Page 1
Cotlook A Index - Cents/lb (Change from previous day)
08-04-2020 63.45 (-0.10)
01-04-2019 81.05
03-04-2018 90.20
New York Cotton Futures (Cents/lb) As on 11.04.2020 (Change from
previous day)
May 2020 54.44 (+0.60)
July 2020 54.00 (+0.84)
Oct 2020 54.80 (-0.49)
11th April
2020
Commerce and Industry Minister meets the Industry and traders
Association;Assures them that the Ministry is working to solve their
problems
Department of commerce asks home ministry to allow exporting units
restart work
ADB pledges $2.2 bn to bolster India's health infrastructure, MSMEs
Foreign exchange reserves decline $902 million to $474 billion: RBI data
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
Apr 2020 16680 (+10)
Cotton 11145 (+25) May 2020 16860 (-30)
Yarn 17380 (+65) June 2020 17120 (+20)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Commerce and Industry Minister meets the Industry and traders Association;Assures them that the Ministry is working to solve their problems
Department of commerce asks home ministry to allow exporting units restart work
ADB pledges $2.2 bn to bolster India's health infrastructure, MSMEs
Corona blues: April GST could fall by 40%
Export sector may lose 15 million jobs unless immediate relief announced: FIEO
IMF MD ropes in Raghuram Rajan, 11 others to key external advisory group
Garment firms begin to make masks, gloves, other PPEs
Foreign exchange reserves decline $902 million to $474 billion: RBI data
Covid-19 lockdown: Ficci urges easier norms for manufacturing to resume
Labour ministry notifies provident fund contribution scheme
Covid-19: Synthetic textile companies seek financial package to pay wages
Textiles output expanded by 5.1% in Feb 2020
Need balanced exit strategy from lockdown: India Inc
32mn livelihoods at risk, economy to shrink 20% if lockdown on till mid-May
Tirupur now a major supplier of protective medical gear
View: India needs a set of fiscal measures, and granular back-to-work protocols, to save both lives and livelihoods
Asia’s clothing makers give stark coronavirus warning
Covid-19: States protest against Centre’s directive on PPE procurement
----------------------------------------------------------------------------- World coronavirus dispatch: EU finally announces $560-bn relief package
New Data Shows U.S. Companies Are Definitely Leaving China
Bangladesh:PM unveils new stimulus package
Australia to subsidise wages of 6 million after coronavirus package approved
Denmark dishes out salaries to virus-hit companies
Japan Will Pay Its Firms to Leave China, Relocate Production as Part of Coronavirus Stimulus Package
Singapore: Govt to subsidise wages of all local workers by at least 25% amid Covid-19 outbreak
Europe could fall, Italy warns as EU tries again for rescue deal
MHGF says ‘halt production’ to ready-to-wear manufacturers
Bangladesh seeks IMF lifeline after record stimulus package
Experts Call For 'Total Abandonment' Of Fast-Fashion to Prevent Environmental Disaster
SPGPrints is sustainable with ZDHC Level 3 classification
------------------ --------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Commerce and Industry Minister meets the Industry and traders
Association;Assures them that the Ministry is working to solve their
problems
(Source: Press Information Bureau, April 09, 2020)
Ministry of Commerce and Industry today held interaction, through Video conferencing,
with various Industry and Trade associations of the country to assess the ground situation
and problems being faced by them in the wake of Covid-19 and subsequent lockdown.
Union Commerce and Industry & Railways Minister Shri Piyush Goyal, MoS Shri Som
Parkash, and officers of the Ministry of Commerce and Industry were present in the
meeting.
The industry associations appraised the status and progress made in the last few days,
since the announcement of the lockdown and similar meetings held since then. They
raised the issues of liquidity crunch, orders cancellation, labour scarcity, different
interpretation of the central Government’s orders by the state and district authorities,
Trucks being stranded, difficulty in getting the spare parts, etc. At the same time, they
informed that the situation has improved considerably in last fortnight, so much so that
IT industry has been able to cover upto 95% of the ground. They also informed about their
CSR activities, best practices and Community kitchens, being undertaken by the
industries and traders.
Speaking on the occasion, Shri Piyush Goyal said that stress on economy and livelihood
has to be protected but saving the lives of the people of the country is of prime importance.
The decision on lockdown will be taken at appropriate time, after making due assessment,
but gains made during the period can’t be lost, through a hurried approach. He drew their
attention to certain states planning extension of the lockdown. Shri Goyal called upon the
industry to have a calibrated and rational approach to the problem, by evolving protocols
and procedures, which will help them in improving their productivity and efficiency,
without compromising on the health security of their employees and other stakeholders.
”I think we should start talking more practical instead of making wish lists.”, he said.
Shri Goyal said that the Ministry is already working to solve the logistics and export-
import related problems, and is also taking up other concerns of the industry and traders
with various ministries. The Minister said that the labour, which had migrated recently,
will return after the COVID cases start declining. On the demand of certain participants
for early announcement of the relief package for the industry, the Minister said that the
feedback received is being forwarded to the Finance Ministry for consideration, which is
likely to take a balanced, nuanced approach. Shri Goyal appreciated the humanitarian
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4 CITI-NEWS LETTER
activities undertaken by the Associations’ members. He called upon the associations to
motivate their members and others to download the Aarogya Setu App, which he
described as an effective technological tool to fight Covid-19.
The meeting was attended by Office bearers of CII, FICCI, ASSOCHAM, ICC, Laghu
Udyog Bharati, FISME, NASSCOM, PHD Chamber of Commerce and Industry, SIAM,
ACMA, IMTMA, IEEMA, CAIT and FAME.
Home
Department of commerce asks home ministry to allow exporting units
restart work
(Source: Kirtika Suneja, Economic Times, April 10, 2020)
The department of commerce has asked home ministry to allow exporting units to restart
work with partial workforce maintaining required precautions such as hygiene and social
distancing. Commerce secretary Anup Wadhawan has written to his counterpart in the
home ministry asking if some manufacturers, who are keen to resume exports to fulfill
orders to be delivered by the end of the month, can be allowed to resume operations, said
people familiar with the development. Commerce and industry minister Piyush Goyal
held a meeting with export promotion councils on Wednesday to take stock of the sector,
which has been hit hard by Covid-19 outbreak and the subsequent lockdown. Exporters,
who have orders that need to be fulfilled quickly, have taken up the issue with the
government.
“The department has proposed that
industry can begin exports with reduced
labour force, but with prescribed
precautions,” said another official, who
attended the meeting. As per yet another
person who attended the meeting, a
letter has been sent to the home ministry
with suggestions on ways to ensure
production begins while maintaining
safety of workers, so units can operate at
half capacity. Global merchandise trade is expected to see a steep decline of anywhere
between 13% to 32% in 2020 due to Covid-19 spread in some of India's key markets. "The
exports sector is facing over 50% cancellation. The worst hit are the life style product like
leather, carpets, handicrafts, apparels which are having over 75% cancellations," said
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5 CITI-NEWS LETTER
Sharad Kumar Saraf, president, Federation of Indian Export Organisations (FIEO) in a
letter to Prime Minister Narendra Modi on Thursday.
Exporters have asked the government to allow them re-start their operation with 50%
labour force. This, they said, will help businesses pay rent, wages will keep migrant
labourers from going to their hometowns as also prevent losing market to China. “The
problem is that whatever little orders are there are getting stuck because we’re unable to
export. If we don’t allow it now, we will not be able to supply the ready-to-ship products,
which are to be delivered by the end of this month,” said one industry representative who
attended the meeting. Industry sources said that Punjab and Rajasthan are keen to allow
exporting units to resume operations and Maharashtra too has written to union home
ministry for the same. WTO director-general Roberto Azevêdo on Wednesday said
keeping markets open and predictable would be critical to spurring renewed investment
as the world confronts one of its deepest economic recessions.
FIEO has asked the government to immediately provide Rs 30,000 crore worth of
interest-free working capital term loan to exporting companies to ease their working
capital liquidity issues and prevent large- scale unemployment that could follow
postlockdown, especially in the labour intensive sectors. In its proposal for interest-free
working capital loan for exporters, it said that the burden on the government would only
be Rs 1,974 crore while the benefits to exporters would be immense and help their
operations.
The exporters body has also sought EPF and ESIC waiver for three months to support
labour intensive sectors.
Home
ADB pledges $2.2 bn to bolster India's health infrastructure, MSMEs
(Source: Indivjal Dhasmana, Business Standard, April 10, 2020)
The ADB president on Friday called Finance Minister Nirmala Sitharaman to discuss the
issue and assured support to India in its fight against the coronavirus disease
The Asian Development Bank (ADB) will provide India $2.2 billion (around Rs 16,000
crore) to help the country ramp up health infrastructure and bolster micro, small and
medium-sized enterprises (MSMEs) facing hardships because of the coronavirus-related
lockdown.
“The ADB is committed to supporting India’s emergency needs. We are now preparing
$2.2 billion in immediate assistance to the health sector and to help alleviate the
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6 CITI-NEWS LETTER
economic impact of the pandemic on the poor, informal workers, MSMEs and the
financial sector,” its president Masatsugu Asakawa said.
He said the ADB assistance will be increased, if needed. “We will consider all financing
options available with us to meet India’s needs, including emergency assistance, policy-
based loans, and budget support to facilitate swift disbursement of ADB funds,” Asakawa
said.
The ADB is also engaged with the private sector to meet its financing needs during this
period.
The ADB president on Friday called Finance Minister Nirmala Sitharaman to discuss the
issue and assured support to India in its fight against the coronavirus disease pandemic.
Sitharaman is also governor of the ADB.Asakawa commended India’s decisive response
to the pandemic, which included a national health emergency programme, tax and other
relief measures provided to businesses, and a $23-billion economic relief package
announced on March 26 to provide immediate income and consumption support to the
poor, women, and workers affected by the three-week nationwide lockdown.
Weakening global economic growth is causing disruptions in India’s trade and
manufacturing supply chains, along with the slowdown in tourism and other economic
activities. This is straining a large number of MSMEs, and the livelihood of formal and
informal labourers across the country.
Asakawa said the policy measures announced by the government will provide the much-
needed relief and stimulus to the most vulnerable people as well as businesses and
become a basis for faster recovery.
On March 18, the ADB had announced an initial package of approximately $6.5 billion to
address the immediate needs of its developing member countries, including India, as they
respond to the pandemic. The ADB said in a statement that it stands ready to provide
further financial assistance and policy advice whenever the situation warrants.Earlier, the
World Bank committed $1 billion in emergency funding to India.
