Page 1
Cotlook A Index - Cents/lb (Change from previous day)
24-01-2019 83.00 (+0.45)
22-01-2018 94.10
23-01-2017 82.45
New York Cotton Futures (Cents/lb) As on 28.01.2019 (Change from
previous day)
Mar 2019 73.99 (-0.14)
May 2019 75.58 (+0.99)
July 2019 76.87 (+0.96)
28th January
2019
Chinese importers rework up to $500 million Indian cotton yarn orders
Govt to organise national conclave on technical textiles in Mumbai on Jan
29
3 native fabrics to get GI tags soon
Government to link industry, handloom clusters
Donald Trump's China tariffs likely to be investigated by the WTO
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
Jan 2019 20600 (-20)
Cotton 15960 (+45) Feb 2019 20920 (-70)
Yarn 24745 (0) Mar 2019 21180 (-30)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Govt to organise national conclave on technical textiles in
Mumbai on Jan 29
Chinese importers rework up to $500 million Indian cotton yarn
orders
Government to link industry, handloom clusters
Union Cabinet may soon approve relief package for farmers
3 native fabrics to get GI tags soon
Efforts On To Double Exports From $321 Billion: Suresh Prabhu
Expo will help find global buyers for Tamil Nadu textiles: Smriti
Irani
CPEC and opportunities for India
------------------------------------------------------------------------------------------------ Donald Trump's China tariffs likely to be investigated by the
WTO
Bangladesh moves up seven spots on economic freedom index
PTI govt foregoes Rs125b to textile, fertilizer, power industries
Making Vietnam’s textile industry sustainable
Have China-Japan relations entered a new era?
--------------------------------------------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Govt to organise national conclave on technical textiles in Mumbai on Jan 29
(Source: Business Standard, January 27, 2019)
The government on Sunday said a national conclave on technical textiles will be held here
on January 29, which will also see the release of HSN codes for items under the sector.
The conclave will be presided over by Union Textiles Minister Smriti Irani.
The release of HSN codes by the Government of India for technical textiles will be one of
the major highlights of the conclave, an official statement said.
"Grateful to PM @narendramodi ji & @sureshpprabhu ji for fulfilling textiles industry's
long-standing demand of declaring HSN codes of Technical Textiles items under separate
category. 207 items notified as technical textiles will give major boost to the sunrise
sector," Irani had said in a tweet earlier.
In another statement, the ministry said the "Artisan Speak" event will be held at UNESCO
World Heritage site Elephanta Caves to showcase the rich handloom and textile tradition
of India.
Irani will be present on the occasion. Cricket icon Sachin Tendulkar will also grace the
occasion, on behalf of M/s Arvind True Blue Limited.
The occasion will witness commitments by the private sector towards development of
handlooms, with the signing of collaborative arrangements between the government and
leading retailers and textile brands.
Under the agreements to be signed between Office of
Development Commissioner (Handlooms), Ministry of Textiles and textile companies,
Weavers' Service Centres (WSCs) under O/o DC (Handlooms) will act as a facilitator,
linking textile companies and handloom clusters.
"The WSCs will enable textile firms to directly source their requirements from handloom
clusters, as per defined quality, cost and time constraints. This will also result in better
price realisation and improved market understanding for weavers," the statement said.
The government recently notified Harmonised System of Nomenclature (HSN) codes for
207 technical textile merchandise that were till now traded as conventional textiles.
The technical textile sector is the sunshine sector for the textile industry and it is one of
the fastest growing segments of the Indian economy.
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4 CITI-NEWS LETTER
The sector is expected to see a double digit growth in coming years and is projected to
reach a market size of Rs 2 lakh crore by 2020-21.
As per baseline survey of technical textile industry in India, there are around 2,100
units manufacturing technical textiles in the country and most of them are concentrated
in Gujarat followed by Maharashtra and Tamil Nadu. India has 4-5 per cent share in the
global technical textiles market size across twelve segments.
Technical textiles constitute 12-15 per cent of the total textile value chain in India, whereas
in some of the European countries technical textiles constitute 50 per cent of the total
textiles value chain.
Home
Chinese importers rework up to $500 million Indian cotton yarn orders
(Source: Kritika Suneja, Economic Times, January 28, 2019)
An improvement in US-China trade
relations has started to hurt India’s cotton
yarn exports and there is a chance of more
damage. Chinese importers have
renegotiated orders of Indian cotton yarn
worth $400-500 million in the past few
weeks.
