Trump Wants to At Least Quadruple US-Pakistan Trade

Talking with the media during Pakistan's Prime Minister Imran Khan's visit to the White House on July 22, 2019, US President Donald Trump said the United States “have a fantastic trade relationship (with Pakistan). I don’t mean we’ll increase it by 20 per cent. I mean, I think we can quadruple it. I think it could go — I mean, literally, it sounds crazy — you could go 10 times more. You could go 20 times more.” This is good news for Pakistan which has seen its exports stalled over the last 5 years. This has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.

US-Pakistan Trade Volume:

So what is the current volume of bilateral US-Pakistan trade?  The United States is currently Pakistan's largest export market accounting for 16% of the country's exports. The United States Office of the Trade Representative (USTR) website says that "Pakistan is currently our 56th largest goods trading partner with $6.6 billion in total (two way) goods trade during 2018. Goods exports totaled $2.9 billion; goods imports totaled $3.7 billion. The U.S. goods trade deficit with Pakistan was $783 million in 2018."

Pakistan's Exports to US: 

Pakistan's major exports to the United States are made up of garments and other textiles. In aggregate the apparel and textile industries accounted for 37.8% and 35.1% respectively of all U.S. imports from Pakistan in the 12 months to May 31, according to S&P Global Market Intelligence. Given Pakistan accounted for just 1.7% of U.S. apparel imports and 8.4% of textiles there may well be room for increased market share, particularly in light of US-China trade tensions.

Pakistan's Exports to the United States. Source: Standard and Poor Global


Pakistan's garments exports to the United States have jumped 12% in first quarter of 2019 from the same period a year ago, according to USITC Dataweb.  This double digit exports growth is being partly attributed to US President Donald's Trump ongoing trade war with China with the US government imposing 10% to 25% tariffs on certain Chinese goods. Pakistani rupee devaluation has also contributed to the nation's overall competitiveness.

Textile Exports to United States. Source: Bloomberg

American buyers are diversifying their supplier base away from China, the No. 1 exporter of these goods to the U.S. Already, Bangladesh is close to snatching the trousers-to-towel crown, according to Bloomberg News. Pakistan, at No. 6 last year, has grown its own shipments to the U.S. by almost 12% this year. It may overtake India, which has seen virtually no improvement.

Major US Importers of Pakistani Apparel: 

Who are the largest American importers of apparel and textile products from Pakistan? The largest importer of apparel and textiles from Pakistan in the past 12 months, aside from trade finance houses, has been Levi Strauss with 1,682 TEUs (Twenty Foot Equivalent Unit Containers) shipped. That followed a 101.5% year over year surge in shipments in 2Q. Other importers have also already been expanding their shipments. That was followed by JC Penney with 991 TEUs shipped after a 13.3% rise in 2Q while Adidas shipped 641 TEUs and grew by 9.9%, according to Standard and Poor Global Market Intelligence.

Biggest Importers of Apparel From Pakistan. Source: Standard and Poor Global


Pakistani Apparel Exporters: 

Pakistan's Interloop Limited based in Faisalabad is one of the largest manufacturers and exporters of apparel and textiles. The company recently raised nearly Rs. 5 billion on Karachi Stock Exchange to expand production of stitched denim designs for its clients including Levi’s and H&M. Interloop's major clients also include Nike, Reebok, Adidas, and Puma, as well as other major clothing retailers like Uniqlo and Target.

Pakistani Export Competitiveness: 

Pakistani apparel exports are becoming more competitive in international markets because Pakistani rupee has declined by almost 25% recently. This has wiped out the currency’s overvaluation adjusted for inflation differences with trading partners, as estimated by the IMF.

Average Annual Cost of Manufacturing Worker in US$ in Asia. Source: JETRO

Textiles industry is just one the export industries seeing exodus of manufactures and buyers from China.  Electronics industry is seeing similar moves. Engadget is reporting that Google is moving production of its US-bound Nest thermostats and motherboards to Taiwan. The Wall Street Journal has reported that Nintendo is shifting at least some production of its Switch console to Southeast Asia.

Last November, Nomura Securities strategists had said they expected Malaysia, Japan and Pakistan  to be the top 3 beneficiaries of import substitution triggered by US-China trade war escalation. Nomura's analysis is based on detailed study of 7,705 items which will be subject to tariffs and counter tariffs by US and China if the stand-off continues. Nomura developed two indices as part of its research on the subject: NISI (Nomura Import Substitution Index) and NPRI (Nomura Production Relocation Index). This is good news for Pakistan which has seen its exports stalled over the last 5 years. This has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.

Pakistan's Stalled Exports. Source: Standard and Poor Global

Summary: 

President Donald Trump at his July 22, 2019 White House meeting with Prime Minister Imran Khan vowed to at least quadruple trade with Pakistan.  It means the bilateral trade between the two countries could grow from the current $6.6 billion to at least $26.4 billion.  Pakistan's garments exports to the United States have jumped 12% in first quarter of 2019 from the same period a year ago, according to USITC Dataweb.  This double digit exports growth is being partly attributed to US President Donald's Trump ongoing trade war with China with the US government imposing 10% to 25% tariffs on certain Chinese goods. Pakistani rupee devaluation has also contributed to the nation's overall competitiveness. This is good news for Pakistan which has seen its exports stalled over the last 5 years. It has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.  Pakistan's Interloop Limited based in Faisalabad is one of the largest manufacturers and exporters of apparel and textiles. The company recently raised nearly Rs. 5 billion on Karachi Stock Exchange to expand production of stitched denim designs for its clients including Levi’s and H&M. Interloop's major clients also include Nike, Reebok, Adidas, and Puma, as well as other major clothing retailers like Uniqlo and Target.

Here's a discussion recorded prior to the Trump-Imran Summit in Washington:

https://youtu.be/Y6fFRSpuNh0




Related Links:

Haq's Musings

South Asia Investor Review

Can Pakistan Avoid Recurring Balance of Payment Crisis?

Pakistan Economy Hobbled By Underinvestment

Pakistan's IT Exports Surging

Can Indian Economy Survive Without Western Capital Inflows?