Home
Corona blues: April GST could fall by 40%
(Source: Financial Express, April 11, 2020)
With the lockdown hitting business activity, GST revenues for April could be down by 30-
40% of the annual monthly collections of around Rs 1 lakh crore in FY20.
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7 CITI-NEWS LETTER
FMCG firms will ensure the dip isn’t more. Currently
collections are just a fifth of normal levels.
Home
Export sector may lose 15 million jobs unless immediate relief announced:
FIEO
(Source: Kirtika Suneja, Economic Times, April 10, 2020)
Above 15 million jobs may get lost in India’s export sector with half the orders getting
cancelled and rising non-performing assets in exporting units, the apex body of exporters
said on Friday. “With cancellation of over 50% of orders and gloomy forecast for the
future, we expect 15 million job losses in exports and rising NPAs amongst exporting
units, hitting the economy very badly,” said Sharad Kumar Saraf, President, Federation
of Indian Export Organisations (FIEO). The organisation’s estimate comes days after the
International Labour Organisation said about 40 crore workers in India working in the
informal economy are at risk of falling deeper into poverty during the Covid-19 pandemic
crisis.
As per the World Trade Organization, the decline in world trade due to Covid-19 will likely
exceed the trade slump brought by the global financial crisis of 2008-09 with
merchandise trade expected to decline 13-32% in 2020 “We are left with very less orders
and if factories are not allowed to work with a minimum work force to execute them
timely, many of them will suffer irreparable losses and bringing them to the brink of
closure as they are saddled with fixed cost, which in any case has to be absorbed by them,”
Saraf said.
Relief sought
Calling for fine balancing between life and livelihood, he asked the government to
immediately announce a relief package for exports.
FIEO has asked exports related manufacturing immediately to be allowed with minimum
work force adhering to safety, sanitization and social distancing norms. It suggested a
Covid Interest free working capital term loan to exporters to cover the cost of wages, rental
and utilities, EPF and ESIC waiver for three months from March to May, 2020 along with
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8 CITI-NEWS LETTER
extension of Pre and Post shipment credit by 90-180 days on their maturity, roll over of
forward cover without interest and penalty, automatic enhancement of limit by 25% to
address liquidity challenges and extension of Interest Equalisation Benefits.
Home
IMF MD ropes in Raghuram Rajan, 11 others to key external advisory group
(Source: Economic Times, April 10, 2020)
IMF MD Kristalina Georgieva on Friday named former RBI governor Raghuram Rajan
and 11 others to her external advisory group to provide perspectives from around the
globe on key developments and policy issues, including responses to the exceptional
challenges the world now faces due to the coronavirus pandemic. Rajan, 57, who was the
Reserve Bank of India (RBI) governor for three years until September 2016, is currently
working as a professor at the prestigious University of Chicago.
Georgieva said that even before the spread of COVID-19 and the dramatic health,
economic and financial disruptions it has brought, International Monetary Fund ( IMF)
members confronted a rapidly evolving world and complex policy issues. “To serve our
membership well in this context, we need top-notch input and expertise from the widest
range of sources, inside and outside the Fund,” she said. “Toward this end, I am proud
that an exceptional and diverse group of eminent individuals with high-level policy,
market and private sector experience has agreed to serve on my External Advisory Group.
Today we had a dynamic discussion to gain their insights, and to receive informal
reactions to our ideas and approaches,” the IMF Managing Director said.
Other members of the group are Tharman Shanmugaratnam, Senior Minister of
Singapore and Chairman of the Monetary Authority of Singapore; Kristin Forbes,
Professor, Massachusetts Institute of Technology; Kevin Rudd, former Prime Minister of
Australia; Lord Mark Malloch Brown, former UN deputy secretary-general among others.
The novel coronavirus pandemic has killed more than 96,000 people and infected over
1,605,000 in 193 countries and territories since it first emerged in China in December.
Home
Garment firms begin to make masks, gloves, other PPEs
(Source: Banikinkar Pattanayak, Financial Express, April 11, 2020)
Gautam Nair, managing director at Matrix Clothing, one of the country’s largest garment
exporters, told FE that two of his factories in Gurgaon are manufacturing body suits.
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9 CITI-NEWS LETTER
About three dozen garment companies have paid heed to the textile ministry’s call to start
producing certain types of personal protective equipment (PPE) and help meet the
mounting domestic demand in the wake of the Covid-19 pandemic.
Gautam Nair, managing director at Matrix Clothing, one of
the country’s largest garment exporters, told FE that two of
his factories in Gurgaon are manufacturing body suits. As
many as 20 companies in the garments hub of Tirupur are
engaged in the production of masks, body coveralls and
gloves, and have already supplied a million masks,
according to Raja M Shanmugham, MD at Warshaw
International and president of the Tirupur Exporters’
Association.
These products would be used primarily by paramedics, said Shanmugham. “Only those
companies, which have got hostels for workers and are better equipped to adhere to safety
measures at this moment, have got permission to produce these items,” Shanmugham
said. Some garment units in Karnataka and Noida have also started such production and
some others are expected to follow suit.
Asked about margins, both Nayar and Shanmugham asserted that they were not doing it
for profit but for humanitarian considerations. The body suits being manufactured by the
garment companies are roughly 40-50% cheaper than the imported ones from China,
some of the companies say. The textile ministry is learnt to have impressed upon the
companies to help improve domestic supplies and the health ministry has firmed up
product specifications.
Most of these products will be supplied to HLL Lifecare — the government’s nodal agency
for procuring PPE. Late last month, the government, through HLL, floated a tender for
725,000 body cover, 1.5 million N-95 masks and one million 3-ply masks.
Home
Foreign exchange reserves decline $902 million to $474 billion: RBI data
(Source: Business Standard, April 10, 2020)
The gold reserve also declined by $340 million to $30.55 billion in the reporting week, the
RBI data showed
India's foreign exchange reserves declined by $902 million to $474.66 billion in the week
to April 3 due to a fall in foreign currency assets, said RBI data on Friday.
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10 CITI-NEWS LETTER
In the previous week, the reserves had surged by $5.65 billion to $475.56 billion,
according to the latest data, news agency PTI reported.
The reserves had touched a life-time high of $487.23 billion in the week to March 6, after
it rose by $5.69 billion.
During 2020-21, foreign exchange reserves have risen by almost $62 billion.
In the reporting week ended April 3, the foreign currency assets (FCA), a major
component of the overall reserves, decreased by $547 million to $439.12 billion.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation
or depreciation of non-US units like the euro, pound and yen held in the foreign exchange
reserves.
The gold reserve also declined by $340 million to $30.55 billion in the reporting week,
the RBI data showed.
The special drawing rights with the International Monetary Fund (IMF) were up by $5
million to $1.43 billion.
The country's reserve position with the IMF dipped by $19 million to $3.57 billion, the
data showed.
Home
Covid-19 lockdown: Ficci urges easier norms for manufacturing to resume
(Source: Subhayan Chakraborty, Business Standard, April 10, 2020)
Industry body wants package for labourers, protection against imports and military
support for delivering essentials.
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11 CITI-NEWS LETTER
While the government assesses the economic
fallout of a proposed extension of the current
lockdown, the Federation of Indian Chambers
of Commerce & Industry (Ficci) has said the
country can’t afford prolonged confinement.
Arguing in favour of maximum social
distancing at all costs, Ficci has called for
dynamic policy measures to bringing about a
fine balance that normalises economic and
social activity in an exit strategy, released on
Friday.
Prime among these is a demand for a package
for migrant labourers as well as effective messaging by central and state governments to
ensure their early return. Ficci has said the Department for Promotion of Industry and
Internal Trade (DPIIT) may drive the process and instill greater confidence among the
labourers.
For essential commodities, Ficci has proposed greater relaxation in the number of hands
working at the plant and warehouses. It has also suggested that industry associations be
allowed to submit to the Centre the names of companies, their
manufacturing/warehousing locations and the number of people at each location by shift.
A central administrative manager for each firm would be empowered to issue
authorisation letters to employees along with copy of a central letter that must be
recognised by the State government.
It also wants the government to institute Covid-19 standards for manufacturing,
compliance to which will enable even non-essential units to operate.
The chamber has released a long list of demands that it says are necessary to support
domestic industry in tiding over the economic downturn. It has asked the government to
put in place higher import duties for products other than essentials and raw materials for
six months, in order to protect the domestic sector. Arguing that India may face a massive
wave of Chinese dumping, it has asked the government to introduce strict anti-dumping
measures expeditiously.
Ficci has also pushed for all pending payments from government buyers to be
immediately cleared and paid to companies so that crucial working capital is unlocked.
The need for three per cent interest subvention on working capital and term loans for
small businesses has also been pointed out. The industry body has also sought a rebate
on or deferment of electricity bills and tax deferment, including GST without any
penalties.
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12 CITI-NEWS LETTER
On the farm front, Ficci has said that inputs such as seeds and fertilisers are currently not
available to farmers and that is hampering the cultivation of summer crops. It has warned
that the entire agricultural value chain needs to be reopened fast, otherwise a crisis for
farmers and agriculture labour may ensue. Also, farmers should be encouraged to sell
their produce through e-NAM directly without needing to take the produce physically to
Agricultural Produce Market Committee (APMC) centres.
For medical supplies, farm produce and other essential items, the industry body has called
for the deployment of army or para-military forces and their vehicles, removing the need
of intra-state and inter-state permits.
Home
Labour ministry notifies provident fund contribution scheme
(Source: Economic Times, April 10, 2020)
The labour ministry on Friday notified the special scheme wherein the government will
contribute 24% of the employee and employer provident fund share per month for three
months to PF accounts of employees earning less than Rs 15,000 to tide over the impact
of Covid-19 on small establishments. Under the scheme, the central government will grant
relief in form of credit of EPF & EPS contributions (24% of wages) for three months in
UANs of contributory EPF members, earning monthly wage of less than Rs 15,000.
It will cover staff already employed in EPFcovered establishments/factories employing
up to 100 employees with 90% or more of such employees earning monthly wage of less
than Rs 15000. “This would prevent disruption in the employment of low wage earning
EPF members and support EPF covered establishments employing up to 100 employees,”
the ministry said in a notification. The EPFO has put in place an electronic mechanism as
part of the electronic challan-cum-return (ECR) filing to enable the establishments to
avail the relief in respect of their eligible employees.
The employer in relation to any eligible establishment, shall disburse wages for the month
to all employees of the establishment and file ECR with required certificate and
declaration to avail the benefit.
After ECR is uploaded and eligibility of establishment and employees is validated, the
challan will separately show the amount of employees’ and employers’ contributions due
as central government relief in respect of eligible employees and the remaining amount
payable by the employer.
