asia Pacific continues to be solid; however, the moderating trend suggests that policy makers in the region must remain focussed on structural reforms that lay the foundation for sustainable, long-term and inclusive growth. Trotsenburg, while explaining what the reforms should constitute said that they should include regulatory improvements in finance, labour and product markets, as well as measures that enhance transparency and accountability. He believes that these policies will reassure investors and markets, and help sustain growth that would lift the impoverished.
The region does face a challenging global environment. Global trade is growing at its slowest pace since 2009 and the recovery in high-income economies remains gradual. The widespread slowdown in developing countries has intensified, particularly in commodity producers affected by lower commodity prices.
Across East Asia, the performance trends are diverse. China’s economy, this year, is expected to grow about 7 per cent and will moderate gradually afterwards. Its economy continues to shift toward a model, which is dominated more by domestic consumption and services, which implies a gradual reduction of growth.
In 2015, the rest of the developing East Asia is expected to grow 4.6 per cent, which is similar to the rate in 2014. Indonesia, Malaysia and Mongolia, which are commodity exporters, will witness a slower growth and lower public revenues this year, which reflects weaker global commodity prices. Whereas, the importers will be stable; for e.g., Vietnam, is expected to grow 6.2 per cent in 2015 and 6.3 percent next year. However, growth will ease in many of the smaller economies. Pacific Island countries will witness moderate growth.
Though growth is still at 6.9 per cent this year in Cambodia, lower agricultural output is hurting the economy. Severe flooding in Myanmar is most likely to slow down the growth to 6.5 per cent from 8.5 per cent last year.
China may slow down growth
Sudhir Shetty, Chief Economist of the World Bank’s East Asia and Pacific Region says that developing East Asia’s growth is expected to slow because of China’s economic rebalancing and the pace of the expected normalisation of US policy interest rates. He feels that these aspects may generate financial volatility in the short-term; however, they are a necessary adjustment for sustainable growth in the long term.
The Chinese economy will slowdown in 2016/17 because the country has sufficient policy buffers and tools to address the risk of a more pronounced slowdown, including relatively low public debt levels, regulations restricting savings outside of the banking system, and the state’s dominant role in the financial system. The effects of the slowdown will be felt in the rest of the region, if the country’s growth slows down further. This is especially for countries linked to China through trade, investment and tourism.
Also, a gradual increase in US interest rates will begin in the coming months. This rise, though anticipated, is still risky for the markets as they could react sharply to such tightening, causing currencies to depreciate, bond spreads to rise, capital inflows to fall, and liquidity to tighten.
The report concludes that given the situation, two key priorities across the region are important—a wise macroeconomic management, aimed at shoring up external and fiscal vulnerabilities, and a deeper structural reform, focussed on encouraging private investment.
Worldbank.org
To promote the cultivation of organic cotton in the Satpuda-Pench corridor of Central India, adjacent to the ecologically important Pench Tiger Reserve, the C&A Foundation and WWF India launched a partnership recently.
The organisations will combine organic agriculture with environmental conservation to create a win-win situation for both farmers and nature through their unique programme. 6000 farmers will obtain organic certification by the end of 2018 through this multi-year project.
Anita Chester, head of sustainable raw materials for C&A Foundation said that their vision for this collaboration is to maintain the ecology of the Satpuda-Pench corridor while enhancing the livelihoods of cotton farmers, who play a critical role in the apparel industry value chain. She feels that degradation of soil and water quality, which adversely affects wildlife habitats can be minimised by helping farmers and also it would while also reduce costs and increase yields for local cotton farmers.
Farmer training has already started in this season though it is in the prototype phase. In this, farmers will learn how to build the fertility of soil to increase yields, and make natural plant pesticides and compost. Those who complete the programme will obtain organic certification, which would give them better access to international organic cotton markets.
Sejal Worah, Program Director, WWF India said that sustainable agriculture plays an important role in conservation and she believes that when farmers manage their land sustainably, they can help preserve critical habitats by improving soil and water quality, which in turn, enhances their agricultural productivity in the long term.
Candafoundation.org
www.wwfindia.org
Vietnam will expand the range of its textile and garment material suppliers to stimulate the development of the sector. The country is looking for textile material suppliers outside Asean and China. And India has suppliers of materials and accessories for the Vietnamese garment and textile industry.
India's fabrics, natural fibers, cotton and garment accessories are of good quality and diversity. In addition the Asean-India free trade agreement has made Indian materials more competitive in term of prices.
India’s yearly exports of garments and textiles to Vietnam have already reached 400 million dollars. However, Vietnam’s imports of materials from India are still modest due to difficulties in payment and transport.
Last year India passed a $300 million credit program in order to help Indian companies enter the Vietnamese market. Both Indian enterprises exporting to or investing in Vietnam and Vietnamese enterprises which want to import garment and textile materials from India can seek preferential loans from the program. Vietnamese-India trade has strongly grown in recent years, up 9.84 per cent in 2014 in comparison with 2013.
