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Local garment makers are gearing up with fresh investment to enter the global sportswear markets, as demand for the items is on the rise with changes in taste and fashion. Although Bangladesh is the second largest garment exporter worldwide after China, it has little presence in the global sportswear market worth $270 billion. China and Vietnam are currently dominating the market.
Bangladesh exports a few million jerseys during different occasions, although the country has greater potential in the sportswear segment, for both fashion and sports functional wear.
Abdus Salam Murshedy, managing director of Envoy Group, a leading garment exporter says that they are setting up a big factory in Gazipur on 50 bighas of land to produce specialised garment items, including sportswear, wind jackets, denim items and swimwear.
KM Rezaul Hasanat, chairman of Viyellatex, stated that sportswear has two segments – fashion and functional. The fashion segment includes garments that are used like any other apparel item, while the functional items are used for performance during sports.Local manufacturers export fashion sportswear items on a limited scale, but they are yet to explore functional wear.
Momin Mondol, managing director of Mondol, another leading garment exporter, says that they had shipped a few million pieces of jerseys during the last football world cup in Brazil in 2014. Bakhtiar Uddin Ahmed, general manager at Fakir Apparels a Narayanganj-based garment maker, stated that his company produces sports t-shirts and trousers on a limited scale.
Mohammad Hatem, former vice-president of Bangladesh Knitwear Manufacturers and Exporters Association, says he supplied eight lakh pieces of jerseys to 10 football playing nations, including Brazil, Germany, France, Portugal and Argentina, during the last football world cup.
Hatemfurther says a lot of factories in Bangladesh supply jerseys to different football clubs in Europe, like Barcelona, Real Madrid, Manchester United and FC Bayern Munich.Some factories inside the export processing zones export high-end functional sportswear items to renowned retailers and brands like Adidas and Puma.
"The just concluded bilateral trade meet between India & Bangladesh seemes to have benefitted both countries. Bangladesh PM Sheikh Hasina raised the issue of growing trade deficit and PM Modi assured her of his government's concrete steps to address it. She believes she has secured firm promise from her India that Delhi will take concrete actions to redress the balance. Incidentally, PM Hasina reportedly raised the issue of Indian imposition of anti-dumping duties on jute imports from Bangladesh seeking to resolve the issue."
The just concluded bilateral trade meet between India & Bangladesh seemes to have benefitted both countries. Bangladesh PM Sheikh Hasina raised the issue of growing trade deficit and PM Modi assured her of his government's concrete steps to address it. She believes she has secured firm promise from her India that Delhi will take concrete actions to redress the balance. Incidentally, PM Hasina reportedly raised the issue of Indian imposition of anti-dumping duties on jute imports from Bangladesh seeking to resolve the issue.
Anti-Dumping Duty on Jute
India accounts for about 30 per cent of Bangladesh's total export of jute. In January this year, India imposed an anti-dumping duty on import of jute and jute goods from Bangladesh and Nepal ranging between $19 and $351.72 per tonne. It means the importing country believes that foreign imported goods, and in this case, jute and jute goods from Bangladesh and Nepal, are priced below fair market value. This duty has been imposed for five years. Bangladesh is in strict opposition of this. As a result, jute/jute goods exports to India have impacted adversely. During July-March period of FY2016-17, it decreased by over 17 per cent to $105.25 million as against $171.41 million in the corresponding period last year. The anti-dumping duties became effective from January 05, so the first six-month of this period, the trade was not affected.
Exports to India during July-March (FY2016-17) rose by 7.28 per cent to $522.83 million, but earnings from apparel exports decreased by 7.85 per cent to $99.99 million. According to MAKS Attire director Farkhunda Jabeen Khan, India's total apparel market is worth $40 billion and there is no threat to India from Bangladesh.