Home
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13 CITI-NEWS LETTER
Covid-19: Synthetic textile companies seek financial package to pay wages
(Source: Dilip Kumar Jha, Business Standard, April 10, 2020)
The demand comes in the wake of closure of factories, wholesale and retail outlets due to
the nationwide lockdown announced by the government on March 25
Synthetic textile players have urged the Centre to compensate the expenses being
incurred during the 21-day lockdown for paying salaries and wages to employees and
costs relating to cancellation or deferment of export orders.
The demand comes in the wake of closure of factories, wholesale and retail outlets due to
the coronavirus (Covid-19) outbreak.
The lockdown has brought the entire business into a standstill and resulted in massive
losses for the entire industry.
“Extend support to the industry for payment of salaries and wages to workers during
the lockdown period similar to that provided by the government of Bangladesh to its
textile units. Also, compensate the full expenses being incurred by exporters due to
cancellation and deferred orders,” said Ronak Rughani, chairman, the Synthetic and
Rayon Textiles Export Promotion Council (SRTEPC), in a meeting held with officials of
the textile ministry.
The Bangladesh government is transferring three months salaries directly to
employees/workers through its commercial banks. It said the amount has to be repaid at
2 per cent interest in 18 instalments within a period of two years by employers to the
commercial banks.
“The immediate requirement is to allow manufacturing facilities to function at 50 per cent
capacity at least and gradually lift the restrictions. There is also a need for creating an
environment to export the produce without any hassles from different departments
involved in the system. Ensure good support from the banking system by providing
moratoriums and enhanced working capital facilities. Another requirement is to ensure
duty refunds from the government with immediate effect and provide extra export
incentives,” said Madhu Sudan Bhageria, chairman and MD, Filatex India.
The manmade fibre (MMF) textile segment is one of the worst hit in this epidemic. Huge
losses have incurred and there is shortage of funds due to the cancellation and deferred
orders. This has put the industry under a ventilator, said SRTEPC.
There is an urgent need for a special corona-relief package to the textile industry,
including entire value chain of the MMF textile segment, to tide over the
prevailing coronavirus crisis, it added.
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14 CITI-NEWS LETTER
To address the problems emerging after the outbreak, the government requires to grant
special export incentive of 3 per cent on fibre and yarn, 4 per cent on fabric and 5 per cent
on made ups. This has to be for at least six months or till the impact
of coronavirus subsides and global markets stabilise.
Also, a separate package for MMF textiles has been sought as this segment has been
reeling from an inverted duty structure under the goods and services tax (GST).
Additionally, there is a need to enhance working capital limit and advances for exports on
a case-to-case basis without any collateral.
The industry needs to be provided 30 per cent additional working capital at 7.25 per cent
interest for both exports and domestic production. This has to be without any collateral
and margin money to meet the working capital needs, pay salaries and wages to
employees and comply with standing charges.
Home
Textiles output expanded by 5.1% in Feb 2020
(Source: Live Mint, April 09, 2020)
Among the 23 industries tracked by the Central Statistics Office's Index of Industrial
Production, the textiles industry had the eighth highest growth rate.
Factory output in the textiles industry expanded 5.1% in Feb 2020 compared to the same
month last year, according to new data released by the Central Statistics Office. In
comparison, it had expanded at 3.4% in the previous month of Jan 2020.
Growth in the textiles industry was more than that in overall industrial output, which
grew 4.5%. Textiles made up 3.29% of the overall index of industrial production (IIP), and
contributed 0.17% to overall IIP growth.
Among the 23 industries tracked by the Central Statistics Office's Index of Industrial
Production, the textiles industry had the eighth highest growth rate. Across all industry
sectors, the growth rate was highest in manufacture of basic metals, and lowest in
manufacture of motor vehicles, trailers and semi-trailers.
Factory output is measured by the Index of Industrial Production (IIP), a composite index
that measures changes in the volume of production of selected industrial goods.
Home
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15 CITI-NEWS LETTER
Need balanced exit strategy from lockdown: India Inc
(Source: Economic Times, April 11, 2020)
In working out an exit strategy from the current nationwide lockdown, the government
should aim towards bringing about a fine balance that on one hand normalises economic
and social activity and yet contains Covid-19 from spreading and getting out of control,
industry body FICCI suggested on Friday.
Though India in the global
context, so far has not seen a
larger number of cases who would
need hospitalization, however,
the increase of infected people in
the past few days may lead to a
situation wherein more and more
patients may require respiratory
assistance and intensive care.
At the same time, for a country
like India we also can’t afford to
have a prolonged lockdown that
lasts for months,” the industry
body said in submission to the
government. The industry body’s suggestions come ahead of the Prime Minister Narendra
Modi's meeting with state Chief ministers on Saturday to take a final call on whether the
current lockdown will be extended beyond April 14, as number of positive Covid-19 cases
in the country remain on the rise.
Home
32mn livelihoods at risk, economy to shrink 20% if lockdown on till mid-May
(Source: Outlook India, April 07, 2020)
If the India lockdown continues till mid-May along with moderate relaxation after the end
of 21-day lockdown on April 14, it could put 32 million livelihoods at risk and swell non-
performing loans (NPLs) by seven percentage points, resulting in the economy
contracting sharply by around 20 per cent in the first quarter of fiscal year 2021, with –2
to –3 per cent growth for fiscal year 2021, a new report warned on Friday.
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16 CITI-NEWS LETTER
According to the report by leading management consulting firm McKinsey and Company,
the cost of stabilising and protecting households, companies and lenders could exceed Rs
10 lakh crore, or more than 5 per cent of GDP in such a scenario.
The report, titled ''Getting ahead of coronavirus: Saving lives and livelihoods in India,''
said that restarting supply chains and normalising production and consumption can take
three–four months if the lockdown goes till mid-May as the virus ligers on.
If the lockdown continues for additional two–three weeks in Q2 and Q4 FY 2021 because
of virus resurgence, it could mean an even deeper economic contraction of around 8 to 10
per cent for fiscal year 2021.
"This could occur if the virus flares up a few times over the rest of the year, necessitating
more lockdowns, causing even greater reluctance among migrants to resume work, and
ensuring a much slower rate of recovery," the report suggested.
To understand probable economic outcomes and possible interventions related to
COVID-19, McKinsey spoke with some 600 business leaders, economists, financial-
market analysts and policy makers.
According to the findings, in case the lockdown period is extended till mid-May, the
potential economic loss in India would vary by sector, with current-quarter output drops
that are large in sectors such as aviation and lower in sectors such as IT-enabled services
and pharmaceuticals.
"Current-quarter consumption could drop by more than 30 per cent in discretionary
categories, such as clothing and furnishings, and by up to 10 per cent in areas such as food
and utilities," said the report.
Strained debt- service-coverage ratios would be anticipated in the travel, transport, and
logistics, textiles, power and hotel and entertainment sectors.
There could be solvency risk within the Indian financial system, as almost 25 per cent of
MSME and small- and medium-size-enterprise (SME) loans could slip into default,
compared with 6 per cent in the corporate sector (although the rate could be much higher
in aviation, textiles, power and construction) and 3 per cent in the retail segment (mainly
in personal loans for self-employed workers and small businesses).
"Liquidity risk would also need urgent attention as payments begin freezing in the
corporate and SME supply chains. Attention will need to be given to the liquidity needs
of banks and nonbanks with stretched liquidity-coverage ratios to ensure depositor
confidence,'' the report mentioned.
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Given the magnitude of potential unemployment, business failure and financial-system
risk, a comprehensive package of fiscal and monetary interventions may need to be
planned.
"Consideration could be given to an income-support programme in which the government
both pays for a share of the payroll for the 60 million informal contractual and permanent
workers linked to companies and provides direct income support for the 135 million
informal workers who are not on any form of company payroll,'' the report further
suggested.
Since last week, the Health Ministry has observed a staggering rise daily in the number of
confirmed coronavirus cases across the country -- nearly 500-plus cases daily with a few
exceptions where the number has gone below 400 cases -- a pattern which indicates a
worrying trend after solid implementation of the nationwide lockdown and sealing of
hotspots.
On Friday, the number of confirmed cases has risen to 6,412, an addition of 669 cases in
a day.
Punjab and Odisha have already extended lockdown till May 1 and April 30, respectively.
According to the report, countries that are experiencing COVID-19 have adopted different
approaches to slow the spread of the virus.
Some have tested extensively, carried out contact tracing, limited travel and large
gatherings, encouraged physical distancing, and quarantined citizens.
Others have implemented full lockdowns in cities with high infection rates and partial
lockdowns in other regions, with strict protocols in place to prevent infections.
"The pace and scale of opening up from lockdown for India may depend on the availability
of the crucial testing capabilities that will be required to get a better handle on the spread
of the virus, granular data and technology to track and trace infections, and the build-up
of healthcare facilities to treat patients (such as hospital beds by district)," said the report.
Since there is a very real possibility of the virus lingering on through the year, a micro-
targeting approach could help decelerate its spread while keeping livelihoods going.
"It is imperative that society preserve both lives and livelihoods. To do so, India can
consider a concerted set of fiscal, monetary, and structural measures and explore ways to
return from the lockdown that reflect its situation and respect that most important of
tenets: the sanctity of human life," the report noted.
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Tirupur now a major supplier of protective medical gear
(Source: Times of India, April 11, 2020)
While textile mills and garment units in this hosiery hub have fallen silent, 100-odd
apparel units are doing brisk business, thanks to an avalanche of orders national and
overseas for face masks, personal protective equipment (PPE) and gloves. With orders for
more than 10 lakh face masks and a lakh PPEs, the multi-million dollar apparel cluster is
emerging as one of the major supplier of medical textiles in the country.
Of all the negatives the global pandemic brought upon us, we see this development as the
only positive one. Tirupur has got introduced to technical textiles. This will become a huge
leap for us,” says Tirupur Exporters Association president Raja M Shanmugam. Orders
started pouring in from state governments, corporate entities and private hospitals from
the last week of March. Kerala government was among the first to place orders. From
10,000 masks, the orders soon touched a lakh and is galloping beyond 10 lakh. On Friday,
two consignments of masks and PPEs weighing more than two tonnes were sent to Kerala
by train. A day back, a special flight was sent from Coimbatore to Mumbai carrying
cartons of medical textiles.
The Tirupur apparel cluster has been going through a rough patch for the last three years,
missing its annual turnover targets due to factors like demonetisation, GST and the global
economic stagnation because of Covid-19. But the crisis has helped units here take baby
steps towards technical textiles, a growing market. ``We were given very specific
instructions on product quality. We have not only adhered to the specifications but have
also made them cost-efficient,” says V Rajamanickam, marketing manager of Wellknit
Garments, which has bagged orders for face masks and PPEs from northeastern states.