Pakistan-China-Russia Vs India-Japan-US

Chinese Yuan to Replace US $ as Reserve Currency?

Remittances From Overseas Pakistanis

Can Imran Khan Lead Pakistan to the Next Level?

China to Expand Manufacturing in Special Economic Zones

Comments

Riaz Haq said…
#China’s #Denim #Exports to US Slide, as Other Major Suppliers Gain Ground. Among the top 5 is #Pakistan, with its denim exports to US up 10.58% to $95.37 million. Pakistan’s market share is up 11.87% in the 12 months to 6.48%. https://sourcingjournal.com/denim/denim-business/china-denim-imports-159137/ via @SourcingJournal

It’s likely that no matter what happens with the Trump administration’s threat to impose stiff punitive tariffs on Chinese apparel imports, damage has already been done.

Many importers have clearly taken the risk of 25 percent duties on Chinese goods and decided to sew them into their sourcing strategies, limiting their exposure to the once-dominant Chinese market, even with the imposition of those tariffs now on hold. Supply chain diversification is in full effect and the latest data from the Commerce Department’s Office of Textiles & Apparel (OTEXA) reflects it.

“People are diversifying their denim sourcing locations. Some people are getting out of China and some people are staying in China,” Robert Antoshak, managing director at Olah Inc., said. “There is definitely confusion in the marketplace.”

The swing in production is most evident among the top suppliers of blue denim apparel, 97 percent of which are jeans. Denim apparel imports from China dropped 5.16 percent in value to $287.49 million in the year through May, compared to the same period in 2018. This brought China’s market share for jeans imports down 1.77 percent to 23.35 percent for the year.

The next four top suppliers all gained ground on China in the 12-month period, according to OTEXA.

In the second place spot, Mexico, which has had its own round of tariff threats from the White House, though they seem to have subsided for now, saw its jeans imports increase 17.61 percent in the first five months of the year to reach $332.43 million in value. Mexico’s market share rose 11.55 percent to 21.98 percent for the year.

Denim apparel imports from third-place supplier, Bangladesh, were up 6.26 percent year to date to $183.42 million, as the country’s market share advanced 7.61 percent to 14.62 percent. Vietnam’s jeans shipments to the U.S. jumped 35 percent to $105.07 million in the first five months of the year, compared to the year-ago period. This lifted Vietnam’s market share 40.49 percent to 8.2 percent.

Rounding out the top five was Pakistan, with its shipments to the U.S. increasing 10.58 percent to $95.37 million. Pakistan’s market share was up 11.87 percent in the 12 months to 6.48 percent.

“There’s no doubt that the trade war between the U.S. and China has resulted in production being spread out across Asia and being a Pakistan manufacturer, we have benefited,” Ebru Ozaydin, senior vice president of sales and marketing at Artistic Milliners, said at last month’s Kingpins New York show.

The Western Hemisphere, led by Mexico, Nicaragua and Guatemala, continued to increase its denim production, too.

Imports from the region rose 14.83 percent year to date through May to $414.07 million. This gave the Western Hemisphere a 27.64 percent market share, with a 10.4 percent gain for the year.
Riaz Haq said…
#India registers strong protest over #US military sale worth $125 million for #Pakistan’s F-16s via @htTweets https://www.hindustantimes.com/india-news/india-registers-strong-protest-over-us-military-sale-worth-125-million-for-pakistan-s-f-16s/story-UtPkvasNVpGaS09AQ2nEPI.html

India has registered a strong protest over the US approving a proposed military sale worth $125 million for Pakistan’s F-16 combat jet fleet, calling in the American envoy in New Delhi to convey its “grave concern”.

Days after the meeting between Pakistan Prime Minister Imran Khan and US President Donald Trump, the Pentagon announced on July 26 that the state department had approved the proposed deal for “24/7 end-use monitoring” of the F-16s.

“We have taken up the matter with the US ambassador in Delhi, as well as with the US government in Washington through our ambassador. We have expressed grave concern over US military assistance to Pakistan,” external affairs ministry spokesperson Raveesh Kumar told a regular news briefing on Thursday.

People familiar with developments said the US envoy was called in to the external affairs ministry for lodging a strong protest.

In response, Kumar said, the US side had informed India the “proposed sale does not indicate any change in the US policy of maintaining a freeze in military assistance to Pakistan”.

“The US has publicly stated the proposed sale is intended to enable the US to continue technical and logistics support services to assist in the oversight of the operations of F-16 aircraft in Pakistan’s inventory,” he said.

Trump snapped military and security aid for Pakistan in January last year after accusing Islamabad of resorting to “lies and deceit” in return for billions of dollars of assistance over the past two decades.

However, the warmth displayed by Trump during his first meeting with Khan last month and the US reliance on Pakistan’s support for pushing forward talks with the Afghan Taliban had led observers to conclude that Washington might resume military aid for Islamabad.

The Pentagon statement announcing the proposed sale had said it was cleared after Pakistan requested a “continuation of technical support services; US Government and contractor technical and logistics support services; and other related elements of logistics support to assist in the oversight” of the F-16s. It had added that the proposed sale “will not alter the basic military balance in the region”
Riaz Haq said…
8 #Chinese firms keen to invest in #Pakistan #textile sector. A delegation from these firms led by Huang Weiguo, chairman of Shanghai Yuanyi Industry called on #ImranKhanPrimeMinister in #Islamabad recently. #China #Investment https://www.fibre2fashion.com/news/textile-news/8-prc-firms-keen-to-invest-in-pak-textile-sector-251096-newsdetails.htm#.XUcGyxxn_lw.twitter

Eight Chinese textile companies evinced keen interest in investing in Pakistan's textile sector when a delegation from those firms led by Huang Weiguo, chairman of Shanghai Yuanyi Industry, called on Prime Minister Imran Khan in Islamabad recently. Khan highlighted Pakistan’ strategic location, a large market and cost-effective and skilled labour.

The delegation also met minister for industry, trade, information and culture of Punjab province Mian Aslam Iqbal, who said China can help raise Pakistan’s exports by relocating export-oriented industries and initiating joint ventures in various fields, according to Pakistani media reports.