Promising sectors getting impacted
Packaged food production has recently gained prominence in Bangladesh and the country is looking at global avenues to expand reach. Despite a number of agreements signed by both Bangladesh and Indian governments in facilitating mutual efforts to enter each others' market, Bangladeshi producers are facing problems. The Indian customs authorities don't accept certification by the Bangladesh Standards and Testing Institution (BSTI) and the exporters are required to testing their products in Indian labs there. It costs time, money and ultimately customers' discontentment.
This scenario remains unchanged despite agreement between BSTI and India's NABL (National Accreditation and Calibration Laboratories) in which BSTI received accreditation for 161 parameters of 27 different products such as fruit juice, fruit drinks, jam jelly, biscuits, noodles, carbonated beverages, soap, cement, MS rod and GI pipes. On the contrary, Indian products are not facing any difficulties in entering the Bangladesh market. Industry experts are of the view that the recognition of certificates issued by BSTI by the concerned Indian agencies could aid in reducing the huge trade gap existing between the two countries.
The commerce ministry fears that a higher than expected goods and services tax (GST) rate on gems and jewellery and textiles products may make such exports uncompetitive and exporters may have to be compensated. These two items are among six on which GST rates could not be finalized in the 14th GST council meeting in Srinagar that was last week and a decision was delayed until the next meeting on 3 June.
A commerce ministry official stated that after GST rates are imposed, if the tax rates increases on textiles and gems and jewellery sectors, then there will be need to evaluate how much more support they may require, because the margins in the international market are fixed and higher taxes may make them uncompetitive. Also, there won’t be uniform rates for textiles and gems and jewellery items as the products vary widely. At present, taxes on textile products vary from 4 per cent to as high as 60 per cent.
Rahul Mehta, president of the Clothing Manufacturers Association of India in a note posted on its website wrote that from all the informal feedback the association has received, government is likely to impose 12 per cent GST rate on the sector and the government has not considered the industry fit to be taxed at the lowest slab of 5 per cent, which would have given a tremendous boost to the industry.
The Gem and Jewellery Export Promotion Council has demanded to fix GST rate at 1.25 per cent for the sector with continuing exemptions for diamonds. Revenue secretary Hasmukh Adhia in an interaction with a news channel pointed out that the GST rate for all branded products including textiles will be decided on 3 June. He further stated that a final decision is yet to be taken on whether branded products should be treated differently from non-branded products, he also suggested that manufacturers of branded products will benefit if a GST rate is imposed since they will be able to claim input credit.
Techtextil was held in Germany, May 9 to 12, 2017. There were more than 47,500 visitors from 114 countries, an increase of around 14 per cent compared to 2015.
It hosted 1,477 exhibitors from 55 countries under the main theme Living in Space. This was a special space-travel oriented exhibition area. The highlight of the interactive area was a virtual reality journey through space to Mars that visitors could undertake and discover how technical textiles and their processing technology can make it possible to set up communities in space.
The Material Gallery showed textile products and processing technologies from around 40 selected Techtextil exhibitors with links to space travel. This year, the exhibition demonstrated the wide range of applications for high-tech textiles and textile-processing technology from and for the aerospace sector.
The Space Habitat area gave insights into how construction can function in space and what a residential environment might look like on Mars. A range of products designed to maintain life, including geo textiles for growing plants and textiles for medical applications, energy generation and filtration, were presented. Lightweight structures for space capsules and membrane systems ventilation, as well as functional apparel textiles and space inspired fashion, were also on display.
To make use of opportunities offered by the pact, experts suggested local enterprises prepare to meet rules set by the deal, especially those regarding product origin. Europe is a promising market for Vietnamese garments and textiles with export turnover reaching 3.5 billion USD in 2016, just behind the US.
Truong Van Cam, Vice President of the Vietnam Textile and Apparel Association (VITAS), described rules of origin as the most important thing in the agreement.
He says that, Vietnamese garment-textile firms must ensure that their products originate from Vietnam or use materials imported from the EU or the bloc’s trade partners. The local garment-textile industry is still heavily dependent on imported materials, mostly from China, the Republic of Korea and Taiwan (China), with the fabric sector.