“Orders are also coming from Sri Lanka and Maldives.” The units had to tweak their
machineries to make PPEs and masks. “PPEs would melt due to the heat generated by the
machines. We had to ensure machineries don’t get too hot,” says N Rathinam, CEO of
SKL Exports, who has got an order for 60,000 medical kits from Kerala.
However, given the size of the workforce and production capacity of the units, the orders
at present are just a fraction. “For now, we are utilising only about 15,000 workers. There
is certainly a major market that remains untapped in the technical textiles sector. If we
take the right steps, this could be yet another huge leap for Tirupur,” adds TEA general
secretary T R Vijaykumar.
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View: India needs a set of fiscal measures, and granular back-to-work
protocols, to save both lives and livelihoods
(Source: Anu Madgavkar & Rajat Gupta, Economic Times, April 10, 2020)
The Covid-19 pandemic is the greatest health and humanitarian challenge the world has
faced since World War 2. In response, India has moved quickly to implement a
nationwide, 21-day lockdown, with a view to flattening the curve and using the time to
consolidate its healthcare resources. Along with its unprecedented human toll, the
pandemic has triggered a deep economic crisis. The global growth outlook is bleak. If the
virus were contained by the current lockdown, India’s GDP may grow 1-2% in FY2021.
But if it needs to be extended until midMay in its current form, with a gradual restarting
of supply chains, India’s GDP in Q1 FY2021 could contract by 20%, and by 2-3% in
FY2021. In the event of more national lockdowns, it could contract by as much as 8-10%
for FY2021.
Assuming Scenario 2 plays out, the livelihoods of 32 million workers, including many in
the informal workforce, could be affected. High credit strain would be seen in travel,
transport and logistics, textiles, power and the hotel and entertainment sectors, and for
MSMEs across the board. With widespread MSME and corporate financial stress, non-
performing loans (NPLs) in the financial system could rise by 7 percentage points of loans.
The financial system could face both solvency and liquidity risk, as payments freeze in the
corporate and SME supply chains, and workers are laid off. If this triggers risk aversion
or even loss of depositor confidence, it will be difficult to recover from.
Given the magnitude of potential unemployment, business failure and risk for the
financial system, a comprehensive package of fiscal and monetary interventions needs to
be planned, keeping Scenario 2 in mind, to be triggered progressively and executed
rapidly as the situation evolves. Such a credible, system-wide stabilisation package could
exceed Rs10 lakh crore, or more than 5% of GDP. Broad themes for consideration could
include GoI paying part of the payroll of the 60 million informal workers linked to
companies and providing direct income support for the 135 million that are not. For
bankruptcy protection and liquidity support, MSMEs could receive liquidity lines from
their banks, refinanced by RBI, with substantial credit backstops from the government,
contingent on these companies protecting their employees. Existing credit guarantee
funds could be expanded with GoI absorbing a major portion of the costs of likely new
NPLs.
For large corporates, banks could be allowed to restructure the debt on their balance
sheets, and procedural requirements relaxed for raising capital. In select distressed
sectors (travel, logistics, auto, textiles, construction, power, etc), GoI could infuse capital
through a temporary TARP (troubled asset relief program)-type program. Again,
appropriate conditions would need to be imposed to safeguard workers and MSMEs and
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20 CITI-NEWS LETTER
make the process transparent. Some banks/non-banks may require measures to
strengthen their capital and liquidity, along with measures to step up liquidity in
corporate bond and government securities markets. To manage the macro-economic
consequences of a fiscal package of this order of magnitude, it should be clearly
communicated that these measures are deep, but temporary. Some support may be
structured as contingent liabilities that only get reflected in the fiscal deficit when they
devolve.
Given that India’s fiscal resources are constrained, RBI may need to finance some portion
of this incremental government spending. The inflationary effects may be low as
lockdowns severely constrict demand, but price increases could occur in sectors like food
so appropriate steps are needed to maintain supply chains. Beyond stimulus measures,
the pace and pattern of lifting lockdowns will be crucial. How it unfolds in India will
depend on the availability of crucial testing capabilities, granular data and technology to
track and trace infections and the healthcare facilities to treat patients. Protocols, co-
created with industry, will be needed for different settings (mandis, factories, BPOs, etc).
Industrial areas like Vapi and Baddi could be ring-fenced for safety, with local dormitories
set up for the labour and minimal movement in and out of the site allowed. While the
principles may be the same for construction sites and BPOs, the specifics would differ.
A geographic lens could be overlaid to determine how quickly the lockdown could be lifted
with the new protocols in place. Red, yellow and green zones could be created - as they
have been in Malaysia, Indonesia and Thailand - with unambiguous criteria and clear
rules for activity laid down. The definition of a ‘zone’ would need to be granular -- ward,
colony, or building cluster -- to allow as much economic activity as safely possible, while
targeting infection as accurately as possible. Since there is a very real possibility of the
virus lingering on through the year, this micro-targeting approach could help decelerate
its spread while keeping livelihoods going. Specific actions could be tailored to different
districts, depending on population density, the relative strength of their healthcare
systems, and the scale of infection locally. India could gear up for local execution by
equipping 700-plus high-performing government officers, and from cities like Mumbai
and states like Kerala that are today fighting the pandemic.
These officers could be deputed to work with the district magistrates, dynamically
developing and executing locally tailored lockdowns, healthcare expansion efforts and
back-to-work protocols, supported by cross-functional centres of excellence at state
and/or Centre. Both lives and livelihoods must be preserved in this crisis. India must
consider a set of fiscal measures, and granular back-to-work protocols, to make it happen.
Madgavkar and Gupta are partner, McKinsey Global Institute (MGI), and senior
partner, McKinsey & Company, respectively
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Asia’s clothing makers give stark coronavirus warning
(Source: Financial Express, April 10, 2020)
"If our workers don't die from coronavirus, they'd die of starvation."
This is the stark assessment of how the pandemic is impacting the clothing industry from
garment factory owner, Vijay Mahtaney, the chairman of Ambattur Fashion India.
In normal times, Vijay Mahtaney and his partners Amit Mahtaney and Shawn Islam
employ a total of 18,000 workers in three countries - Bangladesh, India and Jordan. But
the outbreak has forced them to shut down the majority of the business, with just one
factory, in Dhaka, partially operational.
Coronavirus lockdowns aren't the only thing affecting their ability to pay their workers.
They say their main problem is unreasonable demands from big clients - mainly in the US
and the UK.
"Some brands are showing a true sense of partnership and high level of ethics in trying to
ensure at least enough cash flow to pay workers," Amit Mahtaney, the chief executive of
Tusker Apparel Jordan, told the BBC.
"But we've also experienced demands for cancellations for goods that are ready or are
work in progress, or discounts for outstanding payments and for goods in transit. They
are also asking for a 30 to 120 day extensions on previously agreed payment terms."
In an email obtained by the BBC, one US retailer has asked for a 30 per cent discount "for
all payables - current or order", including those already delivered.
The reason they cite is to "get through this extraordinary period".
"Their attitude is one of protecting only shareholder value without any regard to the
garment worker, behaving in a hypocritical manner, showing complete disregard to their
ethos of responsible sourcing," Vijay Mahtaney said.
"Brand focus on share price, now means some of them don't have money for this rainy
day, and are coming to the weakest link in the supply chain, asking us to help them out
when they could be applying for a bailout from the US government stimulus package,"
Vijay added. It comes as garment manufacturers have been hit hard by two major issues
related to coronavirus lockdowns.
The problems started in February when factories couldn't get the raw materials they
needed from China, the world biggest exporter of textiles, which accounted for some
$118bn (£67bn) in 2018.
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Then as China's textile factories reopened in recent weeks - giving garment manufacturers
hopes of getting operations back on track - demand collapsed as retailers were forced to
shut their doors after governments around the world imposed lockdowns.
Crucial industry
China may be known as the factory of the world, but when it comes to clothes, Bangladesh,
Indonesia, Cambodia, Vietnam and Myanmar play a growing role. "Garment
manufacturing has been diversifying away from China for around ten years due to China's
high costs," according to Stanley Szeto of apparel maker Lever Style which supplies
premium brands including Hugo Boss, Theory, Vince, and Coach, as well as online names
like Bonobos, Stitch Fix and Everlane.
It means that garment manufacturing is a crucial industry for many of Asia's developing
economies, with World Trade Organization data showing that Bangladesh and Vietnam
are amongst the world's four largest exporters of clothing. Bangladesh now accounts for
6.7 per cent of market share, followed by Vietnam with 5.7 per cent. Bangladesh has more
than four million garment workers, and textile and apparel products made up more than
90 per cent of the country's exports last year.
Cambodia and Sri Lanka also rely on the industry for more than 60 per cent of their
exports, according to Sheng Lu at the University of Delaware's department of fashion and
apparel studies.
The industry accounts for more than half of all manufacturing jobs in Bangladesh, and 60
per cent in Cambodia, with production being a particularly important employer of
women.
Associate Professor Lu thinks the coronavirus pandemic could see countries such as
Bangladesh, Vietnam, Cambodia and India cutting between 4 per cent to 9 per cent of
garment sector jobs. That is partly why the Bangladeshi government is trying to help the
industry.
"It has offered a generous stimulus package to subsidise wages, convert loans to long-
term debt and offer very reasonable interest rates," said Shawn Islam, managing director
of Sparrow Apparel Bangladesh. "While it's not enough to weather the storm, it will help."
The Cambodian government has also announced tax holidays for textile factories and
proposed a wage subsidy scheme for workers.
That is because this outbreak could result in a longer term impact like labour shortages,
price increases of raw materials and a lack of production capacity, said Associate
Professor Lu. After growing criticism and pressure, some brands including H&M and
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23 CITI-NEWS LETTER
Zara-owner Inditex have committed to paying in full for existing orders from clothing
manufacturers.
"Brands have profited for many years from producing in low wage countries without social
security systems and have in many cases built up huge empires through this business
model," said Dominique Muller of Labour Behind the Label. "Decades of exploitation
must now be paid back to care for their workers." Factory owner Amit Mahtaney agrees.
"Retailers have to help out. Richer governments' bailouts of the industry are also critical,"
he said.
Without it, he claims, the industry could be wiped out completely.
Home
Covid-19: States protest against Centre’s directive on PPE procurement
(Source: Amrita Madhukalya, Hindustan Times, April 10, 2020)
The states were told in a note that PPEs, N-95 masks and ventilators will be procured by
the Centre and then distributed to the states.