“Recently, there have been problems of
renegotiation and cancellation of orders by importers of cotton yarn in China,” said an
official privy to the development.
Indian exporters said importers, import agents and Chinese bankers have defaulted,
renegotiated confirmed orders or even cancelled shipments and letters of credit on 10-12
contracts without assigning proper reasons.
The US-China tariff war had benefited India. Between June and September 2018, the US
announced high customs duties on several Chinese goods and China retaliated by
increasing levies on US goods. Consequently, India’s exports to the neighbouring country
increased by about 32% to $8.46 billion during the June-November period.
“Earlier, the Chinese had put duties on American cotton so there was pressure to buy from
India. Now, the situation has eased so they want to moderate the prices... This is a
spillover of US China trade issues ” the official said make efforts to resolve their trade war.
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India exported $892.4 million worth of cotton yarn to China in April-November, up 2.5%
from $870.2 million in 2017-18.
“China is slowing and it fears losing competitiveness if the second round of American
tariffs, which includes apparel, come into effect from March. They may want to cut down
on the inventory,” said another person.
While China is the largest importer of cotton yarn with a share of 46.7% globally, India
remains the largest exporter of cotton yarn in the world.
According to Ajay Sahai, director general of the Federation of Indian Export
Organisations, Chinese importers are apprehensive because domestic consumption has
declined and they are unsure of an agreement with the US.
Home
Government to link industry, handloom clusters
(Source: Business Standard, January 27, 2019)
Artisan Speak, an event to be held at the Elephanta Caves on Monday, will mark a new
beginning of commitments by the private sector towards the development of Indias
handlooms.
Handloom promotion will get a boost due to the signing of collaborative arrangements
between the government and leading retailers and textile brands.
Under the agreements to be signed between the Office of the
Development Commissioner (Handlooms) and textile companies, Weavers' Service
Centres (WSCs) under the office of DC (Handlooms) will act as facilitators, linking textile
companies and handloom clusters, an official statement said.
The WSCs will enable textile firms directly source their requirements from handloom
clusters, as per defined quality, cost and time constraints. This will also result in better
price realisation and improved market understanding for weavers.
Union Minister for Textiles Smriti Irani will be present on the occasion, as will cricket
star Sachin Tendulkar on behalf of M/s Arvind True Blue Limited.
Arvind True Blue Limited, Raymond Ltd., Welspun India Limited, Titan Co.
Ltd. and Reliance Retail Limited are the textiles companies which will sign agreements
with the Ministry of Textiles.
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6 CITI-NEWS LETTER
The strategic partnership between big brands and handloom clusters is aimed at
establishing long-term market linkages between key industry players on the one hand and
handloom weavers on the other.
The event will also include a grand showcase of Indian textiles, through a curated cultural
show, with participation of leading designers. The presentation by established and
emerging designers along with artisans will be based on GI (Geographical Indication)
textiles drawn from various regions across India.
Designers Rahul Mishra and Meera and Muzaffar Ali will showcase Chikankari, Payal
Khandwala has worked with Banarasi brocades and master weaver Shantilal Bhangade
will present works in Paithani.
There will be Gaurang who will showcase Kancheepuram silks, Ushadevi Balakrishnan
from Kerala presenting Balaramapuram sarees,
designer Karishma Shahani Khan showcasing kota doria/Chanderi textiles, Padmaja
showcasing Maheshwari textiles, artisan Rajib Debnath (Burdwan)
showcasing Jamdani saris, and designer Abraham & Thakore have worked with hand-
block prints on handloom cotton.
The event, backed by IMG Reliance, will also be marked by a cultural programme, with
music and dance performances.
Home
Union Cabinet may soon approve relief package for farmers
(Source: The Hindu, January 27, 2019)
The Union Cabinet is expected to soon approve a relief package for farmers grappling with
falling prices of their crops and to tackle distress in the farm sector, according to sources.
The likely relief package is seen as an attempt to assuage the farming community’s
discontent ahead of the general elections.
“...The Agriculture Ministry’s proposal on addressing income deficit syndrome of small
and marginal farmers is on the agenda (at the Cabinet meeting),” a source said.