VITAS Deputy Secretary General Vu Thi Phuong suggested domestic enterprises review their investment and business strategies to catch up with the transformation from the cut-make-and-trim production model to free-on-board and original design manufacturing (ODM) practices. According to Phuong, apart from strict rules, the agreement also offers an open mechanism to the Vietnamese side, saying that products using materials from the EU’s partner countries will also enjoy the tariff breaks.
Under the agreement, fabrics from the RoK, which has a free trade agreement with the EU, are considered as having clear product origin and are eligible for the tax reduction. VITAS statistics show that the garment-textile sector spends more than 10 billion USD each year on importing fabric, with more than half from China, about 18 percent from the RoK and 15 percent from Taiwan (China).
The association confirmed saying that if Vietnamese firms continue to import materials from China, they will find it hard to benefit from the EVFTA. European experts proposed local enterprises learn the rules and the roadmap for tariff reductions in order to better access the market.
Japan has revised its labeling laws for textile products, processed plastics and miscellaneous goods. According to the revision, washing care labeling for mufflers, scarves and shawls, and fiber composition of interlining for trousers are mandatory from April 1, 2017 while washing care labeling and fiber composition for hats, caps etc are mandatory from April 1, 2018.
There will be a one-year transition period for implementation. After the enforcement on April 1, 2017, items can be labeled either according to the requirements before or after the revision until April 1, 2018.
Most apparel and textile products are required to be labeled with fiber composition as well as instructions for care. Along with the effectiveness of the new care labeling standard implementation, textile products must be labeled with care symbols while fiber name and percentage are required. All the labeling information must be permanently attached to the textile product, either printed directly on the product or on a sewn-in label. The label must be visible, indelible and easily accessible to the consumer.
The Consumer Affairs Agency in Japan has carried out a partial revision of the Enforcement Regulations of the Household Goods Quality Labeling Act and revisions to the quality labeling regulations of textile products, processed plastics and miscellaneous goods.
The act protects the interests of general consumers.
The government has trimmed the textile and clothing export target to $45 billion for the current fiscal. The total shipments in the last fiscal missed the initial target of $48.5 billion by a huge margin. The target for 2017-18 will nevertheless represent a 17 per cent rise from the actual level of $38.6 billion in 2016-17. While garments exports witnessed a marginal rise from the year before, textiles exports dropped in the last fiscal. According to provisional official estimates in 2015-16, the overall textile and garment exports were to the tune of $40 billion.
The exports were way off the target in the last fiscal, as demand from China especially for cotton and yarn was warmish and recovery in the developed markets like the US and the EU still remained fragile. Demonetisation, too, hit the labour-intensive sector, albeit temporarily, as many workers are paid in cash daily or weekly.
Official sources says that the textile ministry has sought a quick resolution of the India-EU free trade agreement, which would pave the way for duty-free access of Indian textile and garment items to the EU, which account for more than a third of the country’s garment exports.
Talking about the Knitwear sector textile minister Smriti Irani commented that they will announce a big package for the knitwear industry which is facing several challenges in the next one month Irani, however, didn’t offer much details on the package.
The minister further added that roadshows were held in six countries the UK, the US, China, Russia, South Korea and UAE. To attract potential investors for the three-day Textiles India 2017 event, which will be inaugurated by Prime Minister Narendra Modi in Gandhi Nagar on June 30.
The government has provided Rs1,900 crore so far for a new duty drawback scheme that was announced as part of a special package for the garments industry in June last year For the current fiscal, the government has budgeted Rs1,555 crore for the remission of state levies (RoSL) to the garments industry under the duty drawback scheme.
Eight years after New York City pulled the plug on a plan to do away with antiquated Garment District zoning, city hall recently came up with a new proposal that’s barely more palatable to activists who killed off the first plan.
