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1、COUNTRY SOURCINGREPORTNovember 2020BANGLADESH CAMBODIA CHINA INDIA INDONESIA PAKISTANPHILIPPINES THAILAND TURKEY VIETNAM CENTRAL AMERICACountry overviewSourcing&industry updatesMinimum wage comparisonsGlobal trade policy regimeInput price trendsMacroeconomic dataHelen Chin,Winnie He,Winnie Lo,Willia
2、m KongFive Forces Shaping the Future Global Sourcing LandscapeExploring New Sourcing Frontiers:Egypt and JordanIssue18 COUNTRY SOURCING REPORT ISSUE 18 November 2020 EXECUTIVE SUMMARYFive Forces Shaping the Future Global Sourcing LandscapeThe COVID-19 pandemic has delivered the biggest,broadest supp
3、ly chain disruptions in memory.With no end to the pandemic in sight,and the business outlook remaining highly uncertain,the fashion industry,which relies heavily on discretionary spending,is still under tremendous strain.Even before the pandemic,the industry had been grappling with exceptional chall
4、enges,brought about by the prolonged ChinaUS trade war,rising trade protectionism elsewhere,and Brexit,on top of the ongoing digital revolution in retail.In this report,we examine five forces that we believe will shape the global sourcing landscape over the medium to long term.These are:the pandemic
5、;geopolitics;free trade agreements(FTAs)and trade preferences;sourcing costs;and domestic development policies within production countries.All five have a bearing on how sourcing companies,retailers and brands may need to adapt.The COVID-19 Pandemic By impacting both supply and demand,the pandemic h
6、as disrupted the business of fashion companies on multiple fronts.Brands and retailers have had further to diversify and re-balance their sourcing portfolios to build resilient,agile supply chains that can withstand unexpected and severe disruptions in the future.Rather than redrawing global sourcin
7、g maps,the COVID-19 crisis will accelerate and deepen some pre-existing trends,including diversification of sourcing bases,near-shoring or regionalisation of supply chains,dual-sourcing/multi-sourcing1 for key raw materials,components or intermediate inputs,and digitalisation of supply chains to mak
8、e them more transparent,traceable,and agile.With regard to near-shoring,production and sourcing are expected to move closer to end users,with Eastern Europe/North Africa and Latin America becoming more important manufacturing clusters for European and US markets,respectively.Meanwhile,production bas
9、es with a vertically integrated domestic supply chain which makes them less reliant on imported inputs and thus less vulnerable to external shocks,will gain more traction in the future.This does not necessarily mean a mass exodus of production from China in the foreseeable future.Rather,we envision
10、a near-term sourcing model that is“China+Vietnam+many low-cost production countries in Asia”.Typically,these countries were successful in containing the initial spread of COVID-19 and have consolidated more integrated domestic or regional supply chains.The alternative of building a more resilient su
11、pply chain by exploring new supplier partnerships elsewhere will inevitably incur extra structural costs,which would further stress fashion companies at a time of reduced consumer spending amid an uncertain outlook.Geopolitics With the deterioration in ChinaUS relations,high tariffs on ChinaUS trade
12、 has been the“new normal”since 2018.Even with the Phase One Trade Deal of January this year,broader uncertainties and tensions(such as the escalating technology war)between the two countries are likely to prevail for a long time,irrespective of the 2020 US Presidential election outcome.That is becau
13、se,in our view,the overriding issue between China and the US is not trade but geopolitical rivalry.In the medium to long term,the continued presence of high tariffs and a prolonged ChinaUS trade conflict will encourage some multinationals to divert some of their production or even the entire manufac
14、turing processes from China to other countries to avoid tariffs and minimise geopolitical risks.This is true even for Chinese firms that are exporting to the US market.At present,more than 90%of apparel imports and more than 50%of footwear imports from China are still subject to additional US tariff
15、s,although the additional tariff rate on most of those products has been cut from 15%to 7.5%after the Phase One Trade Deal with the remainder still subject to 25%additional tariffs.Some Asian countries,1 Dual-sourcing or multi-sourcing:using more than one supplier for a given input COUNTRY SOURCING
16、REPORT ISSUE 18 November 2020 including Vietnam and Cambodia,and Central American countries,could even benefit from the ChinaUS trade war,seeing their exports of fashion products to the US increase.FTAs and Trade Preferences Amid rising labour costs and trade protectionism,a strategy of leveraging F
17、TAs and unilateral preferential trade arrangements(PTAs),which grant certain member countries or beneficiary countries preferential market access,can potentially help multinational companies avoid higher tariffs.Relevant developments of note this year include the USMexicoCanada Trade Agreement(USMCA
18、),replacing the North American Free Trade Agreement(NAFTA)on 1 July,the EUVietnam Free Trade Agreement(EVFTA),which entered into force on 1 August,as well as the EUs partial withdrawal of duty-free and quota-free preferences granted to selected garments and footwear,and to all travel goods made in C