Meanwhile, the Cabinet meeting, which was scheduled for January 28, has been deferred,
as per sources. The Agriculture Ministry has recommended several options to provide
both short and long-term solutions to address agrarian distress. However, a final call will
be taken in the Cabinet meeting as a huge cost is involved, they said.
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7 CITI-NEWS LETTER
One of the options proposed is waiving interest on crop loans for farmers who pay on
time, costing an additional ₹15,000 crore to the exchequer.
There is also a proposal to completely waive premium for taking insurance policy for food
crops. The Centre is also evaluating the scheme followed by the Telangana and Odisha
governments wherein a fixed amount is transferred directly into the bank account of
farmers, the sources further said.
Agriculture Minister Radha Mohan Singh had recently indicated that the government
would announce an agriculture package before the 2019-20 budget. The NDA government
will present an interim budget on February 1.
Experts said the government has less time to implement any new scheme. The measure
has to be such that it can be implemented faster to reap the political gains during the
elections.
It may be noted that the central government has taken farmers’ issues seriously after the
ruling BJP was defeated in Madhya Pradesh, Rajasthan and Chhattisgarh in the recent
state polls, where rural distress was a key factor.
Farmers are in distress owing to fall in prices of most crops in view of bumper crop.
Home
3 native fabrics to get GI tags soon
(Source: Times of India, January 27, 2019)
The state handloom and textiles department has applied for the geographical indicator
(GI) tag for three textile varieties from Tamil Nadu at the GI Registry and would soon
apply for three more, said P Sanjai Gandhi, Geographical Indication attorney and IPR
attorney. The fabrics for which GI tag applications have been given are Thirubuvanam
Silk sari, Kodali Karuppur Sari and Karaikudi Kandangi Sari. “We are waiting for the legal
formalities to be completed shortly,” Gandhi said.
Soon, GI tag applications for three more fabricsSediputta Sari, Uraiyur Sari and
Negamam Cotton Sariwill be filed, the official said. “If a product is given the GI tag, the
originality of the product can be verified and the weavers can benefit directly.”
At present, six fabric varietiesKanjivaram Silk Sari, Bhavani Jamukkalam, Arni Silk,
Kovai Kora Cotton, Salem White Silk and Madurai Sungudi Sarihave earned the GI tag
Home
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8 CITI-NEWS LETTER
Efforts On To Double Exports From $321 Billion: Suresh Prabhu
(Source: NDTV, January 27, 2019)
He said the policy focuses on five key elements, namely agriculture, horticulture,
plantation, fisheries and meat
Union Commerce and Industry Minister Suresh Prabhu on Sunday said new policies of
the government will ensure the doubling of exports, currently pegged at $321 billion, in a
few years. He was speaking at the inauguration ceremony of a new office and laboratory
complex of the Export Inspection Agency at Margao in south Goa.
"It is our endeavour to increase India's exports from the current $321 billion to almost
double in a few years. One of the principal potential areas for export is fisheries,especially
at a time when for the first time, the country has come out with an agricultural policy,"
Mr Prabhu said.
He said the policy focuses on five key elements,namely agriculture, horticulture,
plantation, fisheries and meat. "All these are going to be exported. From the current $30
billion, we want to take it to $100 billion.Fisheries can create several lakh jobs in the
country," he added.
He said the Air Cargo policy announced on January 15 this year will boost fish exports,
adding that the Centre and Goa government would tie up to form clusters to make value-
added products. "Vegetables, fruits, cashew, fish can be exported from Goa. For that, we
have already created a marine export development agency," he said.
Home
Expo will help find global buyers for Tamil Nadu textiles: Smriti Irani
(Source: Indian Express, January 28, 2019)
The events would aimed at helping the industrialists of Tamil Nadu find buyers from
across the world.
The State government’s international textile expo ‘TEX TN’ and the fair by Texprocil
(Cotton Textiles Export Promotion Council) and Pdexcil (Powerloom Development and
Export Promotion Council) titled IND TEXPO saw that participation of buyers from both
the domestic and international circles. The events would aimed at helping the
industrialists of Tamil Nadu find buyers from across the world.
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9 CITI-NEWS LETTER
Inaugurating the expo on Sunday at the CODISSIA trade fair complex, Central Textile
Minister Smriti Irani welcomed the buyers from over 20 countries. She said that the expo
was meant to aid all industrialists in the entire textile value chain get good recognition for
their goods and services in the foreign markets.