A garment city spread over 400 acres is being established at Kasur Road and China Railway will invest $500 million there to generate 3000 employment opportunities, Iqbal added. (DS)
Riaz Haq said…
#Tech #Investments Put #Pakistan’s #Karachi based Denim Manufacturer Siddiqsons Back on Track to Regain Global Marketshare in Jeans. #garments – Sourcing Journal

https://sourcingjournal.com/denim/denim-mills/investments-siddiqsons-regain-marketshare-157798/

It’s never too late to teach an old dog new tricks—including legacy denim manufacturers.

Siddiqsons Group is rebooting its denim business with major investments in sustainable innovation, including adopting Archroma’s aniline-free indigo across its entire production, and becoming the first fully-operational Jeanologia 5.0 laundry in Pakistan.

The vertical company helped lay the framework for denim manufacturing in the country, setting up a spinning unit in 1982 and its first denim fabric unit in 1989. Knit and garment units followed with success, leading the company to diversify into other industries including real estate, construction and energy. However, with large investments and success in other sectors, Siddiqsons’ footprint in denim manufacturing started to diminish—and it’s rebuilding that business today through strategic investments and supply chain commitments.

"They made a decision that they wanted to regain market share and to become relevant in the world today,” said Matthew Fuhr, a consultant brought on by the firm to help kickstart its denim business for the next generation of brands and consumers. Siddiqsons, he said, is making investments in areas that will put the business “ahead of the curve of what’s happening in the marketplace.” The company plans to use those investments to rebuild the relationships they previously enjoyed in the U.S. market.

Each investment, Fuhr said, be it in spinning, finishing or garment processing, is a step closer to transparency and sustainability.

“They have to go hand in hand because people talk about being sustainable, but they’re not willing to share what they’re doing or how they can validate it,” he said.


The roll-out of Archroma’s aniline-free denim indigo dye timed well with Siddiqsons’s renewed focus on denim and its expiring contract with Dystar. The mill, Fuhr said, contemplated shifting a portion of its production to Archroma, but after a series of wash down tests with the aniline-free dye, they were satisfied with the results.

“We looked at all of our shades that we were running and how we were doing our product development and we figured out that we could make more of a commitment to the transition of a new dyestuff,” Fuhr said.

The decision to be sustainable across the entire supply chain led the vertical operation to adopt Jeanologia 5.0 for laundry, and the laundry will be operational in Q3 2019.

“Our intent is to produce a large percentage of our internal fabric capacity into garments,” Fuhr said.

To reduce the time and cost of sampling, Fuhr said Siddiqsons is developing fabrics that are conducive to the technology of 5.0, including no stones, ozone, laser and limited chemicals.

“You can develop the fabric so that is reacts in an appropriate manner,” he said. “We can manage the expectation of what design wants and what the production team

Up next, the company is planning to set up a lab in the United States in 2020 to give its brand partners a place where their design and merchandising teams can gather and innovate with the Siddiqsons team.

“The way our technology is set up, you can develop something in the U.S. and it can be transferred to a production unit anywhere in the world,” Fuhr said. The lab, he added, will help the company have an “upper end” research development environment, which could bring better business to Pakistan for production purposes.

These investments, Fuhr added, have been made knowing Pakistan is viewed as a lower cost producer.

“We have to engineer the plant and make our investments knowing that it’s always going to be a place where people are looking for an inexpensive product,” he said. “With that being said, based on the technology and the investments, we are able to offer a more premium product at a more affordable price.”
Riaz Haq said…
A Denim Factory Could Hold the Key to Reviving Pakistan’s Exportshttps://www.businessoffashion.com/articles/news-analysis/a-denim-factory-could-hold-the-key-to-reviving-pakistans-exports


KARACHI, Pakistan — A denim factory in Karachi could hold the key to reviving Pakistan’s ailing exports.

With many retailers shifting textile orders to cheaper and more timely suppliers in rival Bangladesh and Vietnam, Pakistan’s manufacturers have long-suffered from power cuts, an expensive exchange rate and what they claim is government indifference. Yet while hundreds of factories have shut down in recent years, shedding more than half a million jobs, Artistic Denim Mills Ltd., which operates as a one-stop shop turning cotton into jeans, is doubling production and has built a new factory in Pakistan’s financial hub.

Chief Executive Officer Faisal Ahmed is bullish and supplies retailers such as Zaraand Next Plc. He points to one key decision — unlike most industrialists, Artistic Denim started by making garments about 25 years ago instead of just shipping spun yarn or fabric. Now “we have been able to get many orders that used to go to Turkey earlier,” he said at his office in an industrial area.

The move shows a rare sign of promise in a stagnant industry that has been part of Pakistan’s economic backbone for decades. Pakistan is among the top five growers globally and cultivated has been cultivated on these lands for at least 5,000 years. Typically Pakistan has been mostly converting cotton into thread and fabric that is shipped East to other Asian countries, which then manufacture the final garment.

Homegrown Cotton

---

Pakistan has lost market share with exports growing 27 percent during 2005 to 2016, falling behind Bangladesh’s 276 percent increase and 445 percent in Vietnam, according to World Bank data. India is the second-largest apparel exporter in South Asia after Bangladesh. Nonetheless, Pakistan still has the advantage of homegrown cotton that it can capitalize on, unlike Bangladesh and Vietnam.

Pakistan's textile industry is key as it accounts for more than half of all overseas shipments.

Pakistan is targeting its first export jump this financial year after giving tax breaks to exporters, in a bid to reverse a three year slump with value added products like denim getting the biggest incentives, Mohammad Younus Dagha, secretary at the Commerce Ministry, said in an November interview.

Textile industrialists have continually lobbied the government for subsidies and incentives. Yet despite last year’s measures, Prime Minister Shahid Khaqan Abbasi said in an interview this month that no further giveaways to the industry were likely before the elections.

“Bangladesh and Vietnam governments are giving huge support to industries, unlike ours,” said Ahmed Lakhani, analyst at Karachi-based JS Global Capital Ltd. “The tax breaks are a good step, but we need to decrease electricity tariffs and keep a check on wages. I don’t think we will give all those incentives and compete globally.”