19、ambodia under the Everything But Arms(EBA)trade scheme,which took effect on 12 August.Other existing FTAs and PTAs that could potentially benefit US fashion companies include the Dominican RepublicCentral America Free Trade Agreement(CAFTADR),the African Growth and Opportunity Act(AGOA),the Qualifyi
20、ng Industrial Zone(QIZ)initiative(applicable exclusively to Egypt and Jordan)and duty-free preferences granted under the US Generalised System of Preferences(GSP)for travel goods exported from GSP-eligible countries,including Cambodia,Myanmar and the Philippines.Apart from the above-mentioned EVFTA
21、between the EU and Vietnam,EU fashion companies can also leverage the EUTurkey Customs Union,the EUs GSP+scheme,which covers Pakistan and the Philippines,and the EBA scheme,which includes Bangladesh,Myanmar and dozens of African countries.The downside of this strategy is that companies aiming to acc
22、ess duty-saving opportunities via FTAs and PTAs face multiple and sometimes overlapping systems of tariffs,standards and regulatory regimes.Moreover,PTAs are subject to disruption as granting countries may unilaterally terminate benefits due to the income level growth of beneficiary countries or bec
23、ause of concerns over human rights or other broad issues.Sourcing Costs While labour costs are becoming less important in determining manufacturing locations because of technology advances such as robotics,the fashion industry,particularly the textile and garment industry,remains largely labour-inte
24、nsive.Fashion businesses still search constantly for low-wage production bases in a bid to remain competitive.Over the period 200617,the Asia Pacific enjoyed the highest real wage growth among all regions,led by China,India,Thailand and Vietnam,according to the Global Wage Report 2018/19 by the Inte
25、rnational Labour Organization(ILO).Especially for fashion-related industries,low-cost,low value-added production will continue to shift from current low-cost manufacturing bases to emerging lower-cost locations.With a young,fast-growing labour force and benefiting from preferential trade arrangement
26、s,Sub-Saharan African countries will emerge as new sourcing frontiers for low-cost,labour-intensive manufacturing.For the long term,existing sourcing bases will need to upgrade,by progressing to higher-end goods and higher value-added activities,or lose out completely if they remain focused on low v
27、alue-added production.Domestic Development Policies Sourcing costs aside,access to skilled talent,along with competitive supplier ecosystems,infrastructure preparedness,logistics efficiency and business environment are among factors that,increasingly,influence the sourcing or production relocation d
28、ecisions of fashion companies.In turn,these factors are largely affected by a countrys long-term domestic development policies.For instance,the Indian government slashed corporate tax rates in September last year,bringing Indias corporate tax rates on par with those in countries across the globe.In
29、addition,India has also started setting up National COUNTRY SOURCING REPORT ISSUE 18 November 2020 Investment and Manufacturing Zones(NIMZs)across the country.These zones are envisaged as large areas of developed land with the requisite ecosystem for promoting world-class manufacturing activity.Than
30、ks to continued efforts to improve its business environment and infrastructure,India has moved up 79 places in the World Banks Ease of Doing Business rankings over the past five years,from 142nd in 2015 to 63rd in 2020.The country also ranked as the 9th largest recipient of FDI inflows in 2019,accor
31、ding to the World Investment Report released by the United Nations Conference on Trade and Development(UNCTAD).Conclusions The COVID-19 pandemic is likely to accelerate and deepen significant pre-existing sourcing trends in the long term.The post-pandemic sourcing model will be more resilient and ag
32、ile to withstand unexpected and severe disruptions in the future.In general,Asia will remain a manufacturing powerhouse for fashion products over the long term,with Chinas export share of those categories declining gradually.Meanwhile,the ChinaUS trade war will accelerate sourcing diversification aw
33、ay from China,mainly to other Asian countries,including Vietnam,Bangladesh,Cambodia and Myanmar,due to their comparative advantage in labour and overhead costs and because of their integrated regional supply chains.During the diversification process,it is noteworthy that China will continue to play
34、an increasingly important role as a textile supplier for apparel-exporting countries in Asia.Additionally,given the e-commerce driven rise of fast fashion and product customization,near-shoring or regionalisation of supply chains will continue to grow in importance to meet consumer demand for shorte
35、r lead times.China is among the worlds fastest growing consumer markets for fashion products,which gives another reason for sourcing in China to serve the domestic market.COUNTRY SOURCING REPORT ISSUE 18 November 2020 SECTIONSCONTRIBUTORSPAGECountry overview1 BangladeshUday Pathak,Rahul Dhand,Anamic