Prime Minister Narendra Modi himself has been showing a lot of interest to ensure that
the necessary support from the Centre was being given to a State like Tamil Nadu conduct
such events, she noted.
The minister talked about how the State benefitted by implementing various schemes
initiated by the Centre. The power bank scheme was implemented to help the powerloom
industrialists get yarn directly from the spinning mills rather than depend on middlemen
or brokers, she pointed out.
Powerlooom weavers also benefitting from the various subsidy schemes, she noted.
State Minister for Textile O S Manian pointed out that the AIADMK-led government was
the first to organise an international textile expo in the State. Meanwhile, buyers seemed
impressed by the expo. Jenny Bai and Jane Wang from China noted that all products from
across the value chain had been put on display under roof to help buyers.
Home
CPEC and opportunities for India
(Source: Shakeel Ahmad Ramay, Daily Times, January 28, 2019)
India has been skeptical of the China Pakistan Economic Corridor (CPEC) from its very
inception. It recognizes CPEC as a stumbling block for realization of its dream as a great
power of Asia.
In 2018 India presented 7.5 percent growth rate as a sign of overcoming China with a
growth rate of 6.5 percent. In mathematical terms it seems fascinating but its translation
into real development of net worth does not make any difference. According to
calculations published in the Times of India in March 2018, they clearly rejects the notion
of any comparison between China and India in term of gains in net worth during 2017-
2018.
Calculations show that with 7.5 percent growth India would only be able to add 215 Billion
US dollars in 2018 to its GDP. For China, the figure would be 1181 billion US dollar.
China’s rate of increase in economy almost equals half of India’s economy every year.
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10 CITI-NEWS LETTER
There is no doubt that India is a rising middle power and it has its own advantages. It is
one of the biggest markets. It has a rising middle class, which is important for sustainable
growth. But the point is that India has to be realistic in exhibiting its status and power
and play a constructive role. It will reap the benefits of cooperation and economic
initiatives.
Unfortunately, India’s actions point to another direction. From its perceived imagination
India is trying to act as a stumbling block in the region. CPEC is the latest victim of this
attitude of India. Although some experts believe that it is due to enmity of India toward
Pakistan, but it is not the full story.
However, sane voices in India are arguing in another direction. They are asking their
government to be a partner in CPEC and reap the benefits of economic development.
CPEC has enormous benefits for India. Shyam Saran, ex-Indian diplomat pointed out that
looking at the financial health of India, it is wise for India to be part of the Belt and Road
Initiative (BRI), and CPEC presents an opportunity.
For improving regional connectivity there is a need to improve transport and related
infrastructure. South Asia is lagging behind on this by a million miles. The World Bank in
2014 estimated that South Asia needs 1.7 to 2.5 trillion dollars to improve its
infrastructure related to transport, service and others till 2020.Annual spread of this
required investment shows that every year South Asia will have to invest 6.6 to 9.9 percent
of the accumulative GDP of South Asia. Another dimension of the issue is that lack of
investment will increase the cost of investment, as we have observed it has increased form
3 percent in 2010 to 6.6 to 9.9 percent in 2014.Pakistan and India stand alone in all these
calculations due to increasing population and middle class.
CPEC provides an opportunity for the region to benefit from it and become part of the
greater plan of BRI. Although CPEC will not be able to provide all required investment
but it will help to cover a substantial part of it. Pakistan by recognizing this fact has
become part of CPEC. In recent years Pakistan has immensely benefited from investment
in energy and transport infrastructure. It is also advisable for India to be part of it and
reap the benefit. Inclusion of India will also pave the way for other regional countries and
there would be smooth sailing for CPEC and BRI. It is also important for India in context
of transition of economy from primary to tertiary stage. Right now, India’s secondary
sector i.e. manufacturing sector, did not show much development. It is necessary in
transition phase that manufacturing sector takes off to create jobs. The same is true for
Pakistan and Pakistan is trying overcoming this through CPEC investments. Planned
Special Economic Zones are a step in this direction.
Moreover, joining of India to CPEC will also open doors of opportunities for regional
connectivity and connectivity to Central Asian States. Being part of CPEC and BCMI,
India can benefit by creating linkages between these corridors. It will open Afghan and
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11 CITI-NEWS LETTER
Central Asian markets for India. India is craving for many years to enter Afghanistan and
Central Asia, CPEC can help it. It would also be beneficial for other regional countries, as
it will open markets for Nepal, Sri Lanka and Myanmar etc.