-----------

“About 95 percent of Pakistani exporters mentality is waiting for a customer rather than going out and finding them,” said Majyd Aziz, president of MHG Group of Companies in Karachi. “In the global world, you need integration and economies of scale, if you do that, you make money.”

Artistic Denim is one of them. It has chased premium brands in Los Angeles that pay more for smaller deliveries to keep changing designs rather than bulk orders. The company said this will help revenues reach as much as eight billion rupees ($72 million) in year ending June with new garment production capacity increasing sales.

“Pakistan’s denim is on an upward trend, despite the larger textile industry being in trouble,” said Ahmed. “Pakistan has a tremendous opportunity.”

Riaz Haq said…
#India's #textile industry alarmed over consistent fall in cotton yarn exports in last 3 months due to sharp decline in demand in importing countries such as #China, #Bangladesh and #SouthKorea, and duty-free access given by China to #Pakistan. #trade https://www.thehindubusinessline.com/economy/agri-business/falling-cotton-yarn-exports-worry-textile-industry/article28773522.ece

Our Bureau

The textile industry has voiced alarm over the consistent fall in cotton yarn exports in the last three months due to sharp decline in demand in importing countries such as China, Bangladesh and South Korea, besides duty-free access given by China to competing Pakistan.

Steep fall in exports
Cotton yarn export in June has more than halved to 59 million kg (mkg) in June from 120 mkg in the same period last year. In fact, the level of 59 mkg of exports logged in June was the lowest monthly export in the last five years.

In May, yarn export was down 30 per cent to 77 mkg (111 mkg) while in April it dipped 16 per cent to 90 mkg.

Overall, export of cotton yarn from India in the first quarter of the financial year ended June was down 33 per cent to 226 mkg (338 mkg).

Considering the large-scale investment in the spinning sector and sluggish demand in the domestic markets, exports are the only avenue to ensure uninterrupted production and capacity utilisation, it said.

The cotton yarn sector has been one of the pillars of the Indian textile industry and is also highly modernised. Driven by technology, it provides sustainable income to farmers.

KV Srinivasan, Chairman, Texprocil, said even though cotton yarn is a value-added product, it has been excluded from the export benefits such as interest subvention, MEIS (Merchandise Exports from India Scheme) and the ROSCTL (Rebate of State and central taxes and levies) schemes.

If the current trends of declining exports continue into the next quarter, it will lead to closure of several spinning units in the near future, resulting in layoffs, he said.

Appeal to govt
Texprocil has appealed to the government to include cotton yarn in the interest subvention scheme and also rebate the embedded taxes such as agricultural cess, mandi tax, power and fuel surcharge which incurred in the production process.

The ROSCTL scheme which rebates these levies should be extended to cotton yarn sector at the earliest, it said. This move will ensure that the industry exports only products and not the taxes, it added.
Riaz Haq said…
#India's #exports fall for first time in nine months amid trade tensions. Exports fell 9.71% in June, while imports declined 9.06% as #US-#China #TradeWars hurt India’s #trade prospects https://www.livemint.com/news/india/amid-trade-tensions-india-s-june-exports-fall-9-7-to-25-billion-1563199917049.html

Exports fell 9.71% in June, while imports declined 9.06% as US-China trade row hurt India’s trade prospects
DURING June, petroleum exports fell 33% as Jamnagar, Mangalore refineries shut temporarily
India’s merchandise exports contracted for the first time in nine months in June while imports shrank first time in four months, signalling that rising protectionism and trade tensions between the US and China are impacting India’s trade prospects as well.

Data released by the commerce ministry showed exports in June fell 9.71% to $25.01 billion while imports dipped 9.06% to $40.29 billion, leaving behind a trade deficit of $15.28 billion during the month.

Comparatively, China’s exports in June fell 1.3%, while imports shrank 7.3%, leading to a trade surplus of $50.98 billion, significantly higher than what analysts projected.

Commerce secretary Anup Wadhawan said the temporary shutdown of ONGC Mangalore Petrochemical Ltd and Jamnagar refinery for maintenance in June adversely impacted exports of petroleum products.

“The shutdown of Jamnagar refinery is likely to abate by mid-July. The fall in the global Brent price by 15.6% in June is also a factor in the declining value of petroleum product exports," he added.

During June, petroleum exports declined 33% while non-oil, non-gems and jewellery exports contracted by 4.86%.

Among other major items, exports of gems and jewellery (10.7%), readymade garments (-9.18%), chemicals (-8.17%) and engineering goods (-2.65%) also contracted.

“The negative growth in June is also consistent with certain global trends, which have impacted India’s exports in recent months. We expect exports growth to revive to the trend growth rate of 2-3% in coming months," Wadhawan said.

The World Bank in its Global Economic Prospects released in June has projected weakening of global trade in 2019.

Global trade is projected to grow at 2.6% this year—a full percentage point below its own previous forecast.

Aditi Nayar, principal economist at Icra Ltd, said lower crude oil prices explain a portion of the contraction in the absolute level of exports and imports.

“Nevertheless, the contraction in imports of items such as transport equipment, machinery and fertilisers should be viewed with caution, as they suggest that the underlying demand dynamics are weak.

Riaz Haq said…

#Pakistan’s ‘Exports surge 14.2pc, imports drop 18.3pc in July' 2019 . #exports #imports #trade - Profit by Pakistan Today

https://profit.pakistantoday.com.pk/2019/08/07/exports-surge-14-2pc-imports-drop-18-3pc-in-july/


Adviser to Prime Minister on Commerce Abdul Razak Dawood said on Wednesday that Pakistan’s exports had increased by 14.23pc in July this year, as compared to the same month of last year.

In term of dollars, the country’s exports increased from $1.63 billion in July 2018 to $1.87 billion in July 2019, the adviser informed while addressing a press conference at the commerce ministry.

He continued that Pakistan’s imports from other countries also reduced by 18.39pc during the month.

The adviser said during the period under review, an increase in exports was witnessed in various sectors, including rice (71pc), readymade garments (17pc), home textiles (14pc), plastic goods (34pc), chemicals (26pc), mangoes (33pc) and footwear (24pc).