36、a Bhardwaj 2-5 CambodiaBunna Long,Regina Villamiel 6-9 ChinaRodger Lee 10-15 IndiaUday Pathak,Anamica Bhardwaj,Sunil Shewakramani 16-21 IndonesiaIrene Yustitia 22-25 PakistanUday Pathak,Umar Bin Asad,Anamica Bhardwaj 26-29 The PhilippinesSylvia Bondoc 30-33 ThailandSupreeda Keeratiwasin 34-36 Turkey
37、Philip Wixon,Medhat Ebeid 37-39 VietnamFatya Mamcu,Haluk Demirtel 40-43 Central AmericaLucas Mayorga,Yolanda Romero 44-47 Feature:Egypt and Jordan48-51 Global trade policy regime52-58 Currency appreciation/depreciation 59 Input prices60-66 Global competitiveness67-68 Minimum wages across Asian count
38、ries69-74 TABLE OF CONTENTSThis report is brought to you by Fung Business Intelligence and Li&Fungs business unit contributors located in the following production countries.It gives an“our people on the ground”perspective of what is happening in those countries.This report covers country and sourcin
39、g updates,major multilateral/bilateral free trade agreements,input price trends,macroeconomic indicators and foreign exchange rates.COUNTRY SOURCING REPORT ISSUE 18 November 2020 COUNTRY OVERVIEWPopulation(million),2019Median age,2020Literacy rate(%),2019 or most recent yearReal GDP growth(%),2019In
40、flation(%),2019Share in world clothing exports(%),2018Monthly base wages for manufacturing workers(US$),2019*China1,397.7 38.4 96.8 6.1 2.9 31.9 493.0 Bangladesh163.0 27.6 74.7 8.2 5.5 6.7 104.0 India1,366.4 28.4 74.4 4.2 4.8 3.4 278.0 Pakistan216.6 22.8 59.1 1.9 6.7 1.2 129.0 Turkey83.4 31.5 96.2 0
41、.9 15.2 3.2 371.5 Cambodia16.5 25.6 80.5 7.0 2.0 1.6 196.0 Indonesia270.6 29.7 95.7 5.0 2.8 1.8 348.0 Philippines108.1 25.7 98.2 6.0 2.5 0.2 236.0 Thailand69.6 40.1 93.8 2.4 0.7 0.8 446.0 Vietnam96.5 32.5 95.0 7.0 2.8 5.7 236.0 Mexico127.6 29.2 95.4-0.33.6 0.9 174.9 El Salvador6.5 27.6 89.0 2.4 0.1
42、0.5 299.3 Guatemala16.6 22.9 81.3 3.8 3.7 0.3 331.8 Honduras9.7 24.3 87.2 2.7 4.4 0.8 334.8 Nicaragua6.5 26.5 82.6-3.95.4 0.3 183.9 Haiti11.3 24.0 61.7-1.217.3 0.2 239.5 Egypt100.4 24.6 71.2 5.6 13.9 0.3 127.4 Jordan10.1 23.8 98.2 2.0 0.7 0.4 310.3 Source:Population(2019):World Bank database,accesse
43、d on 20 October 2020 Median Age(2020):United Nations World Population Prospects 2019Literacy rate(2019 or most recent year):World Bank database,accessed on 20 October 2020 Real GDP growth and inflation(2019):IMF World Economic Outlook,October 2020Share in world clothing exports(2018):WTO database,ac
44、cessed on 21 October 2020 Monthly wages(2019):JETRO Survey of Japanese-Affiliated Companies in Asia and Oceania,November 2019*Wages of Central American and Middle Eastern countries are monthly minimum wages as of mid-Oct 2020.Turkeys wage is thegross minimum wage nationwide effective in 2020 before
45、taxes and social security deductions.All wage rates are converted to USdollar terms based on Bloombergs spot exchange rates on 16 October 2020.1 2 COUNTRY SOURCING REPORT ISSUE 18 November 2020 BANGLADESH Country&sourcing updates Macroeconomic trends According to the Bangladesh Bureau of Statistics,
46、real GDP growth is estimated to be 5.24%in the 2019-20 fiscal year(July 2019 June 2020).Bangladesh reported the first COVID-19 case in the early March.In response to widespread concern,the economy was shut down from mid-March to the end of May.The countrys export earnings in the JulySeptember period
47、 of the current financial year 2020-21 grew by 2.58%to US$9.89 billion from US$9.64 billion in the same period of last fiscal year due to good performance in the European market despite the COVID-19 pandemic.Export earnings in September increased by 3.53%to US$3.01 billion from US$2.91 billion in th
48、e same month of last fiscal year,according to Export Promotion Bureau data.Total exports started to rebound in July and grew by 0.59%yoy to US$3.91 billion,as international retailers and brands started returning to Bangladesh with new orders.Exports in August increased by 4.32%yoy to US$2.96 billion
49、 thanks to the reopening of retail stores in the EU and US markets.The exchange rate of taka remained broadly stable in the first nine months of 2020,aided by the intervention by the Bangladesh Bank and shrinking growth of imports and a significant inflow of remittances from overseas Bangladeshi wor
50、kers.Policies®ulations To tackle the economic impacts caused by the COVID-19 pandemic,the Bangladeshi government has announced stimulus packages worth over 1 trillion takas so far.Below is a summary of measures targeted toward export-oriented industries.The first stimulus package,announced on 25
51、March,allocated 50 billion takas for the payment of salaries and allowances of workers and employees in export-oriented industries for three months starting from April.However,the fund was found to be inadequate and the government released another 55 billion takas for the payment of salaries for Jun
52、e and July.The second stimulus package,announced on 5 April,totaled 677.5 billion takas.The funding is aimed at helping both local and export-oriented sectors which are affected by the pandemic through working capital loan facilities.The third package,announced on 7 April,concerns the allocation of
53、an additional 127.5 billion takas to the Bangladesh Banks Export Development Fund(EDF),which will be increased from US$3.5 billion to US$5 billion to facilitate import of raw materials under back-to-back letters of credit.Under the fourth package,the Bangladesh Bank launched on 12 April a 50 billion