A directive by the Centre, asking states to not procure personal protective equipment
(PPE) for Covid-19 on their own, has led to protests from states.
In a notification sent to principal secretaries of the health departments of states on April
2, the Union ministry of health and family welfare asked them to not procure crucial
medical equipment such as PPEs, N-95 masks and ventilators on their own, as they will
be procured by the Centre and then distributed to the states. The decision was taken at
the third meeting of the empowered group formed to look at procurement of medical
equipment that took place on April 1, the note said. By way of rationale, the notification
said that states were found to be hoarding these materials as field functionaries, such as
care working as essential service providers, continued to work without them. In some
areas, inventories which can do with some repair work, were lying, the Centre noted.
A senior government official, involved in the process, said that the move was prompted
by reports coming in from states that in states where domestic producers of PPEs are
situated, state officials have insisted that the produce be sent to states instead. India has
just started domestic production of PPEs. The textile ministry has readied over 45
producers to manufacture PPEs such as masks and coveralls - that require non-woven
fabric - as well as manufacturers of such fabric. N-95 masks are being made by two
domestic producers with the help of DRDE, while ventilators are manufactured by two
other producers domestically. In addition to that, Indian auto manufacturers are also
preparing to step up manufacturing of ventilators.
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The official said there were reports that some of the states were individually procuring
PPEs which were untested by authorised agencies. To ease shortage, the Centre has
announced the lifting of basic customs duty and health cess till September 30 on crucial
medical equipment such as ventilators, face and surgical masks, PPEs, Covid-19 test kits,
and on any item that goes into the making of these items. A notification was issued by the
finance ministry’s department of revenue on April 9.
The move has led to protests from states. Former Lok Sabha MP from Kerala, MB Rajesh
said that the Centre is trying to wash its hands off its failure to act in time and because of
this move, states will suffer.
“The first case was detected on January 30 and the lockdown was announced on March
24; the government had 54 days to act, but it wasted time. One cannot eradicate Covid-19
by lockdown, so every state has to prepare,” he said. He added that since health is a state
subject, states should be allowed to do their own procuring.
DMK MP from Tamil Nadu’s Dharmapuri, Dr Senthilkumar S, took to Twitter to voice his
protest. He said that he strongly condemns the move to make health care centralised, and
that Tamil Nadu and Kerala will be affected the most. “This is (an) infringement on state’s
federalism,” he tweeted.
The move could well be revised soon, said a senior textiles ministry official. Nihar Ranjan
Dash, joint secretary at the textiles ministry, said that the health ministry’s move might
have been prompted by a need to “rationalise” procurement and inventories. He said that
the domestic manufacturers whose samples were tested and approved by the textile
ministry have started producing 15,000 units of PPEs such as masks and ventilators per
day. “By April 20, we will be producing 30,000 units per day easing the shortage,” said
Dash.
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GLOBAL
World coronavirus dispatch: EU finally announces $560-bn relief package
(Source: Business Standard, April 11, 2020)
From Italy and Spain extending their lockdowns, to Yemen's first coronavirus case, and
Amazon starting its own test facility - read these and more in today's world digest
Europe, the most affected by the coronavirus pandemic globally at present, has finally
agreed upon a relief package totalling 500 billion euros ($560 billion). This marks the end
of a long deadlock — mostly on a video conference — among finance representatives of
European nations.
The main component of the rescue plan is 240 billion euros worth of credit lines to
indebted countries hit by Covid-19. A part of the money will also go to European
Investment Bank, which has been asked to increase lending to recovery initiatives.
And finally, 100 billion euros will be set aside for a new unemployment insurance scheme.
Home
New Data Shows U.S. Companies Are Definitely Leaving China
(Source: Kenneth Rapoza, Forbes, April 07, 2020)
U.S. companies are leaving China thanks to the trade war. They’ll leave even more thanks
to the pandemic.
Sorry, Davos Man. Your China-led globalization is going out of style like bell bottoms.
Global manufacturing consulting firm Kearney released its seventh annual Reshoring
Index on Tuesday, showing what it called a “dramatic reversal” of a five-year trend as
domestic U.S. manufacturing in 2019 commanded a significantly greater share versus 14
Asian exporters tracked in the study. Manufacturing imports from China were the hardest
hit.
Last year saw companies actively rethinking their supply chain, either convincing their
Chinese partners to relocate to southeast Asia to avoid tariffs, or by opting out of sourcing
from China altogether.
“Three decades ago, U.S. producers began manufacturing and sourcing in China for one
reason: costs. The trade war brought a second dimension more fully into the
equation―risk―as tariffs and the threat of disrupted China imports prompted companies
to weigh surety of supply more fully alongside costs. COVID-19 brings a third dimension
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more fully into the mix, and arguably to the fore: resilience―the ability to foresee and
adapt to unforeseen systemic shocks,” says Patrick Van den Bossche, Kearney partner and
co-author of the 19-page report.
The main beneficiaries of this are the smaller southeast Asian nations, led by Vietnam.
And thanks to the passing of the U.S. Mexico Canada Agreement, Mexico, for all its
problems with drug cartels, has become a favorite spot for sourcing.
Home
Bangladesh:PM unveils new stimulus package
(Source: The News, April 11, 2020)
Mentioning that the Covid-19 outbreak could cause a slowdown of the country’s economic
growth, PM Sheikh Hasina said the government will extend similar funds in future to
manage the pandemic impact.
Prime Minister Sheikh Hasina yesterday unveiled a set of financial support packages of
Tk72,750 crore to shield the economy from the impact of the coronavirus pandemic
providing low-cost funds to affected industries.
The entire amount which is nearly 2.52 percent of GDP will come from the banking system
and the government will provide interest subsidy under the packages.
The premier made the announcement in a televised speech from her official Ganabhaban
residence in the capital yesterday.
"Earlier I declared a Tk5,000 crore (emergency) incentive package for paying salaries and
allowances of workers and employees of export-oriented industries and today I am
announcing four fresh financial stimulus packages of Tk67,750 crore," she said.
Mentioning that the Covid-19 outbreak could cause a slowdown of the country's economic
growth, PM Sheikh Hasina said the government will extend similar funds in future to
manage the pandemic impact.
Bangladesh confirmed its first Covid-19 case on March 8. As of Sunday, 88 cases including
nine fatalities were reported.
The government has extended the ongoing shutdown of public transport and general
holidays to April 14 to stop the spread of the virus. It had earlier declared a 10-day
nationwide general holiday and public transport shutdown effective from March 26.
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While unveiling her government's work plan to mitigate the economic impact of Covid-
19, the premier said the government has taken four programmes which will be
implemented in phases categorised as "immediate, short-term and long-term".
"The four programmes are increasing public expenditure, introducing fiscal packages,
widening social safety net coverage and increasing money supply," she said.
Highlighting the key aspects of the four new financial packages, the premier said the first
of the four packages would be of Tk30,000 crore that will be made available to affected
industries and services sector as working capital through banks as low-interest loans.
She said commercial banks would provide the amount as loans from their own funds to
industries and enterprises concerned on the basis of bank-client relations.
"The interest rate of this lending facility will be 9 percent, and the industries and business
organisations concerned will pay 4.50 percent, while the government would pay the re
Sheikh Hasina said under the second package, micro, small and medium enterprises
(MSMEs) including cottage industries would get Tk20,000 crore as working capital.
She said a mechanism would be devised to make the amount available to the MSMEs as
low-interest loans through banks which identically will disburse amounts to the MSMEs
on the basis of bank-client relations. The government in this case would bear the greater
share of the interest amount.
"The interest rate for this lending facility will be 9 percent of which 4 percent will be paid
by the industries and businesses, while the government will subsidise the remaining 5
percent," the premier said.
The fourth package concerns the Bangladesh Bank's Export Development Fund or EDF,
which will be increased to $5 billion from $3.5 billion now to facilitate import of raw
materials under back-to-back letters of credit (LC).
The prime minister said this last package would add an additional Tk12,750crore,
equivalent to $1.5 billion, to the EDF while its interest rate would be brought down to 2
percent.
The existing EDF interest rate is 2.73 percent in line with current London Interbank
Offered Rate-LIBOR + 1.5 percent.
The prime minister said under the fourth package, the central bank will introduce a new
credit facility of Tk5,000 crore as "Pre-shipment Credit Refinance Scheme" and its
interest rate would be 7 percent.
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Sheikh Hasina said local products alongside the export-oriented sectors would deserve
special attention and support to cope with the possible global and domestic economic
crisis caused by the pandemic.
"In this regard, I call upon all to boost production of local products and increase their
consumption," she said.
The premier strictly warned all departments involved with the implementation of the
stimulus packages against indulging in any type of corruption, irregularity and misuse.
"I want everybody to work with utmost sincerity and honesty. Taking the opportunity (of
the crisis), don't indulge in any type of corruption, irregularity and misuse," Sheikh
Hasina said.
"I hope our economy will rebound and we could reach close to the desired economic
growth, if the stimulus packages, the previous and the fresh ones, could be quickly
implemented," she said.
Finance Minister AHM Mustafa Kamal, the Senior Secretary of Finance Ministry Abdur
Rouf Talukder, and the Bangladesh Bank Governor Fazle Kabir also spoke at the press
conference moderated by the PM's Press Secretary Ihsanul Karim.
PM's Principal Secretary Dr Ahmad Kaikaus and the Prime Minister's Office (PMO)
Secretary Md Tofazzel Hossain Miah, among others, were also present.
In her speech, Prime Minister Sheikh Hasina elaborated the four financial support
programmes.
Increasing public expenditure: Generating employment will be mainly given priority
in public expenditure while foreign tours and lavish expenditure will be discouraged.
Since the debt to GDP ratio of Bangladesh is very low (34%), the higher public expenditure
would not create any pressure on the macro economy of the country.
Introducing fiscal packages: Some low-interest credit facilities will be launched
through the banking system. The main objective of this programme is to rejuvenate the
economic activities by keeping the jobs of workers and employees as well as the
competitive edge of entrepreneurs intact.
Widening social safety net coverage: The existing social safety net programmes of
the government would be further widened to support the basic needs of people living
below the poverty line.
Increasing Monetary Supply: It is extremely important to increase the monetary
supply to overcome the adverse impact of Covid–19 on the economy.
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PM Sheikh Hasina mentioned that the Bangladesh Bank has already reduced the CRR and
REPO rate to boost the money supply which will continue in the future as necessary. "But,
in this regard, our goal would be to see that there is no increase in inflation due to
monetary supply," she said.
Impact on global economy
The prime minister said the rapid spread of the novel coronavirus, huge pressure on the
health sector, unprecedented lockdown, and disrupted communication to curb the
pandemic have already started to affect the global economy.
