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ADB offers loan to Bangladesh to support garment industry upgrade

The Asian Development Bank (ADB) has signed a loan agreement with Bangladesh's BRAC Bank to finance the construction and upgrade of ready-made garment factories in Bangladesh that have taken steps to meet global standards and improve the rights and safety of workers.

The 30 million U.S. dollars of loan will also be used to build the badly-needed effluent treatment facilities in the textile and garment industry.

The Manila-based lender in a statement said many factories in the country still operate without effluent treatment plants, resulting in widespread water pollution which is particularly damaging rural areas where communities rely on surface water for washing, bathing, irrigation and fishing.

"Bangladesh has been taking steps in conjunction with the international community, to make its factories safer and to improve conditions for workers, but there is a substantial cost and a need for long term funding that is not readily available from current sources," said Biao Huang, investment specialist in ADB's Private Sector Operations Department.

"This loan, with a 5-year tenor, will help meet the need for longer term finance currently unavailable from local banks and international capital markets, and will be used exclusively by BRAC Bank to finance socially and environmentally sustainable projects."

Bangladesh is the world's second largest exporter of textiles and garments, accounting for over 80 percent of the country's merchandise exports in fiscal year 2014, and employs 4.2 million workers, said ADB.

However, it said the industry has suffered setbacks after two disasters in recent years - the 2012 Tazreen factory fire and the 2013 Rana Plaza building collapse.

In the wake of these events, ADB said the Bangladesh government entered into a compact with the European Union, the United States, and the International Labor Organization to commit to improvements in building safety, labor rights, and business conduct.

Separate accord and alliance agreements have also been signed by global apparel companies, global and Bangladeshi trade unions, and non-government organizations to improve business conduct and worker safety.

Transforming the factories in line with the compact and other agreements, however, requires substantial outlays, with the cost estimated at around 250,000 U.S. dollars to 400,000 U.S. dollars per factory, it said.

Given the lack of long-term funding available in Bangladesh, ADB's loan will enable the BRAC Bank to offer longer tenor financing to companies wanting to upgrade and improve structural, safety and social standards at their factories, it added.

ADB will also be working with the bank on a rollout of a gender action plan, which will ensure factory upgrades reflect the needs of women, said the ADB statement.

This includes the provision of day-care facilities, safety measures for females, and health clinics, it said, noting that women make up nearly 80 percent of all workers in the textile and garments industry in Bangladesh.


Country remains world's largest luxury goods market

China continues to be the largest segment of the world's luxury market, despite economic slowdown. According to a Xinhua report, China looks likely to continue to make up for the weaker demand elsewhere. Chinese shoppers currently account for nearly half of the global luxury market, providing an invaluable demand to brands in every segment. Data from Fortune Character Institute, a Shanghai-based luxury research consultancy, show China's luxury spending in 2015 rose 9%, year on year to $16.8 billion. Observers say that educated, well-traveled and tech-savvy younger generation shoppers are emerging as the new target market.

The Chinese customer is becoming a lot more global, said Andrew Keith, President of Lane Crawford, the high-end fashion retailer headquartered in Hong Kong.

Research found that 39% of wealthy Chinese think the logo is no longer the priority, said Dr. Tina Zhou of the Fortune Character Institute. Now they buy luxury goods for their own enjoyment. Niche high-end brands are becoming new drivers of luxury consumption.


Chinese textile manufacturer to invest US$ 350 million

Jiangsu Sunshine Group, a Chinese manufacturer, intends to construct a textile plant in Ethiopia at a cost of US$350 million. In the aim of boosting the country's textile industry and making the nation Africa's textile industry hub, Ethiopia is using the sector as a bridge for economic development.

The textile plant is planned to be installed in Adama Industrial Park. Once it starts operation it will have production capacity of 10 million meters of worsted wool fabrics and 1.5 million finished parts.

The Chinese manufacturer has annual production capacity of 35 million meters of superfine worsted wool fabrics and 3.5 million sets of men's suits and women's wear. It is also the only Chinese textile manufacturer that won honorable title of 'World Brand' and 'Garment Export Inspection Exemption'.

In the past few years Ethiopia has managed to attract different foreign companies, which operate in the textile and clothing sector. This includes the Turkish textile giant Akber and Taiwanese George Shoe Corporation.


Textile sector in Northeast gets Rs.10.38 billion to boost textile exports

The Indian Union government has undertaken an Rs.10.38 billion ($156 million) scheme in the northeast to boost textile exports, increase jobs and curb the migration of workers.

Funded by the Union Ministry of Textiles under the North-East Region Textile Promotion Scheme (NERTPS), the project is also aimed at developing and modernising the textile sector by providing region-specific flexibility in execution.

Under the NERTPS, the Textile Ministry has been providing Rs.18 crore each for setting up of a ready-made garment manufacturing unit or 'Apparel and Garment Making Centre' (AGMC) in each of the eight Northeastern States. It would also provide financial assistance to run the units after their commissioning, said Textiles Secretary Rashmi Verma.

The first AGMC was inaugurated in Nagaland on April 6 and the second one in Tripura on April 8.

The AGMCs aim to boost the scopes of employment and exports and curb migration of workers from this region to other parts of the country.

Three hundred Japanese computerised sewing machines will be installed in each of the eight AGMCs. The Tokyo-based Juki Company, which started making sewing machines in 1947, has customers in 170 countries from China to the Vatican. Of the 300 sewing machines, 200 would be used for manufacturing and 100 for providing training.