54、 takas preshipment credit refinance scheme with reduced interest rate for the exporter-oriented industries.The government has identified 13 sectors as high priority sectors in the export policy 2018-21,which are believed to be next growth drivers if adequate facilities and policy support are provide
55、d.Value-added readymade garment and garment accessories,software and IT enabled services,pharmaceutical products,leather and footwear,jute products and agro&agro-processed products,etc.are some of the high priority sectors which are given policy support to exploit their potentials.Industry&sourcing
56、developments The COVID-19 pandemic has dealt a heavy blow to Bangladeshs garment industry.Global demand for goods shrank and production in the country was suspended due to lockdowns.Production in 348 member factories of the Bangladesh Garment Manufacturers and Exporters Association(BGMEA)and 71 memb
57、er 3 COUNTRY SOURCING REPORT ISSUE 18 November 2020 factories of the Bangladesh Knitwear Manufacturers and Exporters Association(BKMEA)had been suspended since the last week of March.Of the 348 BGMEA members stated above,268 were closed temporarily due to the lack of orders,while 80 were closed perm
58、anently.According to BGMEA data,a total of 1,150 member factories reported that global buyers had cancelled orders with a total value of US$3.18 billion amid the COVID-19 pandemic.The shortfall in order in the market has also led to a decline in prices.On average,order prices have shown a 14%drop in
59、 the second half of 2020 compared to the same period last year,according to a BGMEA survey.Mens undergarments have seen the biggest price drop of 43%compared to last year,followed by babies garments at 35%.Only knitted bottoms have seen a price increase of 6%.Japanese trade body eyes more investment
60、 in Bangladesh.The JapanBangladesh Chamber of Commerce and Industry(JBCCI)urged for a better,favourable investment environment in the country for Japanese companies.There are now 310 Japanese companies operating in Bangladesh with investment totaled at around US$3 billion.According to the country re
61、presentative of the Japan External Trade Organization(JETRO),among those Japanese companies seeking to relocate from China,ASEAN countries are their priority for relocation.FTAs,trade preferences&facilitation China has granted zero-duty treatment for 97%of the tariff lines originated from Bangladesh
62、 effective 1 July.With this policy,a total of 8,256 tariff lines imported from Bangladesh are exempted from tariffs,including the 3,095 tariff lines that are already enjoying duty-free access to China under the Asia-Pacific Trade Agreement(APTA)and an additional 5,161 tariff lines.Bangladesh continu
63、ed to request the US to reinstate its Generalized System of Preferences(GSP)status at the fifth USBangladesh Trade and Investment Cooperation Forum Agreement Council(TICFA)meeting in Dhaka on 5 March.The US Trade Representative(USTR),however,gave no such assurance at the meeting.The GSP status,a pre
64、ferential tariff system which provides tariff reduction on various products,was suspended for Bangladesh following the nations deadliest industrial accident,the collapse of Rana Plaza in 2013.Currently,the US government does not provide GSP status to apparel items from any country but the duties imp
65、osed differ from nation to nation.Bangladeshi exporters face a 15.62%duty on the export of apparel items to the US.Bangladesh has joined hands with peer least-developed countries(LDCs)to appeal to the World Trade Organisation(WTO)for retaining existing trade preferences granted by developed economie
66、s after their graduation from LDC status.Bangladesh met the graduation criteria for the first time in 2018 and is envisaged to graduate in 2024.Once the country graduates,all tariff benefits will be lifted.Only the EU will allow the tariff benefits for Bangladesh for another three years as a grace p
67、eriod.All government services,licences and approvals required for doing business in the country are expected to be made available with the One-Stop Service(OSS)by the end of 2021.The plan envisages to integrate 154 services from 35 agencies into the OSS platform with the support from the Internation
68、al Finance Corporation(IFC).Infrastructure&environmental sustainability The Bangladeshi government is focusing on developing good infrastructure in the country to improve business connectivity through land,water and air.The Padma Bridge,metro rail,highways and BANGLADESH Country&sourcing updates 4 C
69、OUNTRY SOURCING REPORT ISSUE 18 November 2020 expressways and other mega-projects including deep seaports and power stations are part of the governments fast-track initiatives.Projects that are underway include:Matarbari Port,Bangladeshs first ever deepseaport,will be made functional by 2025.TheMata
70、rbari Port Development Project has beenundertaken to ensure sustainable developmentto build sound maritime logistics that will supportgrowing export and import trade of Bangladeshand to make the country a regional maritimehub.The Payra Port Infrastructure DevelopmentProject and its first terminal ar
71、e in the works,targeted to be completed by 2022.A new expressway between Dhaka andChattogram is being designed to boost trade and ease congestion.Additionally,Inland Container Terminals(ICT)are being constructed as an additional cargodelivery method through inland waterways.BANGLADESHCountry&sourcin