Fortunately, China and Pakistan are open for inclusion of India or any other country in
CPEC. Both countries have reiterated many times that CPEC is a project of the future and
for everyone. However, India’s self-perceived fears, assumptions and dreams are
hindering the inclusion of India. India can decide anything as a sovereign country, but it
has to keep in mind that the opportunity cost of missing CPEC and BRI is very high for
India and the region.
South Asia needs an investment of 1.7 to 2.5 trillion US dollars, only for infrastructure.
This does not include the investment in education, health, skill development or human
capital development. Addition of these costs may increase the investment figure to 3-5
trillion US dollars. Therefore, taking any initiative, India must remember that 3-5 trillion
is beyond the capacity of any country or South Asia as a region.
The writer is Executive Director of the Zalmi Foundation
Home
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GLOBAL:
Donald Trump's China tariffs likely to be investigated by the WTO
(Source: Live Mint, January 27, 2019)
Tensions between the US and China are about to get more complicated, with the World
Trade Organization poised to begin an investigation into President Donald Trump’s tariffs
on $250 billion of Chinese goods.
On Monday, the Geneva-based arbiter of trade disputes will likely launch an inquiry into
whether the US duties run afoul of a requirement that all WTO members give each other
the same tariff treatment, as China asserts.
The investigation comes at a delicate moment between the world’s two largest economies.
A new round of trade talks is scheduled to begin on 30 January, and if a deal isn’t reached
by 1 March, the Trump administration has threatened to raise the tariff rate on $200
billion in Chinese goods to 25% from 10%.
“This WTO case is especially significant because it deals with the central international
legal issue in the US conduct of its trade war with China — whether the US can impose
trade restrictions on China in response to alleged Chinese WTO violations without first
seeking dispute settlement in the WTO," James Bacchus, a former Democratic
congressman and onetime head of the WTO’s appellate body, said in an email. “I believe
these US tariffs are inconsistent with WTO obligations, but it will be left to my successors
on the WTO appellate body to decide."
Existential threat
The WTO is already facing an existential threat over a hold the US has placed on new
appellate judge nominations. Absent any reforms, the decision-making wing of the
organization will have too few judges to rule on cases by the end of the year. This new
investigation could further antagonize the US, which sees the WTO as overstepping its
authority.
This is China’s second request for an inquiry on the matter, the first one last month was
vetoed by the US. The investigation is likely to move ahead on Monday because WTO rules
prevent members from blocking a dispute inquiry a second time.
But China won’t be expecting a resolution to the investigation any time soon due to a
backlog in the WTO dispute settlement system. So far, 23 disputes have been brought
against the current US administration, including an EU inquiry into tariffs levied against
aluminum and steel imports.
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13 CITI-NEWS LETTER
“These trade tensions are not only a threat to the system, they are a threat to the entire
international community," Roberto Azevedo, the director-general of the WTO, said on a
panel in Davos on 24 January. “The risks are very real and there will be economic
impacts."
Intellectual property
The case cuts to the heart of the US-China trade conflict because Trump says the tariffs
are necessary to counter an alleged Chinese campaign to steal American intellectual
property.
China’s dispute alleges the US tariffs violate the WTO’s most favored nation provision
because the measures fail to provide the same tariff treatment that the US offers to
imports of all other WTO members.
The US counters that the tariffs fall outside the WTO’s remit because they address trade
issues that are not specifically covered under WTO rules.
Home
Bangladesh moves up seven spots on economic freedom index
(Source: Dhaka Tribune, January 27, 2019)
Heritage Foundation says Bangladesh’s economic freedom score is 55.6, making it the
121st freest economy in 2019
Bangladesh's ranking on economic freedom has moved up seven notches to 121st from
128th this year, according to the Heritage Foundation, a Washington-based think tank.
According to the 2019 Index of Economic Freedom released by the organization on
Thursday, the government’s reforms have improved the freedom of doing business in the
country. However, slower implementation of the reforms are undermining economic
development.
“Bangladesh’s economic freedom score is 55.6, making its economy the 121st freest in the
2019 index,” said the report.
While the country's overall score has increased by 0.5 points, it scored higher in terms of
property rights and "government integrity countering declines in investment freedom and
fiscal health", the report added.