Replying to a question, he said that China-Pakistan Free Trade Agreement (CPFTA), a comprehensive tariff policy, reforms in National Tariff Commission (NTC) and an increase in local exports were among the major hallmarks of his ministry during the first year of this government.

He informed media that Afghanistan had offered a Preferential Trade Agreement (PTA) to Pakistan in order to enhance trade between the two countries.

During the visit of Afghan President Ashraf Ghani, both sides had discussed issues pertaining to bilateral transit trade, he said, adding that both countries were willing to increase the volume of bilateral trade.

He said Afghan Ambassador Shukrullah Atif Mashal had invited him to visit Afghanistan on August 20th.

“I will visit Afghanistan to share the agenda of bilateral trade and to chalk out ways to increase the volume of transit trade.”

On a query, the adviser said that Pakistan had successfully gotten market access to the China, European Union (EU), Indonesia, Malaysia and the Association of Southeast Asian Nations (ASEAN).

“We are committed to getting trade access to the potential markets of the United States (US), Canada, Japan, South Korea and Australia so as to increase the volume of our exports,” he maintained.

Regarding his recent visit to South Korea, Dawood informed that during his visit, he held meetings with various Korean companies who were willing to bring their investment to Pakistan, particularly in the textile and agriculture sectors.

He noted that Pakistan has been facing a trade deficit with South Korea, as the former’s exports to latter were $300 million as compared to the imports of $600 million.

“We have arranged the business-to-business meetings with Korean investors in order to negotiate on a Free Trade Agreement (FTA), similar to those it signed with India, Vietnam, Bangladesh and Chile,” he stated. “Both sides decided to hold a working group meeting in October to discuss ways to increase the volume of bilateral trade.”
Riaz Haq said…
Jeans Sourcing Landscape Sees Major Changes as China Fade Continues
By Arthur Friedman

https://sourcingjournal.com/denim/denim-retail/jeans-sourcing-china-163400/

Reflecting the volatile sourcing environment created in great part by the U.S.-China trade war, the first half of 2019 saw significant swings in denim apparel sourcing.

Imports of the category from China dropped 10.44 percent in the six months through June to a value of $369.97 million. This brought China’s market share of the category–97 percent of which are denim jeans–down to 22.82 percent, a 5.11 percent decline for the year ended June 30.

Levi Strauss & Co. said it has drawn down its reliance on China as a source for its jeans. Imports from China now represent less than 8 percent of overall production for Levi’s and the company said it is in the process of bringing that number down to “very low-single-digits” by 2020. Many brands have followed suit in denim and overall apparel to limit risks from tariff threats by President Trump and increased costs in China.

-----------

All of the other Top 5 suppliers posted gains in the amount of denim they shipped to the U.S., with each growing their market share. Mexico, the No. 2 denim supplier to the U.S., inched up on China to hold a 22.16 percent market share. Jeans imports from Mexico rose 14.44 percent to $410.07 million, leading a Western Hemisphere increase of 12.03 percent to $509.74 million, which also included a 28.02 percent gain by Nicaragua to $55.19 million, and a 12.06 percent advance by Guatemala to $16.22 million.

Among the major Asian apparel suppliers, Vietnam and Pakistan are the big winners so far this year, while Cambodia and Indonesia lost ground, and Bangladesh maintained the status quo.

Jeans imports from Vietnam jumped 29.36 percent to a value of $142.36 million. The country’s market share rose 36.39 percent to 8.38 percent for the 12 months, as makers look to capitalize on its apparel manufacturing expertise.

Pakistan, which benefits from also being a major supplier of denim fabric, saw its first-half imports to the U.S. rise 15.49 percent to $119.72 million. The country’s market share increased 16.27 percent to 6.69 percent.
Riaz Haq said…
TOKYO -- Having prepared for the prospect of additional U.S. tariffs on Chinese goods, Japanese corporations with factories in China are expected to move faster in shifting production out of the country now that Washington has decided to escalate the trade war.

The U.S. announced Thursday that a 10% duty on roughly $300 billion in Chinese goods will take effect on Sept. 1. President Donald Trump said the duty can be increased in stages and that tariffs "can be lifted to well beyond 25%."

This fourth round of tariffs would cover a broad range of products, including smartphones, game systems and clothing.

Nintendo, which currently assembles most of its Switch game systems in China, has begun moving production to Vietnam and intends to boost its output further in the Southeast Asian nation.

Sony's production of its PlayStation 4 game console, cameras and other products could be affected by the tariffs. The company has already been studying steps such as relocating production and hiking prices, so it will likely make decisions depending on the situation. At its earnings briefing at the end of last month, Senior Vice President Naomi Matsuoka said that she hopes to keep the operating profit impact of the fourth round of tariffs at less than 10 billion yen ($94 million) this fiscal year.

Sharp subsidiary Dynabook builds all of its notebook computers in China, but Sharp said it will consider moving production to its own facilities in Vietnam or to plants of Taiwanese parent Hon Hai Precision Industry -- commonly known as Foxconn -- if the fourth round of tariffs is implemented.

Kyocera assembles copiers and multifunction printers for the U.S. market in China, and Europe-bound products in Vietnam.

"We will switch production between Chinese and Vietnamese facilities," Kyocera President Hideo Tanimoto told reporters on Friday, after the U.S. announced the fourth round of tariffs, which cover copiers and multifunction printers. The move is expected to cost up to several billion yen.

Ricoh moved production of U.S.-bound multifunction printers to Thailand from China at the end of last month, and is looking at building those products for the Japanese and European markets in China instead of Thailand.

Asics' shoes will be subject to the latest tariffs. "The impact of the tariffs will be negligible," said President Yasuhito Hirota. "But I am concerned about slowdowns in the U.S. and Chinese economies."

The U.S.-China trade frictions have crimped corporations' appetite to invest. Panasonic's sales of motors, sensors and other devices used in production equipment have declined as clients hold off on capital investment. The company believes that investment may cool further due to the fourth round of tariffs.


https://asia.nikkei.com/Economy/Tra...eed-up-China-exit-in-response-to-more-tariffs
Riaz Haq said…
#Pakistan #garment makers chase rivals in #India and #Bangladesh. Pakistan has been hailed as an "attractive sourcing base" by industry executives including Spencer Fung, CEO of Hong Kong-based supply chain giant Li & Fung https://asia.nikkei.com/Business/Business-trends/Pakistan-garment-makers-chase-rivals-in-India-and-Bangladesh


The global shift to online retailing is further intensifying cost competition, a trend that could benefit Pakistan.