72、g updates 5 COUNTRY SOURCING REPORT ISSUE 18 November 2020 BANGLADESH Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quantum index of medium and large-scale manufacturing(Base:2005-06=100,yoy growth%)-25.6-27.0 5.1 Consumer price index(yoy growth%)6.0 5.4 6.0 5.5 5.7 6.0 Exports(yoy gr
73、owth%)-82.9-61.6-2.5 0.6 4.3 3.5 Exports(US$mn)520.0 1,465.3 2,715.0 3,910.9 2,967.2 3,018.8 Of which:-Knitwear(US$mn)180.1 608.4 1,165.0 1,750.3 1,364.5 1,348.9 -Woven garments(US$mn)194.5 622.2 1,075.3 1,494.7 1,103.5 1,064.5 -Home textile(US$mn)22.7 50.1 87.9 94.0 74.0 84.3 -Footwear*(US$mn)10.3
74、33.9 63.6 108.2 71.0 71.2 -Leather products(US$mn)3.6 11.7 11.5 22.1 12.0 19.0 Imports(yoy growth%)-51.0-49.2-2.3-25.1 Imports(US$mn)2,489.8 2,532.2 3,941.0 3,395.9 *Includes leather footwear Source:Bangladesh Bureau of Statistics,Bangladesh Bank,Export Promotion Bureau of Bangladesh EXCHANGE RATES
75、Source:Bangladesh Bank 84.0084.2584.5084.7585.0085.2585.50USD:BDT buy rate(AprilSeptember 2020)6 COUNTRY SOURCING REPORT ISSUE 18 November 2020 CAMBODIACountry&sourcing updatesMacroeconomic trends Economic growth remained stagnant in the firsthalf of 2020 due to disruptions brought about by theCOVID
76、-19 pandemic,according to a semi-annualreport released by the National Bank of Cambodia(NBC).In the first half of 2020,manufacturingproduction shrunk by 11%yoy,while export-oriented manufacturing dropped by 12.5%yoy.Garment production dipped by 10%yoy in theperiod,while production of footwear and tr
77、avelgoods went up by 2%yoy and 8%yoy,respectively.NBC predicted the countrys GDP to contract by1.9%this year.The World Bank predicted inOctober that Cambodias economy will contractby 2%this year and rebound to the growth pathat a rate of 4.3%in 2021 and 5.2%in 2022.Exports increased by 3%in the firs
78、t half of 2020,thanks to sharp export increases in electronics(+45%yoy),bicycles(+18%yoy)and rice(+29%yoy).Exports of garments,footwear and travelgoods dropped by 5.4%yoy to US$3.78 billion inthe first half of 2020,due to sluggish externaldemand amid the pandemic.The US imported US$4.04 billion wort
79、h of goodsfrom Cambodia in the first eight months of 2020,asharp increase of 21.3%compared to the sameperiod last year,according to data released by theUS International Trade Commission.In the eight-month period,apparel remained theUSs largest import category from Cambodia,with an import value of US
80、$1.84 billion and asteady growth rate of 5.2%yoy,followed bytravel goods,which increased by 10.5%yoy toUS$655.60 million.Furniture,which replacedfootwear as the third largest import category,jumped by 55.1%yoy to US$376.08 million inthe period.The US also imported US$346.68million worth of footwear
81、from Cambodia during the period,up by 13.0%yoy.Policies®ulations A five-year development plan(20202025)for thecountrys garment,footwear and travel goodssector is in the works to improve itscompetitiveness.The strategy envisages thetransformation of the sector into a higher value-added,supportive,
82、diversified and more competitivesector.As the first ever strategy designed exclusivelyfor the sector,the five-year plan is expected tofocus on strengthening human resources andincreasing productivity,while at the same timeimproving working conditions and workerwelfare.Industrial investment in higher
83、 value-added products and export market diversification will also be promoted.The countrys new investment law,to replace theprevious version effective in 2003,is scheduled tobe launched by the end of this year.The new law isdesigned to solve problems facing existing andpotential investors,create a b
84、etter investmentenvironment and provide incentives for newindustries for the long term.The launch of the new investment law will be atimely response to the ongoing trend ofproduction relocation amid the ChinaUStrade war and the COVID-19 pandemic.The new investment law is expected to be moreattractiv
85、e to investors,particularly at a time when Cambodia and China have signed a free tradeagreement(FTA)and negotiations on the SouthKoreaCambodia FTA are underway.Investorsare already looking at export opportunities to theChinese market to benefit through the ChinaCambodia FTA.7 COUNTRY SOURCING REPORT
86、 ISSUE 18 November 2020 Industry&sourcing developments Cambodias garment industry has borne the brunt of the shocks caused by the COVID-19 pandemic.The industry,which sources over 60%of raw materials from China,suffered from a shortage of Chinese raw materials in February.While supplies from China s
87、tarted to flood in in March,the prolonged outbreak in Western countries has led to an unprecedentedly large-scale export order cancelation.As of June,around 450 garment,footwear and travel goods factories in Cambodia had suspended their operations due to the pandemic,while 83 factories were permanen
88、tly closed,according to the Ministry of Labour and Vocational Training.To keep the industry afloat,the government has decided to provide wage subsidies for affected factories that have applied for temporary suspension.Workers who have been furloughed or laid off amid the COVID-19 crisis receive a te