In the 2018 Index of Economic Freedom, Bangladesh’s position was 128th, with a score
of 55.1 points.
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Bangladesh also ranked 27th among 43 countries in the Asia-Pacific region, and its overall
score is below the regional and world averages, showed the report. The world average
freedom score is 60.8 points, while the Asia Pacific regional average stands at 60.6 points.
As per the report, robust annual economic growth of approximately 6% for two decades
has been driven by a rapid increase in private consumption and fixed investment.
"Nevertheless, Bangladesh still grapples with poor infrastructure, endemic corruption,
insufficient power supplies, and slow implementation of economic reforms," the report
stated.
On the other hand, the report found that the "fragile rule of law" continues to "undermine
economic development", while "corruption and weak enforcement of property rights"
force workers and small businesses into the informal economy.
Furthermore, despite some progress in "streamlining business regulations,
entrepreneurial activity is hampered by an uncertain regulatory environment and the
absence of effective long-term institutional support for private-sector development",
according to the report.
The report also stated that although a well-functioning labour market has not been fully
developed yet, labour productivity growth has been slightly higher than wage hikes.
The index also revealed that in the South Asian region, Nepal ranked 136th, Sri Lanka
ranked 115th, Bhutan ranked 74th, India 129th, Pakistan 131st, and the Maldives achieved
the status of 141st economy.
Hong Kong, Singapore and New Zealand each logged increases in their index scores,
finishing first, second, and third in the rankings, respectively scoring 90.2, 89.4, and 84.4
points.
The Index of Economic Freedom evaluates countries on four broad policy areas that affect
economic freedom—rule of law, government size, regulatory efficiency, and open markets.
Additionally, property rights, judicial effectiveness, government integrity, tax burden,
government spending, fiscal health, business freedom, labour freedom, monetary
freedom, trade freedom, investment freedom, and financial freedom are also taken into
account while measuring the economic freedom of a country.
Economists and industrialists have expressed almost identical views on the report,
stressing on doing more regulatory and on-site initiatives to improve the ease of doing
business to take the country to a faster and sustainable economic growth trajectory.
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15 CITI-NEWS LETTER
Speaking to the Dhaka Tribune, Abdus Salam Murshedy, managing director of Envoy
Textile, said: “Access to finance and getting a business registered is now better compared
to previous years. This is because of government initiatives ensuring faster services.”
He added that steady growth and political calmness have also helped Bangladesh in
improving on the index.
“Some initiatives have been undertaken in recent times to improve the business
environment. Bangladesh Investment Development Authority has taken steps to make
vibrant the one stop services. But the implementation is not yet at satisfactory level,”
former caretaker government adviser AB Mirza Azizul Islam told the Dhaka Tribune.
Since there is no significant improvement in regulatory efficiency and good governance,
the rise in ranking does not mean significant improvement in the country’s overall “doing
business” situation, said the economist.
He urged the government to implement the projects within the deadline to keep the costs
within limits.
“Upward movement in the economic freedom index is a good sign, but it is not enough in
terms of improving quality,” said Centre for Policy Dialogue (CPD) Research Director
Khondaker Golam Moazzem.
On economic growth and other improved economic and social indicators, Bangladesh’s
status is comparable to other developing countries, but the ease of doing business is
comparable only to African nations, said Moazzem.
Home
PTI govt foregoes Rs125b to textile, fertilizer, power industries
(Source: Ahmad Ahmadani, The Profit, January 27, 2019)
The incumbent government has forgone approximately Rs125 billion to the owners of
fertilizer, textile, captive power plants, and general industry – which they had collected
from farmers and masses under the head Gas Infrastructure Development Cess (GIDC).
Sources in the finance ministry informed that the ministry had obtained an approval from
the federal cabinet to forgo more than Rs125 billion under GIDC, which the influential
owners of fertilizer, textile, captive power plants, and general industry had already
collected from the farmers and the masses in last three years, without consulting relevant
ministries.
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16 CITI-NEWS LETTER
They said that although a 50 per cent waiver to owners under GIDC was not part of the
federal cabinet’s agenda, the finance ministry, however, got approval from the federal
cabinet. The finance ministry in an apparent bid decrease the rate of GIDC has prepared
a draft to get amendments in the GIDC Act approved by the parliament, said sources.
It is relevant to mention here that the cabinet on Thursday decided to bail out three major
defaulters by waving off 50 per cent outstanding amounts to the tune of Rs200 billion.