"Sectors and areas affected include industries and production; export and trade; services
sectors, especially tourism, aviation, and hospitality; small and medium enterprises; and
employment," she said.
Not only the supply side, she mentioned, the consumption and investment in demand are
also witnessing a downward trend.
Sheikh Hasina said the International Monetary Fund (IMF) has already declared that a
global economic recession has started while stock markets across the globe have
witnessed a fall of 28-34 percent over the last few weeks.
Citing an estimation of the Organisation for Economic Co-operation and Development
(OECD), she said the global economic growth could come down to 1.5 percent if the
recession persists for a long period. A huge number of workforces across the globe are
feared to lose their jobs, she said.
Sheikh Hasina said if the recession persists longer, it is also apprehended that the world
will face a great economic depression for the first time after World War II.
She said it was not time yet to identify clearly and definitely the impact of the coronavirus
pandemic on the Bangladesh economy.
Impact on domestic economy
The prime minister also listed some of the impacts of the Covid-19 on the country's
economy which are as follows:
Fall in import-export: The import cost and export earnings in this fiscal year have
witnessed a 5 percent fall compared to the same period of the last fiscal year. This fall
could further stretch at the end of the current fiscal year.
Slump in private investment: There is a possibility of not getting private investment
at a desired level due to the delay in implementation of the ongoing mega projects,
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establishment of the economic zones and also delay in implementing the decision to
reduce bank interest rates.
Virus-hit service sector: The novel coronavirus will leave a negative impact on the
services sector, especially hotel-restaurants, transport and the aviation sectors.
Shock in capital market: Like in other countries of the world, the capital market in
Bangladesh will also suffer adverse impacts due to the novel coronavirus.
Impact on remittance inflow: Due to a decline in global demand, oil price in the
international market has fallen by over 50 percent for which the inward remittance flow
is being affected.
Economic loss: The Asian Development Bank (ADB) in its estimation said the economic
loss of Bangladesh due to the Covid-19 pandemic could extend up to $3.2 billion. But
under the present circumstances, it is assumed that the extent of loss could be much.
Impact on demand-supply: The purchasing capacity of low-income people could fall
and there could be disruption in the supply chain due to long general holidays, which
might affect the production of the SMEs and disrupt the transport services.
Shortfall of revenue collection: The overall revenue collection in the current fiscal
year (FY20) is less compared to the budgetary target. This could further increase the
budget deficit at the end of the current fiscal year.
GDP loss: A strong domestic demand coupled with supportive revenue and monetary
policy was the driving force behind the attainment of over 7 percent GDP growth on an
average for three years and lastly an 8.15 percent growth in FY19. The GDP growth could
decline due to the negative trend of the macroeconomic indicators.
Prime Minister Sheikh Hasina once again urged the people to celebrate Pahela Baishakh
(Bangla New Year) on April 14 in their homes. "The cultural programmes can be aired
through the media," she said.
Talking about the upcoming Shab-e-Barat falling on April 9, she called upon Muslims to
perform their prayers at their homes. "Please seek blessings staying at your homes so that
Almighty Allah saves us all, the people of the country could advance socio-economically
and the people from home and abroad get rid of this pandemic," she said.
Addressing the Sunday's press conference, Finance Minister AHM Mustafa Kamal said,
"If everything goes well and the present situation doesn't linger, our growth will be near
8 percent."
Analysing the pre-Covid-19 pandemic situation, the finance minister said, "Our growth
rate was satisfactory. Remittance and revenue collection were also good. We were lagging
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31 CITI-NEWS LETTER
behind in export earnings. Growth in remittance will cover the shortage in export
earnings."
Senior Secretary of the finance ministry Abdur Rouf Talukder said the loan amount in the
declared stimulus packages can be used twice as these are short-term loans, which are
payable in four to six months. "If we can use the amount effectively the package amount
will eventually turn into Tk1.35 lakh crore," he added.
Bangladesh Bank Governor Fazle Kabir highlighted the central bank's initiatives taken up
during this period. He said industry workers' wages for April will be disbursed on the last
day of the month.
Home
Australia to subsidise wages of 6 million after coronavirus package approved
(Source: Colin Packham, Swati Pandey, Reuters, April 09, 2020)
Australia’s conservative government will subsidise the wages of 6 million people for at
least the next six months after lawmakers approved the country’s largest financial
stimulus package to cushion the economic blow from the coronavirus pandemic.
Citing the threat of a prolonged economic downturn, Prime Minister Scott Morrison’s
government late last month outlined a plan to pay employees at any company that has
seen a 30% reduction in revenues A$1,500 ($928) every fortnight.
The wage subsidy package, which is expected to cost A$130 billion, is the centrepiece of
A$320 billion pledged by the government and central bank in financial support as the
pandemic shuts companies and leaves many unemployed.
“This is the biggest economic lifeline that this country has ever seen,” Australian
Treasurer Josh Frydenberg told reporters in Canberra.
“We will do whatever is necessary to ensure our nation gets to the other side of this
coronavirus pandemic.”
The package was approved by a pared back version of Australia’s parliament with the
support of the opposition Labor party.
Fewer than normal lawmakers were present for the one-day sitting to minimise the risk
of the virus spreading.
The economic rescue package comes after S&P on Wednesday lowered the outlook on the
country’s ‘AAA’ sovereign rating to “negative” from “stable”.
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32 CITI-NEWS LETTER
“The COVID-19 outbreak has dealt Australia a severe economic and fiscal shock,” the
ratings agency said.
“We expect the Australian economy to plunge into recession for the first time in almost
30 years, causing a substantial deterioration of the government’s fiscal headroom at the
‘AAA’ rating level.”
A triple-A credit rating is given to only a select group of countries with the strongest
finances. The rating means a country can easily meet its financial commitments, has the
lowest risk of default and can borrow money more cheaply.
Many economists predict the worst recession in Australia’s history regardless, with
unemployment expected to double to near 10%.
The Reserve Bank of Australia on Tuesday predicted a “very large” economic contraction
in the current quarter as restrictions to slow the spread of the coronavirus bite.
HORRIBLE SITUATION
Australia has for weeks curtailed people’s movements, limited social gatherings and
forced many businesses in the hospitality, retail, transport and education sectors to shut.
Those businesses that remain open face falling sales and increasing operational
restrictions.
The restrictions have helped slow the spread of coronavirus in Australia. The number of
new cases has grown by around 2% in recent days, well below the 25% daily growth that
was being recorded last month.
Australia now has just over 6,000 cases, with 50 deaths.
Although the spread of the virus has slowed, authorities have warned against
complacency.
“The virus doesn’t take a holiday,” Health Minister Greg Hunt told reporters in Canberra.
Hunt said Australia will distribute 11 million face masks to hospitals and doctors, some of
whom have complained about a lack of protective equipment.
The early success in controlling the spread of the virus has fanned speculation some of
the mobility restrictions could be eased from the beginning of May.
The New South Wales (NSW) state premier, Gladys Berejiklian, said in a televised briefing
in Sydney that “there could be a chance, if the health experts deem it appropriate”.
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However, she warned lifting restrictions could lead to a second wave of infections. NSW
is the country’s worst affected state, accounting for almost half the total infections.
“Every time you relax a restriction, more people will get sick. More people will die. And
it’s a horrible situation to be in, but they’re the choices and we need to be up-front about
that.”
Reporting by Swati Pandey; Additional reporting by Renju Jose; Editing by Richard
Pullin, Michael Perry, Lincoln Feast and Giles Elgood.
Home
Denmark dishes out salaries to virus-hit companies
(Source: Times of India, April 09, 2020)
Denmark has always prided itself on its "flexicurity" model that marries the free market
with a welfare society, but in the face of the COVID-19 pandemic, it has chosen another
strategy. The northern European country had long been looked at for how it found a
socially acceptable solution to the curse of free market economies: unemployment. Under
Denmark's flexicurity model, employers have been given free rein to hire and fire workers,
letting businesses adapt to the ups, downs and shifts in markets.
Those who found themselves out of work could rely on generous unemployment benefits
combined with plentiful retraining programmes to get the skills needed to land a new job.
Even during the global financial crisis in 2008, Denmark stuck with its flexicurity model.
But the coronavirus crisis is not one of adapting to market changes. Denmark, like many
other countries, ordered many businesses to shut down to stem the spread of COVID-19.
With so much of the economy halted on its orders, the centre-left government has taken
a different path. Like several other European countries, it chose to effectively fork over
money to companies to pay the wages of their staff.
"It is important for me here today to send a signal to companies: Keep on your
employees," Prime Minister Mette Frederiksen said in one of her major public statements
as the government sought to develop measures to deal with the health and economic
impact of the pandemic. "The unions and government have agreed to strengthen the
temporary system of wage compensation. Together, we will support Danish jobs." To
encourage firms to not let go their employees, the government is compensating firms for
75 percent of wages of up to 4,000 euros per month ($4,347). For those on temporary
hourly contracts, the state will pay 90 percent. One business which has taken up the state's
offer is electrician Hornbaek El-forretning, in the city of Randers in western Denmark.
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34 CITI-NEWS LETTER
"We want to make sure that we would keep all our employees, as they are all needed,"
Lene Tind, who runs the company, told AFP.
Hornbaek El-forretning, like many firms, is paying the rest so their employees don't lose
any income. The firm was quickly affected by the measures meant to slow the spread of
the coronavirus. "The first signs of the shutdown was that we were not allowed in nursing
homes with old and weak people," Tind explained. "Also in some companies and at some
private households, they wanted to wait with projects," she added. Thanks to the
programme, nine of 27 employees were furloughed, but Tind expects to call them back to
work as Denmark gradually loosens its confinement restrictions from April 15.
Around 20,000 companies have already applied for the programme, which will remain in
place until June 9. This is the first time Denmark has introduced measures like this to
make sure employees stay on the job. Thomas Bredgaard, a professor of economics at
Aalborg University, said the magnitude of the coronavirus crisis required a different
response. "This crisis is much worse than the financial crisis, and the government had to
avoid mass dismissals," he said. Before the crisis, the country was near to full employment
with an unemployment rate of 3.7 percent, the lowest in over a decade. But even with the
programme in place, Denmark, like many other countries, is still seeing a spike in
unemployment. Since the introduction of the country's containment measures in mid-
March, twice the usual number of people are registering for unemployment every day,
according to the Ministry of Employment.