89、mporary wage payment of US$70 a month,of which US$30 is contributed by factory owners,while the remaining US$40 is subsidised by the government.Besides,the government has allocated US$600 million as special low-interest loans to help businesses secure working capital or investment funds.Despite the
90、suspension of duty-free preferences for selected garment and footwear products and all travel goods to the EU market,investment in Cambodias garment,footwear and travel goods industry has continued to pour in,showing the strong potential of the industry as a low-cost sourcing alternative.Among the 9
91、2 projects(excluding those located in special economic zones)approved by the Council for the Development of Cambodia(CDC)in the first five months of 2020,nine were in bag manufacturing and another 25 in the garment industry.In July,CDC issued a final certificate of registration for Mann Long Shoes C
92、o Ltd.s US$10.3 million footwear factory in Kampong Cham province,while another US$10.3 million investment by Forever Fug Garment Co.,Ltd.was approved in August for building a garment factory in Kampong Speu province.The Hong Kong-based and Taipei-listed textile maker TST Group Holding Ltd.is planni
93、ng to expand into apparel production from textile manufacturing in Cambodia with a planned investment of US$20 million,with an aim to build up vertically integrated production of textiles and apparel in the country.Labour&workplace compliance Minimum wage for the garment and footwear sector will inc
94、rease by a minor US$2 to US$192 per month starting from 1 January 2021,reflecting severe difficulties facing employers amid the COVID-19 crisis.FTAs,trade preferences&facilitation Starting 12 August,partial withdrawal of the duty-free and quota-free preferences granted to Cambodia under the EUs Ever
95、ything But Arms(EBA)trade scheme took effect.Selected garment and footwear products,all travel goods and sugar from Cambodia are now subject to standard most-favoured-nation(MFN)tariff rates when entering the EU market.The move impacts roughly 20%or 1 billion euros of the countrys annual exports to
96、the EU,while the other 80%will continue to enjoy duty-free and quota-free preferences.It will affect some garment and footwear exporters,while impacts on the travel goods industry will be limited as only a small portion of travel goods are shipped to the EU market.If the Cambodian government shows s
97、ignificant progress on human rights,particularly on civil CAMBODIA Country&sourcing updates 8 COUNTRY SOURCING REPORT ISSUE 18 November 2020 and political rights,the EU Commission may review its decision and reinstate tariff preferences.To mitigate the impacts caused by the suspension of EBA prefere
98、nces,the Cambodian government has provided income tax exemptions for affected garment,footwear and travel goods enterprises.Depending on their level of income loss,the affected enterprises will get a 50%income tax exemption for six months or 100%exemption for a year.The Garment Manufacturers Associa
99、tion in Cambodia(GMAC)has filed a complaint with the European Court of Justice,seeking to annul the EUs decision.The Cambodian government has strived to diversify exports and integrate the country into the regional and global economy through free trade agreements(FTAs).The Ministry of Commerce has e
100、stablished eight working groups to take charge of trade negotiations with each potential partner,including China,South Korea,the Eurasian Economic Union(EAEU),the UK,the US,Japan,Mongolia and India.So far,the UK,the US,Japan,Mongolia and India have not started to launch FTA talks with Cambodia.China
101、 is the first country to negotiate an FTA with Cambodia.The two sides concluded their negotiations on the FTA in July and the deal was signed in October.Preferential access to Chinas huge market enables Cambodia to diversify its exports and reduce over-reliance on a few trading partners,such as the
102、EU,the US and Canada.The third round of negotiations on the South KoreaCambodia FTA was held in early October.The two sides have pledged to finalise their negotiations by the end of this year.Cambodia has ratified the protocol on the amendment of the ASEAN Trade in Goods Agreement(ATIGA)to implement
103、 the ASEAN-wide Self-Certification(AWSC)scheme.Effective from September this year,the scheme is aimed at streamlining customs procedures by allowing approved operators to self-certify the origins of their goods and facilitating trade flows among ASEAN members.Infrastructure&environmental sustainabil
104、ity Funded by the EUs SWITCHAsia programme,the GMAC rolled out the green-tech clean-energy Switch Garment project in September.The project aims at increasing competitiveness and employing sustainable energy practices to curb the garment industrys environmental impact.CAMBODIA Country&sourcing update
105、s 9 COUNTRY SOURCING REPORT ISSUE 18 November 2020 CAMBODIA Macroeconomic data Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Consumer price index(yoy growth%)2.7 2.8 1.9 2.4 3.2 3.1 Exports(yoy growth%)24.8-14.1 0.4 26.9 41.0 50.5 Exports(Cambodian riel billion)4,934.1 4,002.5 3,578.5 6,151.0 7,472.9 8,
106、933.7 Of which:-Garments(Cambodian riel billion)3,153.0 2,545.0 1,793.5 2,214.3 2,937.9 3,387.6 -Footwear(Cambodian riel billion)444.6 332.4 290.2 352.9 439.0 443.6 -Electrical parts(Cambodian riel billion)91.6 92.9 95.1 100.0 367.3 576.8 -Bicycles(Cambodian riel billion)193.5 128.1 146.9 175.2 199.