Each AGMC will provide direct employment to 1,200-1,500 people, mostly women, and take care of skill up gradation and marketing of finished products.

With a 46 million population, the northeastern states share a more than 5,435 km border with China, Myanmar, Bhutan, Bangladesh and Nepal. Some of the states have trade ties with a few of these countries, especially Bangladesh and Myanmar. Thus, the AGMCs have scope to exporting readymade apparel to these adjoining and other countries.


Country approves new support for technical textiles industry

The Russian government has designed a new package of measures, aimed at improving of the current situation in its domestic technical textiles market and further increasing domestic production of technical textiles.

Despite the on-going financial recession in Russia, caused by Western sanctions, the Russian market of technical textiles continues to grow. This is reflected in official statistics, which say that last year the market grew by 22% in volume terms, compared to 2014. This is contrary to the last year's performance of the Russian market of standard textiles, which posted a significant decline in 2015, both in value and volume terms. In the meantime, the Russian government believes that this is just the beginning, while the local market of technical textiles has big potential for further growth during the next few years.

The Russian government has recently approved the provision of funds for technical re-equipment of the industry. As part of these plans, RUB 1.3 billion (US$25 million) should be allocated for these needs, which should help Russian technical textiles producers to purchase new equipment for their production facilities. It is planned that the funds will be provided from the existing Russian Fund for the Development of Industrial Production, one of Russia's largest state-owned investment funds.


Textile companies get a lifeline

Textile companies of Swaziland which were hard hit by the loss of the lucrative duty free market under African Growth and Opportunity Act (AGOA) of the US government have found another preferential market that is ready for textile products.

The market was opened on April 1, 2016, when the Preferential Trade Agreement between MERCOSUR and the Southern African Customs Union (SACU) entered into force. MERCOSUR is South America's leading trading bloc, also known as the common market of the South, it aims to bring about the free movement of goods, capital, services and people among its member States.

Its members are Argentina, Brazil, Paraguay and Uruguay, where as, Bolivia, Chile, Colombia, Ecuador and Peru are associate members, as they can join free-trade agreements but remain outside the bloc's customs union.

The MERCOSUR-SACU Agreement was signed on December 15, 2008 by the MERCOSUR States Parties and on April 3, 2009 by the members of SACU (South Africa, Botswana, Lesotho, Namibia and Swaziland). The Agreement sets out preference margins of 10%, 25%, 50% and 100% on 1,050 tariff lines on both sides. By virtue of being a preferential trade agreement, it means all the SACU member States are eligible to export and pay lower rates of import customs duty and or levy charge, or none at all, on their goods to every member of MERCOSUR.

The productive sectors of MERCOSUR/SACU which will benefit from tariff preferences include chemical, textile, steel, plastic, automotive, electronics and capital goods, in addition to agricultural products.


Russian sanctions against Turkish textiles

Russia is the one of the largest market for Turkish exports. The main item of exports to Russia is textiles, which has decreased due to this political turmoil. Although textiles were not formally included in the list, shipments of Turkish textiles have been blocked at the Russian border since November 2015. A few shipments that manage to make it past the Federal Customs Service of Russia undergoes long inspections that result in significant delivery delays.

The unhealthy relationship between Turkey and Russia may have a deep impact on Turkish economy.

As per data, at the end of Q3 of 2015, Turkey's share in Russian imports was 11% for fabrics made from chemical fibres; more than 40% for warp-knit fabrics; and about 25% for yarns made from synthetic and artificial fibres. Finished products make up the majority of Turkish textile imports to Russia, while raw materials amount to roughly 30% of the total import volume.

Experts say that Russian textile manufacturers still don't have the capacities to substitute for Turkish imports. Though, Russia will be the main short term loser on account of its ban on imports of some Turkish items. In the longer term, Turkey will lose a valuable export market in Russia, a leading destination for Turkish products.


The fashion business a global perspective

Global fashion industry is worth US$ 1.2 trillion, of which US$ 250 billion originates annually from the United States. Fashion provides more than a positive personal impact. The industry employs nearly two million people every year. It is also an industry, which suffers a tremendous trade gap for US consumers, because of the lower costs of labour that can be found around the world. The US exports about US$ 6 billion in apparel each year, but imports more than US$ 82 billion.

About 75% of the people who are garment workers in the fashion industry worldwide are women. Upto 75 million people are employed by the fashion industry globally right now. In 2000, only 20 million people were believed to be employed by the industry. In the US, cotton pickers make an average of US$ 40000 per year. In India, the average employee makes US$ 730 per year. In Uzbekistan, workers may not earn anything at all. In 2004, it was estimated that the informal economy within the fashion industry generated 35% of global GDP; the figure is likely be higher today.

The fact is that, though a majority of the manufacturing occurs outside of the US and Europe while a majority of sales occur inside the US and Europe, economies everywhere are able to benefit from what this industry contributes. Whether there are ethnic, cultural, or national fashion trends that are emphasised, there is always a niche available for designers, manufacturers, and retailers. Although the US often dominates the fashion industry in terms of imports and influence, there really is something for every demographic if you are willing to look hard enough.

In the US, the average household spends about US$1700 per year on fashion items, including apparel, footwear, and related accessories.
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Publication:Pakistan Textile Journal
Geographic Code:9PAKI
Date:May 31, 2016
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