Myanmar’s clothing industry is set to grow tremendously in the coming years, according to a report in the latest issue of Global Apparel Markets from the business information company Textiles Intelligence. Freedom from military rule and reformist government policies are making things possible.
A turning point came on March 30, 2016, Myanmar’s first civilian president in 50 years Htin Kyaw sworn in as the leader of country under the advisory of democratic leader Aung San Suu Kyi. That is when the investors’ world and garment sourcing companies based in the west has taken their serious attention to Myanmar. Although some of them has went their much seeing reforms of former military-civilian president Thein Sein. The first western brand to source from Myanmar was H&M in 2013 followed by Gap in 2014 and these companies appear to have paved the way for others to follow. Experts predict that there could be up to 1.5 million jobs in the garment industry by 2020 compared with approximately 230,000 in mid-2015, and that garment exports could rise from $1.5 million in 2014 to as much as $12 billion in 2020.
Prior to 2011, Myanmar had been subject to 50 years of military rule which made it a very poor country, plagued by bureaucracy and corruption, and isolated by international sanctions. But most of the sanctions have been removed in recent years and many countries have granted free trade or preferential trade status to clothing made in Myanmar. Furthermore, foreign direct investment (FDI) in the garment industry has been growing at an impressive pace in recent years and, following the removal of sanctions, clothing exports from Myanmar shot up by 26.5 per cent in 2013 and by a further 27.4 per cent in 2014.
This section of Textile Today summarizes some important international news in textile and apparel world.
The labour conditions in Indian textile needs to improve
The labour conditions in Indian textile is now on a wide check, taking the example of Apple Inc, which tackled poor wages and working conditions at the factories of its partner Foxconn in China after criticism from consumers among others.
In India, legislation exists against bonded labour and child labour, but enforcement is weak. Mona Gupta, a senior official at India’s Apparel Export Promotion Council feels, the industry has the most invisible supply chain. It is also mostly unorganized, which makes it harder to map and regulate. Domestic consumers should raise their voice. If they insist on buying only ethical products, that will bring pressure on manufacturers.
According to the International Labour Organization, 21 million people are victims of forced labour globally, while the Global Slavery Index says there are 36 million slaves in the world, half of them in India. As per estimates the domestic market accounts for more than 40 per cent of the industry’s revenue. Hundreds of small and medium-sized enterprises use forced labour and treat workers poorly, with abuses ranging from withheld salaries to debt bondage.
Italy sees Iran as an attractive market for luxury goods
It’s thought Iran has more than three million high net worth individuals who are major and regular buyers of luxury goods. Iran could probably be worth about two per cent of the global luxury market once developed.
The sanctions on Iran over the past decade did not apply to cosmetics and many other consumer goods, but they made it difficult for European companies to own stores in Iran. In February, fashion house Roberto Cavalli opened its first shop in Iran, in the footsteps of leather goods maker Piquadro and men’s shirt company Camicissima. Versace is due to open a flagship boutique in Tehran soon, in franchise with a local commercial partner. However, setting up businesses in Iran is no easy task due to a lack of appropriate retail infrastructure, high tariffs and banking restrictions. Iran is hungry for infrastructure investment as it emerges from financial isolation and it’s seeking a strong Italian foothold. Iran rejoined the global trading system in January following a deal to lift crippling sanctions in exchange for limiting its nuclear activities.
Italian firms appear to have adopted a more proactive attitude than their French luxury and fashion rivals. Some French brands such as Longchamp and Lalique are looking for distribution partners but have no plans to open boutiques.
Technology to help reduce waste in Vietnam’s apparel industry
With Vietnam’s increasing participation in trade agreements, including the Trans-Pacific Partnership and the EU free trade agreement, local textile sector is poised for faster growth, creating increased demand for sustainable energy and water use practices. The textile, apparel and footwear sector is a significant contributor to Vietnam’s economy. In 2015, the sector’s exports reached $39.2 billion and generated approximately three million jobs, mostly for women.
While this sector is energy and water intensive, there are opportunities for reducing resource consumption by 20 per cent or higher by using the latest technology and good operating practices. Energy and water efficiency assessments will be conducted at about 30 factories over the next 12 months to help them reduce operating costs and improve productivity while contributing to the country’s green growth and climate change targets.
This manufacturing sustainability initiative will promote resource efficiency by systematically assessing performance improvement opportunities, conducting benchmarking studies, sharing technology best practices, and raising sector-level awareness for broader uptake. Factory assessments at supplier factories across the textile value chain, including cut-and-sew, dyeing-and-printing and garment-washing operations, will identify and develop cost-effective measures to improve energy and water efficiency while helping suppliers improve productivity and competitiveness.
Cambodian garment workers are unsafe even outside of the factories
As many as 70 garment workers were injured recently in Cambodia’s Kampong Speu province when two tires on a truck carrying them to work blew out, causing the truck to overturn with the workers in tow.
Reports have informed that roofless, seatless trucks carrying too many workers because there aren’t stringent-or enforced-laws outlining a passenger limit, are notoriously perilous in Cambodia. The drivers of those privately-owned trucks are also often unlicensed.