However, major losers in this decision would be the poor farmers who had paid around
Rs125 billion in GIDC to the fertilizer industry.
Last year, through an amendment to the GIDC Act, the government had notified to collect
50 per cent of the cess levied or charged from January 2012 to May 2015 in two tranches
for the Compressed Natural Gas (CNG) sector. As per that notification, the All Pakistan
CNG Association agreed to pay the due amount of Rs12 billion.
It is relevant to mention that fertilizer producers, captive power plant owners, and CNG
filling outlets had owed the government Rs400 billion on account of GIDC, a big amount
which they had kept with them after obtaining stay orders from courts.
Rates of this cess per mmbtu varies industry wise, where fertilizer is required to pay
Rs300/mmbtu for feed gas and Rs150/mmbtu for fuel gas which increases urea
manufacturers cost by Rs400/bag. Meanwhile, industries and captives power plants are
required to pay Rs100 and Rs200 per mmbtu respectively.
In the last five years, the government had missed its actual collection target of GIDC by
an average 56 per cent, as Sindh High Court (SHC) in its verdict concluded that GIDC
ultra vires the constitution. Currently, this case is pending with the Supreme Court (SC).
The sources further said that the fertilizer industry has been charging farmers with Rs405
under the head GIDC over the sale of each bag of urea. They said that the industry has so
far collected approximately Rs40 billion from the farmers but have still not paid GIDC to
the government.
The owners of fertilizer plants have withheld this amount in the company’s bank accounts
since October 2016 and they are reaping benefits from the amount withheld, said sources.
The GIDC was imposed by the Pakistan Peoples’ Party (PPP) government on gas
consumers, including fertilizer, captive, and CNG to raise funds to execute gas pipeline
projects like gas pipelines and the LNG project.
However, the levy became controversial when the Pakistan Muslim League-Nawaz (PML-
N) government, instead of spending the amount on building pipeline projects, made it
part of the budget. Later different sectors approached the court and obtained stay orders.
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Making Vietnam’s textile industry sustainable
(Source: ASEAN Post, January 27, 2019)
The Vietnam Textile and Apparel Association (VITAS) and World Wildlife Fund (WWF)
Vietnam are collaborating to transform Vietnam’s bourgeoning textile and apparel
industryinto a more sustainable one. The project was launched this month and will be
carried out from 2018 to 2020. It will involve engaging the sectoral players to better
manage their water and energy use – focusing specifically on the Mekong and Dong Nai
deltas, where more than half of Vietnam’s apparel factories are located.
The project also targets raising the sustainability profile of Vietnam’s textile and apparel
industry by introducing better river basin governance to improve water quality. This is
expected to bring about social, economic, and conservation benefits to the country. It
follows a similar project funded by HSBC Bank to reduce the impact of the textile industry
along the value chain in China, Bangladesh, India and Vietnam.
According to VITAS’ Chairman, Vu Duc Giang, the project is timely as it reinforces the
need for better management of the textile and apparel industry by holding it to higher
environmental and social standards. This is parallel to the increasing awareness of
customers worldwide who demand global brands to become more ethical in their business
practices.
"Vietnam ranks as the fifth largest exporter of apparel goods in the world but our industry
is more famous for low-cost production with limited environmental standards. If we do
not change our practice now, Vietnam could lose its competitiveness. That is why this
project is so important and timely," he said.
"In the long run we want to see factories, industrial parks and other actors come together
to take more proactive collective actions to address risks and impacts beyond their factory
fences and more responsibly manage shared resource uses across-sectors," said WWF-
Greater Mekong’s Water Lead, Marc Goichot.
Environmental footprints
Taking advantage of their young population, low-cost labour, and natural resources,
countries such as Cambodia, Lao PDR, Myanmar and Vietnam have targeted investments
in the textile and apparel industries.
The textile industry however, consumes a lot of energy and water in its operations
throughout the value chain and along the products’ lifecycle. The consumption of energy
and water takes place in the processing of the raw materials all through to the production
stage. This overconsumption is also seen in the logistics, sales and marketing of the
products.
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Other factors can also affect how much energy and water is consumed. Different fibres –
whether they are made from renewable materials such as cotton, bamboo and silk or non-
renewable sources like petroleum – have different water and energy footprints. For
example, polyester fabrics which are made from petroleum consume over 70 percent of
the total energy used at the production phase. For cotton products, most of the energy
consumption occurs during the post-retail phase by consumers. In terms of water usage,
cotton is one of the most water-intensive agricultural crops.