Leading the shift is Amazon, which offers cheaper apparel that can be customized to individual shoppers' tastes and delivered quickly.

-----------
Pakistan garment companies are fighting hard to break into the supply chains of some of the world's biggest fashion brands as the country races to catch up with Bangladesh and other Asian apparel heavyweights.

The battle is fierce, however, as customers like Zara and H&M demand high quality and low costs from their suppliers, all on increasingly tight time tables.

Kay & Emms, a garment maker based in Faisalabad, says it is benefiting from clients' desire to diversify.

"We are getting more benefit because the customers are thinking that they are not 100% safe while putting all of their eggs in one basket that is either China or Bangladesh," Faisal Waheed, sales and marketing general manager at Kay & Emms.

Compared to the traditional leaders in garment production -- China, Vietnam and Bangladesh -- Pakistan is still a minor player, and the pressure on companies to reduce costs is intense.

"There is always a war-footing situation," Waheed said. "Every customer is cost-conscious, because they know they have the buying power around the globe. They have a lot of suppliers in their basket -- Cambodia, India, Bangladesh, China and Pakistan. If you don't act on war footing, you will be losing business."

---------------------

Pakistan has been hailed as an "attractive sourcing base" by industry executives including Spencer Fung, CEO of Hong Kong-based supply chain giant Li & Fung, as garment production for Western brands continue to shift to lower cost countries.

Kay & Emms is still small by global standards, with an annual turnover of just $50 million and 2,300 employees, but it is growing at an annual rate of 60%. About a fifth of its sales comes from Zara, a brand belonging to Spain's Inditex. Kay & Emms has been supplying jogging pants, hoodies, crew neck shirts, pullovers and zipper jackets for Zara since 2014, but it was a hard-earned success, according to Waheed.

"After an effort of more than four, five months, we got the first order," Waheed said. "It was quite hard to get into their business."

Zara is a demanding customer, Waheed. "It is cost-conscious, quality-conscious and time-conscious." But his company was after the prestige of doing business with the world's biggest apparel company. Zara releases new items every three to four weeks, rather than on a four-season cycle. "It compels us to develop new fabrics and garments," Waheed said. "That's harder, but more exciting."

Pakistan's cost-competitive garment makers are drawing attention from multinational brands, even though the country's growth lags behind more dynamic markets such as India or Bangladesh. Pakistan is still recovering from the U.S. war on terror, which has stirred Islamic insurgency and has left tens of thousands dead near the border with Afghanistan.
Riaz Haq said…
Pakistan fast gaining access to markets of developed nations
By Salman SiddiquiPublished: August 24, 2019

https://tribune.com.pk/story/2040817/2-pakistan-fast-gaining-access-markets-developed-nations/

Pakistan is fast strengthening trade ties and getting access to markets of several developed countries around the globe in an attempt to increase exports, which is a must to do away with the pressure on the rupee, build foreign currency reserves and steer the country out of the financial crisis.

“We have got increased market access to China, Europa, Indonesia…and a small market access in Qatar,” said Adviser to Prime Minister for Commerce, Investment, Industries, Production and Textile Abdul Razak Dawood during a visit to a Dawlance factory on Friday.

“Now I am going to the United States to get more market access there,” he said, adding that there were four other countries with whom Islamabad was negotiating to get more market access, which included Canada, Japan, South Korea and Australia.
“All of us in Pakistan must understand that without (revival of) exports this country is not going anywhere,” he remarked while emphasising that exports were increasing at a fast pace.

“Are the country’s exports increasing fast,” he asked and said in the same breath “the answer is yes.”

He said exports increased 14% in July 2019 compared to July 2018. “That is good, but still not good enough. We have to do a lot more. Data for August is keenly awaited to see whether the trend is sustained,” he said.

Pakistan’s exports remained almost static at $24.22 billion in FY19 compared to $24.76 billion in FY18, according to the central bank.

Dawood said exports, which started improving at the outset of second year of his government, would help ease pressure on the rupee and build foreign currency reserves of the country.

The current account deficit dropped significantly to $13.5 billion in FY19 compared to a record high of around $20 billion in FY18. “The deficit will be further restricted in the range of $5-7 billion in the current fiscal year,” he said.

He, however, regretted too much reliance on textile exports and urged other sectors of the economy to play their role in diversifying exports. “We have to now move towards export of engineering goods, chemicals, IT products, processed food and others,” he said.

The PM aide was happy to note that engineering firms like Millat Tractors and Dawlance had started exporting their products to African and European countries respectively.

He asked the large-scale manufacturing (LSM) sector to help small and medium-sized enterprises (SME) to enter the manufacturing sector.

“We actually had a de-industrialisation situation. That is over. We are now back on the track of industrialisation,” he said, adding that the new industrialisation phase would help build the brand of ‘Make in Pakistan’ for exports and import substitution.

“Prime Minister Imran Khan holds weekly meetings to stay updated on the issues and problems faced by the industrial sector and how to resolve them,” he said.

Dawood said the government was trying to correct the duty structure. “I am not satisfied (with the current duty structure). There is a lot to be done. We have to correct the duty structure to facilitate the ease of doing business.”

He invited budget proposals from the industries to resolve their outstanding issues and added that such challenges may be overcome much earlier than the next budget presentation.

“What do you want in the next budget or before the budget (for industries),” he asked.

The adviser said the Chinese were relocating their industries to Pakistan, which would help build the export sector and promote import substitution. A large Chinese delegation of 65 parties is due in October. They are believed to make a huge participation in the new industrialisation phase in Pakistan.