Vietnam’s garment and textile sector has to import a large quantity of cotton as the country's cotton output meets only one per cent of local producers' demand. And India has a sufficient supply of the material for the Vietnamese textile industry.
US apparel imports continued to soar in August, reaching a record high for the second straight month. Total apparel imports rose by 8.7 per cent over August 2014.
On a 12-month smoothed basis, which corrects for volatility of data in a particular month, apparel import growth was 5.6 per cent in August, its biggest monthly jump in almost four years.
China, Vietnam, Bangladesh, Indonesia and India are the top five sources of US imported apparel so far this year. The apparel import increase contrasted sharply with total US imports in the month, which fell by 3.1 per cent despite the purchasing power of the stronger US dollar.
Apparel exports outperformed the total export market as well, falling by 7.5 per cent compared to last August, while total US exports of goods and services plunged by 10.5 per cent. On a 12-month smoothed basis, apparel exports increased by two per cent, their smallest monthly increase in almost two years.
Meanwhile the textile and apparel industry in the US remains healthy, with earnings and margins for the most part continuing to top year-earlier levels. On the mill level, for example, after-tax earnings were running a solid 18-per cent ahead of a year earlier. Apparel manufacturers managed to eke out another four per cent bottom line increase.
Technical textiles have grown big enough to have exhibitions devoted to them. Fashion fabrics can have technical functions like moisture transference, ultraviolet protection, and wind proofing antistatic and thermal conservation.
Bio-tech recycled-polymer based fiber has lasting skin care properties. It is composed of ocean collagen peptide and recycled rayon fiber, both of which are biodegradable. Some fabrics apart from the weatherproof properties have conductors with the potential to supply heating and illumination. Various micro systems are being integrated into fabrics, including polymer photonics, micro fluids and smart power.
Some companies are producing millions of meters of technical fabrics with features such as four-way stretch and permeability. Many of them relate to comfort but also to fashionable areas like double face. Many of these technical creations have a fashionable slant. Technical features are also increasingly incorporated into suitings, overcoats and shirtings. Rubberised finishes have come in. The biggest unrealised potential is the fabric as a second skin, sending and receiving messages from the brain.
German companies like Development Never Stops supply brands with the wherewithal for prototypes of functional and technological fabrics. Among such fabrics are anti-bacterial, perfumed fabrics with four-way stretch. One Chinese company has introduced magical printing as one of its innovations.
www.developmentneverstops.com
Ijaz A Khokhar, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) spokesperson said that to bring about revolutionary changes to enhance the export volume, it has submitted proposals to the Prime Minister.
Khokhar stated that to enhance the export of Pakistani products, a permanent display centre ‘Pakistan Trade House’ should be established in Dubai. Presently, their value-added products were unable to fetch high price because of poor packaging, he said. Thus, there was a great need to set up a product development and packaging centre in universities aimed at involving graduate students to help the industry improve the product line and packaging for better price, he added.
Special incentives for Research and Development (R&D) to enable the SMEs for up-gradation of machinery, innovation of new products and the compliance of issues should be announced by the government, said Khokhar. He also feels that an aggressive marketing plan for garment export to gain maximum benefits of GSP status was required at this point. Besides, to monitor all garment exports activity and policy-making for maximising exports, he stated, a high power committee comprising public and private sector in the name of ‘Garment Export Promotion Council’ should be constituted.
Moreover, the PRGMEA has also requested the government that import of fabric should be allowed under SRO 492 instead of DTRE, which is very complicated. Under this, merely 2 per cent exporters can avail while 97 per cent SME sector can be facilitated under SRO-492.
www.prgmea.org
Next-generation textile products such as smart garment components were showcased at Taiwan's Textile International Forum and Exhibition (TIFE) 2015.
Jointly organised by the Department of Industrial Technology, under the Ministry of Economic Affairs and the Taiwan Textile Research Institute (TTRI), TIFE 2015 was held from October 5-7, 2015 and was focussed on the theme, ‘Innovation and Value Creation’.
Domestic textile businesses, facing competition from low-cost manufacturers, need to look at enhancing the added value of their products and services, said Bai Chi-Chung, President of the TTRI. They need to create unique textile goods to maintain Taiwan's competitive edge in the global market, he added.
A heat-resistant smart garment made from fire-resistant fabric cable and USB connectors was one of the highlights of the expo. Fire-fighting suits made using such technology could allow fire-fighters to plug into electronic devices to search for victims or the sources of fires, And also to connect life-saving flashover warning devices.
Besides this, at the expo, the use of fabric for cable jackets also attracted the interest of domestic cable suppliers for Apple Inc. They were drawn to the exhibition because of the innate flexibility of the fabric cable jackets, which could greatly improve the durability of power cables for Apple products.
www.ttri.org.tw
The newly-elected President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Md Siddiqur Rahman, and other leaders were visited by the Ambassador of the Netherlands to Bangladesh Leoni Margaretha Cuelenaere, recently. Faruque Hassan, BGMEA Senior Vice-President, Directors ANM Saifuddin and Miran Ali were also present at the time.