A similar incident to Wednesday’s occurred in the same province in January, that time killing five garment workers when the open-topped truck flipped over as the driver tried to overtake another truck, Cambodia Daily reported. Sixty-seven of the workers bound for the Now Corp factory in Kandal were injured in the accident, 15 of them seriously.
India not to provide export subsidies for cotton
India is not user of export subsidies for cotton, according to Government of India. On 27th April, Ministry of Commerce and industry of India provided clarification with regard to export subsidies for cotton.
Since India did not have export subsidies during 1986 to 1988, which is the base period per the Uruguay Round Agreement on Agriculture (AOA), India is not entitled to export subsidies. However, subsidies to reduce the cost of marketing, transportation costs, handling and processing costs are permitted without circumventing the export subsidy reduction commitments.
Developed nations have agreed to eliminate export subsidies based on the Nairobi Ministerial Decision on Cotton and Export Competition, which was adopted on December 19, 2015. This agreement will enable developing countries to eliminate export subsidies by January 1 of 2017.
Global cotton price advance
International cotton prices have advanced in the past month, influenced by upward movements in New York, and has returned to the lower end of the previously well-established trading range, which had prevailed for several months.
International business activity has remained much the same as in the past several months, with spinners generally unwilling to extend demand beyond hand-to-mouth requirements. Mills have remained concentrated mainly on cotton for nearby delivery. The steady pace of business during the past few months has resulted in a fairly well-sold position for many trade sellers, with the result that the volume of cotton available from certain origins during the remaining months of the season appears to be becoming tight. However, little demand for cotton further forward has been in evidence, with the exception of some Brazilian new crop into Far Eastern markets. US export sales reports released during March have painted a rather mixed picture, with strong numbers in the first half of the month and a less robust pace in the succeeding weeks.
Turkey continues to feature quite heavily as a destination for US exports. An overall decrease of around ten per cent, meanwhile, is foreseen in China. India has instructed farmers to adhere to a sowing window as one measure that might help in the effort to prevent a repeat of last year’s insect damage.
Pakistan ministry of textile industry wants cabinet support for boosting cotton production
There was a slump in local production of cotton during 2015 in Pakistan. So, this time the ministry of textile industry wants cabinet support for an action plan to ensure the country’s textile manufacturers receive enough cotton supplies.
According to government data, Pakistan’s cotton production dropped 33.85 percent to 9.71 million bales during this past 2015 growing season. The fall was particularly pronounced in Punjab province. Pest attacks, inferior inputs and sliding prices are key reasons for the low output, ministry officials say.The ministry has recommended waiving sales tax and duties on cotton imports to help support mills in the short term. Along with this a minimum support price for Pakistan-produced cotton to stem the trend of growers switching to other crops in wake of falling global prices. The ministry wants to ensure a ready supply of local raw materials for small- and medium-sized textile units that lack the capacity to import directly. As per figures, the annual cotton requirement of the textile industry is 16 million bales against the local production of 9.7 million bales this year. The gap is wide and may grow if the government does not address the issue.The country produced 14.71 million bales in the same period of last year against domestic demand of 15 million bales from the textile industry. According to the Pakistan Cotton Ginners’ Association (PCGA), cotton output dipped to 5.95 million bales in Punjab during the last growing season from 10.74 million bales harvested a year earlier (2014). Sindh province’s production fell marginally to 3.77 million bales, compared with 3.96 million bales in the previous year.
TPP can pose problems for India’s textile and clothing business
The Trans Pacific Partnership can pose problems for India’s textile and clothing business. For one, exporters from TPP member countries (of which India is not a member) will get preferential access to the US market. India’s apparel exports to the US have been sliding since 2010-11. To avail of duty preference, India will have to source yarn, fabrics and other inputs from TPP member countries.
So the option before Indian businesses would be to consider relocating to Vietnam (a TPP partner) and avail of the TPP duty advantage. But this proposition may not be feasible considering that labor is highly expensive in Vietnam compared to India.
To tide over the situation, India needs to explore export markets in emerging regions of Africa, South Asia, CIS and Latin America. The country will need to address the issue of inverted duties (a situation of higher duties on fiber and lower duties on apparel), expedite the free trade agreement with the Russian customs unions (it can be a big market in the coming years), make it mandatory for all least developed countries to use fabrics made in India if they want to export their apparels to India duty free and request the US to include apparel items in its GSP program.
Australia is ready to eliminate import duties on all items from India
As part of the proposed free trade agreement (FTA), the country’s special envoy for trade Andrew Robb said the free trade pact officially known as the Comprehensive Economic Cooperation Agreement (CECA) is likely to be freezed in about 6-8 weeks. According to Robb, this would translate into import duties on more than 9,000 items out of about 11,000 exported to Australia coming down to near zero as soon as the pact gets implemented and benefit sectors like auto parts, textiles, leather and pharmaceuticals. The country has also agreed to ease visa norms for Indian workers as part of the pact, especially for intra-corporate transfers (ICT), the trade envoy said. In both goods and services, we have offered India the best of what we have extended to our other FTA partners.
Currently, India-Australia bilateral trade was about $14 billion in 2014-15, with Australian exports at $11 billion and Indian exports just at $3.2 billion. The two countries hope to increase two-way trade to at least $40 billion by 2020, which would still be much lower than Australia-China’s $160 billion worth of annual trade.