He said fundamentals of textile exports had also changed to positive. Exports of value-added textile goods like garments and knitwear increased notably in July while exports of raw material – yarn – dropped 18%.
Riaz Haq said…
US, China, UK top three export destinations of Pakistani products

https://www.thenews.com.pk/latest/519182-us-china-uk-top-three-export-destinations-of-pakistani-products

The United States remained among the top exports destinations of the Pakistani products followed by China and United Kingdom during first month of current financial year 2019-20 as compared to the corresponding month of last year.

During the month of July, 2019, the total exports to the US were recorded at $373.514 million against the exports of $328.090 million, showing an increase of 13.84 percent during the period under review, according to the data issued by State Bank of Pakistan (SBP).

This was followed by China, wherein Pakistan exported goods worth $167.058 million against the exports of $152.043 million same month of last year, showing growth of 9.87 percent.

To United Kingdom (UK), Pakistan exported products worth $147.333 million during the current fiscal year against the exports of $153.702 million during last fiscal year, showing decrease of 14.4 percent, SBP data revealed.

Among other countries, Pakistani exports to Germany stood at $116.041 million against $116.064 million during last year, showing decline of 0.01 percent while the exports to Afghanistan were recorded at $108.642 million against $127.475 million last year, the data revealed.

The exports to Netherlands (Holland) were recorded at $85.398 million against $80.424 million whereas the exports to Spain were recorded at $81.468 million against $74.632 million last year.

During the period under review, the exports to Italy were recorded at $70.195 million against $68.008 million whereas the exports to Bangladesh stood at $66.957 million against $58.370 million.

Pakistan’s exports to France were recorded at $40.699 million against $38.209 million last year where as the exports to Turkey stood at $30.924 million against $29.267 million.

Similarly, the exports to Saudi Arabia during the period under review were recorded at $30.139 million against $27.008 million while the exports to Singapore stood at $ 27.155 million against $15.157 million.

During first month, Pakistan’s exports to Kenya were recorded at $24.101 million during the current fiscal year compared to 22.703 million same month of last year, the exports to Canada stood at $23.975 million against $25.792 million, to Japan $20.301 million against $17.608 million whereas the exports to Malaysia stood at $14.901 million during the current year against $14.013 million during last year.

Riaz Haq said…
#American denim giant Levi Strauss partners on #Pakistan #water project to restore #Ravi River basin around #Lahore | Apparel Industry News | just-style https://www.just-style.com/news/levi-strauss-partners-on-pakistan-water-project_id136922.aspx via @juststyle


The project is part of the company's better water management strategy in sourcing countries.
Riaz Haq said…
Special Economic Zones (#SEZs) in #Faisalabad alone would help #Pakistan grow its #exports by $1billion to $1.5 billion per year in the short span of time by ensuring effective and comprehensive planning, Says (FIEDMC) Chief Mian Kashif #economy https://nation.com.pk/15-Sep-2019/sezs-to-boost-exports-to-1-5b-per-annum-fiedmc

Appreciating economic vision of Prime Minister Imran Khan, he said the premier has directed all the concerned departments to remove hurdles in the way of development of SEZs and establish them on priority basis.

Fortunately, he said almost hundred percent plots in M-3 Industrial Estate have already been sold out while hundreds of units have become operational and were playing their role in providing exportable surplus in addition to accommodating thousands of workers.

Mian Kashif said that the industrial city would house more than 400 textile, steel, pharmaceutical, engineering, chemical, food processing, plastic and agriculture appliances units in addition to providing jobs to 250 thousand workers.

He claimed that the city was also expected to attract Rs400 billion local and foreign direct investment which would help Pakistan to stabilise its economy. He further said that Faisalabad was strategically located in the heart of Pakistan with two motorways passing from its eastern and western sides.

He said that this city has a unique privilege to contribute 60 percent towards textile exports and 45 percent towards total exports of the country.

He further said that it was not only restricted to textile which was its iconic identification but hundreds of SMEs hailing from chemicals, steel, food processing and others were also playing their role in the overall economy of Pakistan.

FIEDMC Chairman further said investors from China, Turkey, Korea and Britain have pumped $ 1.10 billion and their confidence in Pakistan have been restored as they are also bringing more investors from their respective country to invest in SEZs.

He said these investors expressed their eagerness to explore the possibility of investment in diverse sectors of Pakistan especially in ceramics, chemicals, steel, food processing and automobiles.

He said Prime Minister Imran Khan clearly directed them to focus on developing such industry in SEZs which is based on export and import substitution to restrict the import bill.

He said the good thing is that a number of Chinese industries have started pumping investment in SEZs and apparently the reason behind this is the production cost in China has increased which is making Pakistan one of the beneficiaries of on-going US China trade war.

He emphasised that consistent policies were imperative to attract foreign investment into the country, which could lead the economy towards sustainable growth.

He said industries operating in the FIEDMC will have an immediate access to high-quality infrastructure, un-interrupted power supply, public facilities and support services along with simpler ease of doing business.

Chief Operating Officer Muhammad Aamer Saleemi also briefed the delegation and said FIEDMC in collaboration with Industrial Police Liaison Committee has established police post at M-3 Industrial City and the industrial community will work under safe environment.

“The whole industrial estate will be monitored by high resolution surveillance cameras and 24 hours police patrolling will be provided in the estate,” adding he said this would make FIEDMC the safest industrial estate in the country.

He said CPEC will attract $40 billion worth of investment which will directly raise investment-to-GDP ratio by 2.8 percentage points besides some indirect investment addition.

“The investment in hard currency will also support exchange rate stability in the country and stabilise balance of payments situation in the country,” he added.
Riaz Haq said…
At Bluezone, Collaborations Help Kickstart Creativity in Denim

https://sourcingjournal.com/denim/denim-trade-shows/bluezone-collaborations-kickstart-creativity-denim-168343/

The Munich, Germany trade show held last week was home to several collaborations that demonstrate how each player in the supply chain contributes to creativity and innovation in the industry.

From mills and trim suppliers, to the next generation of denim designers, here’s a look at some of the notable partnerships found at the show.

Creative collaboration
Bluezone’s trend curators at Monsieur T introduced a new layer to their seasonal forecast with the All Related Collaboration, a project that emphasized teamwork and creativity.