107、8 220.8 Imports(yoy growth%)22.3 1.8-13.1-25.5-22.3-27.6 Imports(Cambodian riel billion)6,395.5 6,598.8 6,044.4 5,762.0 5,506.6 5,646.2 Note:July 2020 figures are the most up-to-date as of the data of publishing.Source:National Bank of Cambodia EXCHANGE RATES Source:National Bank of Cambodia 4,0004,
108、0254,0504,0754,1004,1254,150USD:KHR official exchange rate(AprilSeptember 2020)10 COUNTRY SOURCING REPORT ISSUE 18 November 2020 CHINA Country&sourcing updates Macroeconomic trends Amid global economic uncertainties caused by the COVID-19 pandemic,Chinas foreign trade sector has delivered a better-t
109、han-expected performance so far this year.In the first nine months of 2020,merchandise exports reached US$1,811.4 billion,down by 0.8%over the same period of the previous year.Merchandise exports totalled US$239.8 billion in September,up by 9.9%over the same month of the previous year.Chinas exports
110、 rose for the fourth consecutive month in September,indicating a strong recovery from the COVID-19-induced declines in exports in the first few months of 2020.Exports of textiles and garments rose by 15.7%yoy to US$28.38 billion in September.Of which,exports of garments rose by 3.2%yoy to US$15.23 b
111、illion,while exports of textiles surged by 34.7%yoy to US$13.15 billion,driven by strong overseas demand for face masks and other personal protective equipment.In the first nine months of 2020,textile and garment exports totalled US$215.78 billion,up by 9.4%over the same period last year.Of which,ex
112、ports of garments reached US97.83 billion,down by 10.3%yoy;while exports of textiles amounted to US$117.95 billion,up by 33.7%yoy.Exports of shoes totalled US$3.34 billion,down by 14.1%yoy,in September.In the first nine months of 2020,exports of shoes reached US$25.02 billion,down by 25.3%yoy.Export
113、s of toys amounted to US$4.11 billion,up by 7.4%yoy,in September.In the first nine months of 2020,exports of toys totalled US$22.18 billion,down by 1.9%yoy.In the first seven months of 2020,China became the top trading partner of the EU,a position previously held by the US.EUs imports from China inc
114、reased by 4.9%yoy in the January-July period,whereas its imports from the US dropped by 11.7%yoy.Chinas trade and investment with countries along the Belt and Road(B&R)have remained robust amid the COVID-19 pandemic.Chinas trade with the B&R countries rose by 1.5%yoy to 6.75 trillion yuan in the fir
115、st nine months of 2020.In the first nine months of 2020,Chinese companies made outward direct investment(ODI)of US$13.0 billion in B&R countries,up by 29.7%yoy,and signed contracts of new projects worth US$83.7 billion.Cross-border e-commerce has provided strong impetus for Chinas foreign trade.In t
116、he first three quarters of the year,trade via cross-border e-commerce platforms increased by 52.8%yoy to 187.4 billion yuan.Consumer prices:CPI growth eased to 1.7%yoy in September from 2.4%yoy in the previous month.In the first nine months of 2020,Chinas CPI growth was 3.3%yoy.Midstream prices:Ex-f
117、actory prices of industrial products have gone up lately.The producer price index(PPI)rose by 0.3%mom in August and 0.1%mom in September.In the first nine months of 2020,Chinas PPI growth was minus 2.0%yoy.Upstream prices:Domestic prices of production inputs have increased lately.The purchaser price
118、 index of industrial products went up by 0.6%mom in August and 0.4%mom in September.In the first nine months of 2020,the growth in Chinas purchaser price index was minus 2.6%yoy.Real GDP growth picked up strongly from minus 6.8%yoy in 1Q20 to 3.2%yoy in 2Q20 and further to 4.9%yoy in 3Q20,making Chi
119、na the first major economy to return to growth in the wake of the COVID-19 pandemic.In the first three quarters of 2020,Chinas economy expanded by 0.7%yoy.Total profits of industrial companies with annual revenue over 20 million yuan fell by 4.4%yoy to 3.72 11 COUNTRY SOURCING REPORT ISSUE 18 Novemb
120、er 2020 trillion yuan in the first eight months of 2020.Among the industries,profits of the textile manufacturing industry edged up by 1.6%yoy to 58.51 billion yuan,while profits in the wearing apparel and ornament manufacturing industry slumped by 25.6%yoy to 35.08 billion yuan in the period.Indust
121、rial production by the textile industry decreased by 1.7%yoy in the first nine months of 2020,compared to the growth of 1.3%yoy in the year 2019.Chinas fabric production contracted by 12.6%yoy to 3.4 billion metres in September.In the first nine months of 2020,fabric production reached 26.2 billion
122、metres,down by 21.6%yoy.Fixed asset investment(excluding rural households)in the textile industry declined by 11.3%yoy in the first nine months of 2020.Foreign direct investment(FDI)into China increased by 5.2%yoy to reach 718.8 billion yuan(US$103.3 billion,up by 2.5%yoy)in the first nine months of
123、 2020.China unveiled revised negative lists in late June,which not only further relax foreign investments access to the manufacturing and agriculture sectors,but also open up key areas in service industries.A more open and convenient market environment will enhance foreign enterprises confidence in