The Confederation of Danish Industry already estimates that there are about 10,000 more
unemployed in the country than at the height of the financial crisis. For some like Liv
Mikkelsen, a part-time chef at a popular restaurant in Copenhagen, the benefits wouldn't
be enough. "It means not working at all and, with what I would have received, I wouldn't
have had enough to live on," she said. So instead Mikkelsen is collecting unemployment
benefits, after having used up the little vacation time she had. A member of the European
Union, but not the euro, Denmark can afford the interventionist approach thanks to its
deep coffers. "The Danish economy was very robust before the crisis. Unemployment was
at a record low and there was a budget surplus,"
Bredgaard noted. The government has put together several other lifelines for businesses,
including covering fixed costs such as rent for small businesses. However if the crisis
keeps going through May-June, the impact on the economy will be severe. Denmark's
central bank has said it expects GDP to contract between three and 10 percent.
Home
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Japan Will Pay Its Firms to Leave China, Relocate Production as Part of
Coronavirus Stimulus Package
(Source: News 18, April 10, 2020)
Japan is willing to fund its companies to shift manufacturing operations out of China,
Bloomberg has reported as the disruptions caused to production by the coronavirus
pandemic has forced a rethink of supply chains between the major trading partners.
As part of its economic stimulus package, Japan has earmarked $2.2 billion to help its
manufacturers shift production out of China. Of this amount, 220 billion yen ($2 billion)is
for companies shifting production back to Japan and 23.5 billion yen for those seeking to
move production to other countries.
China is Japan’s biggest trading partner under normal circumstances, but imports from
China have slumped by almost half in February due to lockdowns to curb the spread of
the virus hitting manufacturing and the supply chain.
Shinichi Seki, an economist at the Japan Research Institute, predicted that there would
be a shift in the coming days as there already was renewed talk of Japanese firms reducing
their reliance on China as a manufacturing base. “Having this in the budget will definitely
provide an impetus,” he told Bloomberg.
Companies, such as car makers, which are manufacturing for the Chinese domestic
market, will likely stay put, he said.
The Japanese government’s panel on future investment had last month discussed the
need for manufacturing of high-added value products to be shifted back to Japan, and for
production of other goods to be diversified across Southeast Asia.
More than 37 per cent of the 2,600 companies surveyed by Tokyo Shoko Research Ltd. in
February had also said they were diversifying procurement to places other than China
amid the coronavirus crisis.
The policy, however, could strain ties that had been on the mend lately and affect Prime
Minister Shinzo Abe’s years-long effort to restore relations with China.
Chinese President Xi Jinping was supposed to be on a state visit to Japan early this month.
But what would have been the first visit of its sort in a decade was postponed a month ago
amid the spread of the virus and no new date has been set.
Home
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Singapore: Govt to subsidise wages of all local workers by at least 25% amid
Covid-19 outbreak
(Source: Joanna Seow, Strait times, April 10, 2020)
Firms will receive wage subsidies of between 25 per cent and 75 per cent for all local
workers as the Government makes "bolder and more aggressive moves" to save jobs and
keep locals employed amid the coronavirus outbreak.
This is up from the 8 per cent wage subsidy in the Jobs Support Scheme announced in
the Budget statement in February. The help will also last for nine months, instead of three,
up to the end of this year.
Deputy Prime Minister Heng Swee Keat said on Thursday (March 26) that a total of $15.1
billion will now be allocated to the enhanced Jobs Support Scheme, up from the original
$1.3 billion package.
This is more than twice the level of support provided during the global financial crisis in
2009, he told Parliament.
"We cannot prevent an economic recession as the external health and economic situation
will evolve beyond our control. But it will help us mitigate the extent of the downturn and
more importantly, help save jobs, and protect livelihoods," said DPM Heng in announcing
the Supplementary Budget.
"With this support from the Government, I urge employers to do your part to hold on to
your workers."
The Ministry of Trade and Industry earlier on Thursday cut its 2020 growth forecast to
between -4.0 and -1.0 per cent, from an earlier estimate of -0.5 per cent to 1.5 per cent.
The last time Singapore posted a full-year recession was in 2001 during the dot.com crash.
DPM Heng announced a slew of measures to support the immediate priority of saving
jobs, supporting workers and protecting livelihoods, including help for the self-employed,
lower-income workers and the unemployed - measures that account for over one-third of
the $48 billion Supplementary Budget.
For employed workers, the top priority is to help them stay in their jobs, said DPM Heng.
While his Budget statement last month introduced the Jobs Support Scheme and
enhanced the Wage Credit Scheme to preserve and enhance jobs, "the situation now calls
for bolder and more aggressive moves to save jobs and keep workers in employment", he
said.
The basic cash grant of 25 per cent applies to all Singaporean and permanent resident
employees, who number more than 1.9 million.
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Firms in the food services sector, including hawker stalls, will receive higher support, at
50 per cent of wages. Firms in the aviation and tourism sectors - which are the worst hit
by the Covid-19 outbreak - will receive 75 per cent of wages. These include airlines, hotels
and operators of meetings, incentives, conferences and exhibitions venues.
The support will apply to the first $4,600 of gross monthly wages per local employee,
which is the median wage in Singapore. Gross monthly wages include employee
contributions to the Central Provident Fund (CPF).
Business owners will not receive subsidies for their own wages.
The qualifying salary was raised from the original $3,600 level to provide greater support
for middle-income workers.
Employers will receive payouts in three tranches, in May, July and October.
They do not need to apply for the scheme as it will be computed based on their CPF
contribution data. Those eligible for higher tiers of support will be informed closer to the
date of the first payout.
Enhancements to the Wage Credit Scheme, which co-funds wage increases for
Singaporean employees, were announced in last month's Budget statement
The Government's contributions for qualifying wage increases for last year and this year
were raised by five percentage points. It will pay 20 per cent of increases given last year,
and 15 per cent of those given this year.
The monthly wage ceiling was also raised to $5,000, up from $4,000, for qualifying wage
increases given last year and this year.
Correction note: The article has been edited to accurately reflect when employers will
receive the Jobs Support Scheme payouts. We are sorry for the error.
Home
Europe could fall, Italy warns as EU tries again for rescue deal
(Source: Aljazeera, April 09, 2020)
European finance ministers are again trying to hammer out a deal to minimise the
expected recession.
The European Union faces an existential threat if it cannot come together to combat
the coronavirus crisis, Italy said on Thursday as the divided bloc sought to salvage talks
on a rescue package to aid battered economies.
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A deal has so far proved elusive amid fraught discussions between the more fiscally
conservative north and the indebted south, which has been hit hard by the pandemic and
is pushing for unprecedented measures like issuing joint EU debt.
Sixteen hours of talks between EU finance ministers on a half-a-trillion-euro ($546bn)
package collapsed on Wednesday. They resumed on Thursday to push for a deal to help
governments, companies and individuals through a deep recession the pandemic is
expected to cause in Europe this year.
"It's a big challenge to the existence of Europe," Italy's Prime Minister Giuseppe Conte
told the BBC. "If Europe fails to come up with a monetary and financial policy adequate
for the biggest challenge since World War II, not only Italians but European citizens will
be deeply disappointed."
For weeks, the EU has struggled to show a united front in the face of the pandemic, with
the 27 member states squabbling over economic rescue plans, medical supplies and
border curbs.
France and Germany are pushing for a compromise to break the deadlock, but budget
hawk Austria said that, while it was willing to make concessions, the contentious "euro
bonds" remained a no-go for Vienna.
"That is out of the question for us," said Austrian Finance Minister Gernot Bluemel.
A deal may still be possible on Thursday, said German Finance Minister Olaf Scholz.
"It looks like an agreement is possible," he said, signalling that the Netherlands,
seemingly alone in demanding tough conditions for countries like Italy and Spain if they
draw aid funds, had softened its stance.
A senior EU diplomat said the risk was growing that the finance ministers would just
patch up divisions for the sake of announcing a deal, but would leave the key unresolved
issues to national leaders.
"There is a lot of pressure for an agreement today," said the diplomat. "Germany and
France are pushing for it. But it's not easy ... we may be heading for a formal agreement
that doesn't really solve much in practice."
Sticking points
The package under discussion would bring the EU's total fiscal response to the epidemic
to 3.2 trillion euros ($3.5 trillion), the biggest in the world. But it includes contentious
elements that expose deep divisions among countries on sharing the financial burden of
crises, bringing back bitter disputes and mistrust from the sovereign debt crisis of 2010-
2012.
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39 CITI-NEWS LETTER
Another problem is agreeing on conditions under which eurozone governments could
access cheap credit from the eurozone bailout fund, the European Stability Mechanism.
Italy and most other countries are ready to accept very light conditions, but the
Netherlands wants stricter rules, including country-specific economic criteria, which is
politically unacceptable for Rome.
"It's important that we take this decision today on the 500 billion euros that is in
discussion - that's an incredibly large sum of money that we could use to help a lot of
people, especially in the hardest-hit countries, Spain and Italy," German Economy
Minister Peter Altmaier said.
Other elements of the package being discussed are more guarantees for the European
Investment Bank to back up companies and a scheme to help subsidise wages across the
bloc so that companies can cut work hours instead of jobs.
But a separate plan to finance the recovery, after the epidemic, raises more questions.
France and the southerners want the money - possibly up to three percent of EU gross
domestic product, or more than 400 billion euros ($437bn) - to be borrowed jointly on
the market by all EU states.
This is a red line for Germany, the Netherlands, Finland and Austria, which strongly
oppose joint debt issuance, even in such an emergency as the coronavirus pandemic.
The ministers might end up sidestepping the problem by just mentioning the need for a
recovery fund and asking the 27 national leaders of the bloc to decide on how to finance
it.
Home
MHGF says ‘halt production’ to ready-to-wear manufacturers
(Source: Textile Gence, April 10, 2020)
The measures taken against the coronavirus outbreak are constantly increasing.
Following the transportation restrictions, curfew was imposed over 65 and under 20. In
this process, shopping malls were closed, the large-scale halt experienced in the retail leg
quickly found its response in production. Singularly, several textile manufacturers
announced that they halted production for a certain period of time. On April 8, the
Fashion and Apparel Federation (MHGF) decided to recommend the manufacturers to
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40 CITI-NEWS LETTER
halt production until the end of April by a majority decision as a result of the meeting held
with the chairmen of the member associations.
MHGF Chairman Hüseyin Öztürk made a written statement on the decision, and
reminded that the federation represented 30 sectoral associations and 9 thousand 300
companies from Turkey’s textile, ready-to-wear, fashion, leather, leather garment and
footwear industries. Öztürk emphasized that they support the social isolation warnings of
the Coronavirus Scientic Board, headed by the Minister of Health Fahrettin Koca, and
President Recep Tayyip Erdoğan’s ‘stay at home’ call. Öztürk stated that they decided to
recommend production halt until the end of April as MHGF due to the Covid-19 outbreak
that affected the world starting from China. Öztürk announced that this decision was
taken at the teleconference held with the chairmen of the member association and with
the approval of the majority.