BGMEA Vice President (Finance) Mohammed Nasir who was present at the meeting said that it was only a courtesy call and they discussed how Bangladesh's exports to the Netherlands could be increased. Besides, they also discussed issues relating to product prices and further market expansion to the Netherlands.
Now, after the security concerns, Nasir said that many foreign buyers were again coming to Bangladesh. Many international buyers were wary of going to the country after the killing of two foreign nationals, one Italian and a Japanese, in Dhaka, recently.
Nasir, the Managing Director of Evergreen Sweaters, said that Ambassador of the Netherlands to Bangladesh visited their office without any security personnel and discussed RMG issues with the BGMEA leaders. Syed Nurul Islam, Chairman and Chief Executive Officer of the Well Group however said that there were certainly some issues after the killings and that some international buyers were asking for meetings abroad in countries such as China or Hong Kong for their convenience.
www.bgmea.com.bd
China’s demand as the textile manufacturing hub is waning as Chinese workers are asking for a hike in wages and thus, local manufacturers are moving to other countries.
Higher pay, a stronger currency (it was 8 to 1 in the mid-2000s and is now 6.3 to 1) and Beijing’s desire to become a more automated, and high-tech society are all pushing clothing manufacturers to Vietnam and Bangladesh. However, Bangladesh is China’s biggest rival in shirts and sneakers.
Some large clothing retailers with global coverage have moved a portion of their production to Bangladesh and have gradually reduced their use of Chinese factories, as per CEIC data. The China contractor is taking their know-how and collaborating with firms elsewhere to keep the business of the big western clothing brands, in some cases. While in others, western brands are finding Bangladeshi companies on their own building new relationships.
Labour-intensive products have been produced by China and it has been selling them across the globe since the seventies. Subsequently, it has increased and through the decades gained market share. Trade volume as a share of GDP kept rising to a peak of 64.8 per cent in 2006. However, it declined steadily to 41.5 per cent in 2014.
The financial crisis in 2007-08 was one of the reason for the decline and another was that the wages of Chinese garment workers doubled, resulting in higher costs of production according to CEIC reports. The Chinese labour force has stepped up on productivity and skill level to compete in other industries.
A thirteen year old company, Textile Exchange believes in using textiles as a catalyst, as a means to create change. “Originally Textile Exchange was an organic exchange and our focus was on organic cotton. We felt organic cotton should be a market-driven solution to address issues such as the use of pesticides and water. Crop rotation was a vital issue. When you think of the way textiles are produced or manufactured, there was no vision of long term resource planning or for the well-being of people on the planet,” explains Pepper.
Perspective on India
Pepper says that some projects in India are quite good where farmers get training and education and a price for their product. However, she explains, at the same time there are projects that don’t have a strong market linkage and support. “We recommend farmers don’t grow cotton unless they have a strong market partner and clear market signals. There is an issue about availability of resources, of non-GMO seed. The GM folks all over the world have not been diligent about keeping their seeds segregated. A farmer may think he’s getting bad non-GMO seed because there’s been carelessness and neglect in its handling. The bottom-line is that that GMO is basically polluted and leads to contamination,” Pepper states.
She adds that basically the cotton seed supply is polluted and we are the victims of this situation. “It is a serious issue in India. We want Indian businessmen to say that these policies are endangering our business. There has to be a collective action. We aim to empower owners. The individual can do only so much and they derive strength from a team,” she avers.
Pepper recently attended a Textile Sustainability conference in Mumbai. Speaking about the conference agenda, Pepper said, “We have visited India earlier for some regional conferences, which was in 2004 and 2006. Every year we have a conference at a different location. We rotate between different markets. North America and the US are the highest markets for us. We engage the buying community there and have had a lot of registrations from India. We rotate to engage different segments of the whole supply chain, be it brands, suppliers or manufacturers. We have had conferences in Hong Kong and Turkey twice. What we want to do is promote that engagement in the supply chain.”
Role of Textile Exchange
Textile exchange does surveys of brands on the kind of materials they use. “We have stopped using the word sustainable since there is nothing that’s truly sustainable. We now call it as preferred,” explains Pepper, adding, “Most brands use more than one material and they give them a portfolio that allows them to pick preferred materials from each of the categories. Textile exchange works with brands and retailers to develop a strategy. Besides, they also work with people in supply webs and help them understand what those materials are, how and where to source them from and the importance of certification.”
According to her organic cotton has a strong base in India with producers and producer groups. “Knitting and weaving are strong. It is robust. We are looking for trigger points. The talk at the conference should serve as a catalyst. I think we are going to have a lot of proactive action. Errors have to be identified and addressed,” Pepper exclaims.
On a concluding note, she says, “We are going to fan out to various locations in India. We have 32 countries represented here. We want commitments to turn into a reality. That’s the continuum of change. We want to focus on creating change in the industry. We want understanding, awareness, and commitment in action. We want to keep the momentum going and have further development and action and address barriers to growth.”
Textileexchange.org