Energy consumed by the textile industry raises the national greenhouse gas (GHG) levels
and because of this, the industry is seen as one of the main drivers of climate change.
Meanwhile, the water footprint during these processes include overconsumption and
release of improperly treated or untreated chemical effluent into waterways. The industry
is also responsible for generating solid waste such as fabric waste.
In the face of domestic environmental issues such as having rivers that are too polluted
for human contact, water scarcity and air pollution, China has recently adopted greening
measures for its own textile and apparel industry. The country is responsible for more
than 50 percent of the world’s fabric. According to a report by United States (US) based
Natural Resources Defense Council (NRDC), 33 Chinese textile mills serving brands such
as Levi Strauss, H&M, Target and Gap are collectively saving US$14.7 million annually by
adopting simple greening and efficiency measures.
With increased consumer awareness of ethical and environmental standards, enterprises
will need to improve their practices or lose out to global competition. The introduction of
greening measures that will give Vietnam a leg up over the rest of the world will require
additional commitment from the authorities and industry players. However, with Chinese
businesses leading the way, it will surely make the transformation easier to swallow.
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Have China-Japan relations entered a new era?
(Source: Chen Yang, Global Times, January 27, 2019)
Years from now when people look back at the China-Japan relationship during the first
half of the 21st century, they could find that 2018 was a special point in time. It was during
this year that ties between the two sides literally entered a new era. Their mutual
understanding of one another underwent fundamental changes.
Amid the rise of the trade protectionism worldwide, the consensus between China and
Japan on safeguarding the global free trade system and transforming their bilateral ties
from competition to collaboration became the new ballast for their relations.
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Before Japanese Prime Minister Shinzo Abe's China visit in October, he announced that
Japan would end its official development assistance (ODA) to China. The move reflects a
fundamental change in the total strength of both countries. Moreover, it means the two
will have a cooperative relationship rather than one based on assistance and support. It
is here that the China-Japan relationship entered a new era in the truest sense. The
change will influence future cooperation between both nations in various fields.
Ties between Beijing and Tokyo will continue improving in 2019. But they must also
safeguard against potential threats that could undermine relations.
US trade protectionism has placed Japan under economic pressure. Due to US President
Donald Trump's capricious policies, Abe sought a stable relationship with Beijing while
developing Tokyo-Washington ties. This means China-Japan relations will unlikely
experience a retrogress of any kind. In 2019, Abe will pursue a balance between China
and the US.
This year, Beijing will preside over the rotating China-Japan-South Korea trilateral
summit, and Abe will use the opportunity to visit China once again. With the upcoming
Japan G20 summit in June, Tokyo is expecting Chinese President Xi Jinping's official
first visit to Japan. Even if Abe is not as enthusiastic in seeking amicable relations with
China like last year, the bilateral ties will at least remain steady.
Although the overall tone of China-Japan relations for the new year is expected to remain
stable, potential threats exist, with some having already appeared since last year. Abe's
cabinet approved the National Defense Program Guidelines (NDPG) and the
accompanying Mid-Term Defense Program in December which involve the acquisition of
new stealth fighters and long-range missiles, and highlight the "China threat theory."
The NDPG and the Mid-Term Defense Program will guide security and defense policy
trends through to 2023. Under these two measures, it is foreseeable that Japan will boost
its military forces and continue to advocate the "China threat theory. "
If Japan acts too radical in promoting its military capabilities, it will not only threaten
regional peace and stability in Northeast Asia but will also be detrimental to warming
China-Japan ties. Thus, Tokyo's continued militarization development will be seen as a
potential threat to bilateral relations this year.
Another perceived threat lies within Japan's attitude toward Chinese companies and
capital. As one of the most loyal US allies in the Asia-Pacific region, Tokyo often follows
Washington's foreign policy.
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For example, after Washington banned Huawei products from the US market, Tokyo
followed its lead and implemented a similar ban. Such behavior by the Japanese
government was harmful to China-Japan ties.
If the US continues to impose unfair sanctions on Chinese companies this year, whether
Japan will follow suit shall determine the direction of its relations with China.
The author is an editor at the Global Times and a research fellow on Japan issues.
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