We must be ready for the aftermath of the outbreak!
Noting that the buyers (suppliers) and chain stores in the domestic and foreign markets
are closed due to the outbreak; Hüseyin Öztürk stated that the number of Covid-19 cases
peaked in Europe; which is the largest market in the sector, and is expected to decrease.
Öztürk; “When these markets open and return to normal in the coming period; it is very
important that we are simultaneously ready. This will only be possible by applying social
isolation and preventing the spread of the virus”. Arguing that part-time and piecemeal
work applied by some companies is not ecient at the costbenet point; Öztürk continued
as follows; “Apart from our workshops and factories; which support the healthcare
organization with products such as masks, overalls, and gauze or have to full orders from
abroad as required by the contract; we are recommending our producers in textile, ready-
to-wear, fashion, leather, leather garments and footwear; to halt their production until
the end of April”.
Textile and ready-to-wear should be declared as a ‘strategic sector’
Hüseyin Öztürk stated that textile and ready-to-wear are of vital importance as seen in
these days. Öztürk; “We are the leading sector in the production, employment and export
of our country. We have a structure that brought the export culture in Turkey; acting by
its own capital, and that produce the most foreign trade. In addition, there is no other
sector that provides employment for 1 person with an investment of one thousand dollars.
With a billion dollar investment in the ready-to-wear industry, 1 million people can be
provided with jobs.
Apart from fashion and daily use, medical textiles play a serious role for our health as do
today; while we offer solutions for the world of today and the future with technical textiles.
When we put all this out, we think that textile and ready-to-wear should be declared a
strategic sector”. Pointing out that the ready-to-wear industry is SME-dominant; Öztürk
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41 CITI-NEWS LETTER
added that national and global store chains should support the producers in this period;
when the outbreak is effective.
Home
Bangladesh seeks IMF lifeline after record stimulus package
(Source: A.Z.M. ANAS, NIKKEI ASIAN Review, April 10, 2020)
Cash infusion may not be enough to cushion blow from COVID-19 crisis
Bangladesh is seeking $700 million in financial backing from the International Monetary
Fund after rolling out its biggest-ever stimulus package. The government hopes the move
will prevent the coronavirus pandemic from ravaging its trademark macroeconomic
stability.
"We are currently assessing the government's request to the IMF for emergency
financing," Ragnar Gudmundsson, the fund's representative in Dhaka, told the Nikkei
Asian Review.
The plea coincides with Prime Minister Sheikh Hasina's announcement on Sunday of a
$9 billion stimulus package, equal to 2.5% of gross domestic product, aimed at cushioning
the economic blow from the lockdown induced by the coronavirus outbreak.
The rescue package is meant "to keep the economy moving, minimize hardship for the
population, especially the more vulnerable, and preserve social stability," said
Gudmundsson.
Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce
and Industry, said the package's targeted measures will revamp economic activities by
boosting liquidity, sustaining business operations and slashing unemployment.
To maximize the use of funds, he said, the top chamber is working with the finance and
commerce ministries and the Prime Minister's Office to make sure smaller companies,
many of which have no access to banking finance, can leverage the stimulus outlays.
"The idea is to keep economic activities running as much as possible," Fahim told Nikkei.
Small and midsize enterprises will receive $2.35 billion as working capital from banks at
9%, of which the government will subsidize 5%. The package also includes around $3.5
billion in subsidized loans to industrial and services sectors, $600 million for the textiles
industry, and another $600 million for pre-shipment credit refinancing. In addition,
export funding has been lifted from $3.5 billion to $5 billion.
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But this will fall short of the total needed, which has prompted Bangladesh to turn to the
donor community for balance of payments and budget support.
BoP posted a modest surplus of $132 million in the seven months to January, but pressure
could build in the coming months, as sagging demand in virus-hit Europe and the U.S.
drove March shipments of textiles, the country's key export item, down by 30%.
Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh, a
Dhaka-based think-tank, is unconvinced about the success of the relief package, saying
the authorities have put too much emphasis on the economic recovery, overlooking the
first and second pillars -- containing COVID-19 and food security of 40 million poor
people.
"You're trying to revive the economy keeping the pandemic active," Mansur told Nikkei.
"It's an incoherent strategy." He added, "The first pillar [disease control] is getting the
least attention."
Furthermore, he is skeptical about financing the package since the banking sector has no
additional wherewithal, because banks will not receive deposits in the next six months
and their income will take a hit because of the moratorium on loan repayment.
The package gave no clear indication of how banks will mobilize money, or whether the
central bank will launch refinancing, offer partial risk guarantees or opt for quantitative
easing.
Mansur of PRI highlighted one downside. He said that, for example, directors of one bank,
whom he called "self-serving clients," could eat up most of the rescue cash in collusion
with their peers in another.
"This is dangerous in the Bangladesh context," he said. "Deserving companies may not
get loans."
Furthermore, Mansur estimated that as much as $6.12 billion will end up in the pockets
of big companies while exporters will enjoy the benefits of $2.6 billion.
The package is intended to keep businesses afloat, but its success will hinge on how it is
implemented, according to Zahid Hussain, a former lead economist of the World Bank's
Dhaka office.
Hussain said it the key is whether the package will protect against unemployment and
bankruptcy while supporting labor income.
Shams Mahmud, president of the Dhaka Chamber of Commerce and Industry, welcomed
the package, but said the onus now is on financial institutions so that genuine
entrepreneurs, not willful defaulters, can get financial firepower.
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43 CITI-NEWS LETTER
"The economy has slowed down. Exports will shrink in countries like Germany," he said.
Nevertheless, he is bullish about the economic recovery in the long run, despite temporary
hiccups.
Last month, Bangladesh sought budget aid from some multilateral lenders, including the
World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank,
said an official of the Economic Relations Division, an arm of the ministry of finance.
Together with budgetary assistance, BoP war chest can be "instrumental to preserving a
country's growth prospects and macroeconomic stability," said the IMF's Gudmundsson.
The South Asian country's macroeconomic success has been built on higher growth (8%-
plus), lower inflation (slightly higher than 5%) and manageable fiscal deficit (slightly
higher than 5%).
Densely-populated Bangladesh reported 112 new confirmed coronavirus cases on
Thursday, bringing the tally to 330, including 21 fatalities. The country confirmed its first
case on March 8.
The countrywide shutdown will continue until April 25.
Home
Experts Call For 'Total Abandonment' Of Fast-Fashion to Prevent
Environmental Disaster
(Source: Euro News, April 10, 2020)
Despite a growing appetite for sustainable clothing, a new report has found that we are
still buying too much to slow fashion’s environmental impact.
Cheap manufacturing, frequent purchases and short-lived items are all factors that
contribute to the 92 million tonnes of waste created by the industry every year. But it isn’t
just waste that poses a threat to the planet. The way our clothing is made also uses trillions
of tonnes of water, many harmful chemicals, and emits more than 1.7 billion tonnes of
CO2.
A team of experts have published a paper in online journal Nature Reviews Earth and
Environment that looks at how this impact is affecting our planet. In the last 20 years,
the amount of clothing produced by fashion brands had doubled. Fast-moving trends that
rely on low-prices and novelty compel consumers to buy more than they need, creating
an artificial demand for more clothing. The paper explains that this massive amount of
unnecessary production needs to stop in favour of a slower-moving approach to fashion.
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Most environmental pollution occurs in countries like Bangladesh, Cambodia and
Indonesia where textiles and clothing are made. While a lot of clothing is made in the
Global South, the head offices of many brands are in the EU or the USA. This disconnect
between where an item is designed and where it is made vastly increases the chances of
mistakes being made, which also contributes to the waste problem.
Consumers need to change their habits if environmental concerns are to be addressed. In
the US, the average person is now buying a new piece of clothing every five and a half days
and evidence from the UK suggests we are wearing our clothes for a lot less time before
we throw them away than we used to.
“Ultimately, the long-term stability of the fashion industry relies on the total
abandonment of the fast-fashion model, linked to a decline in overproduction and
overconsumption,” states the paper.
WHAT CAN WE DO?
“From consumers’ side, the most important thing is to slow down the consumption;
buying less, using longer (extending the lifetime), taking good care of your garments,
laundering more seldom, and investing in better quality and more classical garments,”
says Kirsi Niinimäki, Associate Professor in Design at Aalto University, Finland. Equally,
the co-author of the report suggests trying to invest in more sustainable, recycled
materials and looking for brands that are making clothing locally.
The ultimate goal is for businesses to shift to a more circular business model, one that
brings back materials to be used again. This would obtain the most value from the
resources used and stop the extraordinary amount of waste being produced. In the
meantime, "there are good examples of repair services, made to measure services,
renting/leasing services, crowdsourcing to support local production," Niinimäki explains
adding that businesses must get creative with ways to manage environmental damage.
Home
SPGPrints is sustainable with ZDHC Level 3 classification
(Source: Fibre2Fashion, April 10, 2020)
SPGPrints has opted to comply with one of the youngest and most progressive
sustainability initiatives: the ZDHC Foundation Roadmap to Zero Programme. The
company demonstrates sustainability with Level 3 classification in ZDHC Audit by
BLC/Eurofins. SPGPrints is a leading provider of integrated solutions for textile, label,
and industrial printing markets.
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45 CITI-NEWS LETTER
The ZDHC Foundation has created a platform where companies within the sports,
fashion, luxury, and outdoor industries work closely together to phase out the usage of
hazardous substances. Intensive testing of all reactive inks for digital printing of textiles
from SPGPrints, followed by a recent audit, performed by a third-party, has resulted in
the highest possible ZDHC compliance: the Level 3 conformance. This clearly shows that
SPGPrints greatly contributes to the ZDHC’s ideal, according to a press release by
SPGPrints.
For companies like SPGPrints, the audit system of the ZDHC is a suitable method to
display products and services that comply with these guidelines. For potential customers,
the ZDHC Foundation created a trustworthy platform that shows how companies are
working very hard towards a sustainable production process. In this way, the consumer
knows he is helping the ideal of a better world by buying sustainable products.
“The ZDHC platform enables SPGPrints to show that they are doing their very best to
create a process that is as sustainable as possible. You should meet customers’ wishes, but
at the same time create results that are not harmful to human health and the
environment.” SPGPrints strives for high-value printers that contribute to sustainability,
being eco-friendly and qualitative at the same time,” Fred Schmitz, Product Stewardship
& Regulatory Compliance (PS&RC) specialist at SPGPrints said.
Home
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