----------------

In partnership with Greek denim label Salt & Pepper Jeans Co., Pakistan denim mill Naveena presented a line of nostalgic-inspired jeans and overalls recreated with contemporary fabrics and sustainable processes. The result is a collection of unique handmade jeans that capture the spirit of American craftsmanship with a touch of European aesthetics and an environmentally-friendly process.

The capsule collection, custom made by Salt & Pepper Jeans Co., are made with Naveena’s Retro Tech fabrics, which are designed to provide the wearer comfort without sacrificing a vintage authentic look. The jeans were washed by Italian chemical company, Officina+39, using its Trustainable substances and technology. The Trustainable portfolio uses fewer hazardous chemicals, reduces power usage and conserves water.

Naveena also teamed with Lenzing and Chottani for the show giveaway denim sailor bag made of Tencel x Refibra Lyocell.

“By collaborating with our partners, we link progressive design with technical innovation, making innovative and beautiful products in a clean, transparent way,” said Aydan Tuzun, Naveena head of global sales and marketing.
Riaz Haq said…
Jeans Imports From China Tumble as Sourcing Gets Increasingly Diverse

https://sourcingjournal.com/denim/denim-business/jeans-imports-china-sourcing-167733/

China’s jeans market share came down to 22.48 percent, just a tick above Mexico’s 22.27 percent, according to OTEXA. For the first seven months of the year, jeans imports from Mexico grew 12.53 percent in value to $483.58 million, topping China’s shipments so far this year. This was notably in contrast to Mexico’s overall apparel shipments in the period, which were down 2.94 percent to $1.89 billion.

Among the suppliers gaining ground this year from Asia were Vietnam, with imports to the U.S. up 30.24 percent to $192.74 million, and Pakistan, with shipments rising 8.72 percent to $148.3 million. Losing ground in the region were Bangladesh; with imports down 1.51 percent to $306.82 million, Cambodia, which saw shipments decline 9.48 percent to $60.76 million, and Indonesia, which dropped 13.89 percent to $40.21 million. Sourcing executives have pointed to labor and quality issues in these countries as the reasons for brands shying away from manufacturing there.

Production picked up in the Western Hemisphere, where Nicaragua saw its shipments to the U.S. increase 28.57 percent to $67.71 million, and Guatemala, with shipments up 13.25 percent to $20.37 million. Overall Western Hemisphere jeans imports to the U.S. were up 10.66 percent in the period to $605.13 million. For the year through July, the region saw its market share reach 28 percent.

Africa continues to get more attention from denim apparel producers, too. Countries showing substantial gains this year include Egypt, Jordan, Madagascar, Kenya, Mauritius, Tanzania and Ethiopia.
Riaz Haq said…
14 #German #textile machinery companies covering the entire textile chain are participating in #Pakistan visit, which will showcase the benefits and #technological #innovations at seminars in both #Karachi and #Lahore. https://www.textileworld.com/textile-world/supplier-notes/2019/09/monforts-in-two-centre-vdma-delegation-to-pakistan/ via @Textile World

A technical seminar in Karachi will be held at the Hotel Karachi Avari Towers on November 12 and a second in Lahore will be held on November 14 at the Hotel Avari Lahore Towers.

“The regions surrounding both of these cities have become major hubs for textile manufacturing, especially in areas such as home textiles and denim, where Monforts enjoys market-leading positions with its finishing systems,” said area sales manager Manfred Havenlith, who in addition to presenting at the seminars, will be holding meetings and networking with existing Monforts customers and potential new ones during the trip. “The Punjab region around Karachi, as Pakistan’s largest city, for example, is now dense with denim manufacturers, many of whom have already expressed keen interest in the new Monforts CYD continuous yarn dyeing system we introduced at ITMA 2019 in Barcelona in June.”

The CYD system integrates new functions and processes into the weaving preparation processes — spinning, direct beaming, warping and assembly beaming, followed by sizing and dyeing – in order to increase quality, flexibility, economic viability and productivity. The unique Eco Bleach process is the first bleaching system for yarn treatment available on the market and is combined with the washing units, after which the fabric is then dyed immediately, resulting in considerable savings in wastewater and chemicals.

It is possible to process short batches of yarn in order to produce minimum runs of finished fabrics in a single continuous process and by comparing the usual processing sequences within the denim industry with the new CYD system, the advantages become immediately clear.

Key customers

Existing Monforts denim manufacturing customers in Karachi include Artistic Milliners, Artistic Fabric & Garment Industries (AFGI), Denim Clothing Company, Denim International, Kasim, Rajby Industries and Soorty. Home textiles customers meanwhile include Afroze, Al Karam, Lucky Textile Mills, Mustaqim and Yunus.

The situation is similar in the region around Pakistan’s second largest city, Lahore, where major Monforts customers include Azgard-9, Crescent Bahuman, Crestex, Kohinoor Textile Mills, Naveena, Sapphire Textiles and US Denim Mills.

On Monday, November 11, the VDMA delegation will also be visiting Karachi-headquartered Gul Ahmed Textile Mills, a leader in the home textiles field, which operates both yarn dyeing and fabric finishing lines from Monforts, and in recent years has expanded into retail, with over 40 stores across Pakistan, offering a diverse range of products, from home accessories to fashion clothing.

Trading partner

The European Union is Pakistan’s most important trading partner and textiles and clothing accounted for over 80 percent of its total exports of 6.8 billion euros to the EU in 2018, according to the European Commission.

Starting from January 2014, Pakistan has benefited from generous tariff preferences — mostly zero duties — under the EU’s GSP+ arrangement, which aims to support the country’s sustainable development and good governance. In order to maintain GSP+, Pakistan has to effectively implement 27 core international conventions on human and labour rights, environmental protection and good governance.

The VDMA delegation is being organised by SBS systems for business solutions on behalf of the German Federal Ministry for Economic Affairs and Energy (BMWi), in collaboration with the German Pakistan Chamber of Commerce and Industry (GPCCI) and with the technical support of the VDMA Textile Machinery Association.

Popular posts from this blog

JF-17 Manufacturer's Stock Soars After Pakistan Air Force's Success Against India

Racism in India

Top Asia Investment Strategist Chris Wood is Bullish on Pakistan