The Economic Development would wish to drop a 1987 rule that requires landlords of larger cross street buildings in the West 30s and lower West 40s between Broadway and Ninth Avenue to earmark 50 percent of above-ground floor space for apparel manufacturing.
The EDC, property owners, the Garment Center Alliance (a business improvement district) and the Council of Fashion Designers of America (CFDA) endorse the change, which would also offer manufacturers generous incentives to move to a new, modern complex in city-owned space in Sunset Park, Brooklyn.Rezoning advocates note that a mere 5,100 apparel-making jobs survive in the district, compared with 30,000 in 1987 and hundreds of thousands in the 1950s.
Scores of street-level, wholesale storefronts still display colorful dresses, sportswear and fabrics. They suggest a thriving “Seventh Avenue” apparel scene, but its deceptive most of what’s on display is made in China and South and Central America.
President Gale Brewer and Deputy Mayor Alicia Glen announced a “steering committee” made up of “major stakeholders” to weigh all the issues and make recommendations in time for an Aug. 21 Department of City Planning hearing.
If an agreement can be sewn up, DCP would enter the rezoning pitch into the city’s seven-month uniform land use review procedure.
Major area landlord Eric Gural, who owns four buildings, notes that rezoning wouldn’t require any manufacturing tenant to leave the neighborhood but purelywill offer the option of moving to Sunset Park with the help of city incentives.
A lot of the media make it sound like moving trucks are going to show up and every manufacturing company is being moved to Brooklyn but rezoning doesn’t require anyone to move says Gural.
Businessmen in the export-oriented garment accessories sector are fearing a rise in production costs due to implementation of the proposed VAT law from July despite assurances to the contrary from the revenue authority. At present, all export-oriented sectors are out of the purview of value-added tax. The new law prescribes a uniform 15 per cent VAT for most goods and services.
The VAT officials at the field levels have confirmed that if any trader buys garment accessories from the local market and sells those to the export-oriented garment factories, VAT will have to be paid at the government-fixed rate.
Zakir Hossain, deputy project director of the National Board of Revenue's VAT Online Project, says that if any accessories trader purchases goods from the local market by opening letters of credit they will not have to pay the VAT. The traders will have to pay the VAT if the goods are purchased from the local markets in cash, but the sum can be reclaimed at the end of the month in the form of rebate.
The new VAT is not well understood by the majority of the small accessories makers and traders. Md Abdul Kader Khan, president of the Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association pointed out saying that at present, garment exporters are overburdened with the 0.70 per cent tax at source, assumed If the VAT is imposed the sector will be abnormally affected.
According to Khan the garment accessories makers have invested more than Tk 30,000 crore. The number of accessories making factories is nearly 1,600 also the share of accessories sector is 20 percent in the total garment export.
The local manufacturers are also supplying accessories worth nearly $1 billion in a year to some other rising export-oriented sectors like ceramics, frozen fish, flowers, crockery and pharmaceuticals. In the early days of garment business in the 1980s, Bangladesh was dependent on accessories imports from China, Hong Kong, Taiwan, Turkey and India.
World apparel and footwear consumption is projected to rise 63 per cent by 2030.This increases the need for the fashion industry to address its environmental and social footprint and take remedial action.
Global Fashion Agenda and Boston Consulting Group have developed a pulse score to assess the industry’s performance on environmental and social issues across fashion companies and stages of the value chain.
As of today, the sustainability pulse of the industry is weak – scoring only 32 out of 100.
The fashion industry has a clear opportunity to act differently, pursuing profit and growth while also creating new value for the world economy.
In the past decade, the global fashion industry has been an engine for global development and made progress on sustainability. Awareness is growing and individually, companies are optimising business practices to limit their negative impact.
But with current trajectories of production and consumption, pressures on natural resources and social conditions will intensify by 2030 to the point of threatening the industry’s growth itself.
The industry can move beyond fragmented individual actions with incremental results. Through collective efforts the industry can unite around an agenda for change, drive the needed systemic change and work jointly on disruptive innovation.