124、entering the Chinese market.Chinas total retail sales of consumer goods reached 27.33 trillion yuan in the first nine months of 2020,down by 7.2%over the same period last year.Of which,retail sales of garments,footwear,hats and knitwear amounted to 804.5 billion yuan,down by 12.4%yoy.In the period,o
125、nline retail sales of physical goods grew 15.3%yoy to 6.65 trillion yuan,accounting for 24.3%of total retail sales of consumer goods.The Chinese yuan appreciated by 2.5%against the US dollar in the first nine months of 2020.After depreciating from 6.9632 on 31 December 2019 to 7.1671 on 27 May,the U
126、SD-CNY spot exchange rate appreciated to 6.7910 on 30 September 2020,according to Bloomberg.In September 2020,the RMB remained the fifth most active currency for international payments by value,with a share of 1.97%according to data from SWIFT,a global payment messaging system.From January to Septem
127、ber 2020,the minimum wage levels in Fujian,Qinghai and Guangxi provinces were adjusted upward.The average monthly income of migrant workers in China increased by 2.1%yoy to 4,035 yuan in the first nine months of 2020.Chinas job market has improved lately after a marked worsening in the first few mon
128、ths of the year.The surveyed urban unemployment rate in 31 major cities in China rose from 5.2%in January to 5.9%in May,and then retreated to 5.7%in August and further to 5.5%in September.Chinas state cotton reserves sales of 2020 commenced on 1 July and ended on 30 September.About 503,000 tonnes of
129、 cotton were sold during the period.Imports of cotton surged 54.1%yoy to 140,000 tonnes in August.In the first eight months of 2020,imports of cotton amounted to 1.19 million tonnes,down by 16.8%yoy.On 1 September,the Chinese government issued additional cotton import quotas of 400,000 tonnes for th
130、e year to meet the domestic demand for imported cotton.Textile and apparel exports via Xinjiangs ports of entry declined 9.8%yoy to 15.13 billion yuan in the first eight months of 2020.Exports of apparel amounted to 12.05 billion yuan,down by 12.4%yoy,while exports of textile totalled 3.08 billion y
131、uan,up by 1.7%yoy.CHINA Country&sourcing updates 12 COUNTRY SOURCING REPORT ISSUE 18 November 2020 CHINA Country&sourcing updates Policies®ulations The Chinese government rolled out a slew of policies to facilitate work resumption and support businesses during the COVID-19 outbreak in China.For e
132、xample,The State Council released a circular on 8 February to urge efforts to resume work and production as soon as possible while protecting workers from getting infected with the COVID-19.It also organized 29 working groups to investigate and facilitate the resumption of work and production in var
133、ious places from mid-March.On February 20,the State Council announced to reduce or exempt employer contributions to pension,unemployment and work injury insurance schemes for all enterprises for a period of three to five months.The move potentially allows enterprises to save up to 10%15%in compensat
134、ion and benefits payouts,or 500 billion yuan,over the period,thereby helping them survive the COVID-19 crisis.To help the resumption of production disrupted by the COVID-19 outbreak,the Chinese government relaxed its environmental enforcement.For example,When conducting on-site environmental checks,
135、the environmental inspectors would not punish enterprises who commit minor violations but are able to correct them in time.Moreover,enterprises involved in the production of materials used in the fight against the COVID-19 or have low emission levels of pollutants would be exempted from environmenta
136、l checks.The government has exempted environmental assessments on some small-and medium-sized enterprises in the service industry,including restaurants,entertainment venues and hotels.It has also simplified environmental assessment and approval processes for some large projects in infrastructure,man
137、ufacturing and transportation.The Chinese government implemented various measures to support foreign trade enterprises amid the challenging foreign trade environment.For example,The State Council issued a circular on 22 June,introducing measures to help exporters sell products domestically and suppo
138、rt foreign trade businesses.Foreign trade enterprises are allowed to sell export products that meet Chinas standards in the domestic market.These enterprises are encouraged to expand sales channels such as e-commerce platforms.The government will provide various administrative support for foreign tr
139、ade companies,such as simplifying product certification procedures and taxation procedures.Moreover,financial institutions are asked to provide support for the transformation,and strengthen supply chain financial services.The State Council released Opinions on Further Stabilizing Foreign Trade and F
140、oreign Investment on 12 August and proposed 15 policy measures,including promoting the use of export credit insurance to provide financing for enterprises,encouraging the development of innovative business models,and providing fiscal and financial support for foreign trade enterprises.The Chinese au
141、thorities have unveiled a series of measures to promote consumption in a bid to stimulate the economy.For example,On 13 March,the Chinese government rolled out 19 measures to boost consumption and develop a strong domestic market.Steps would be taken to reduce import tariffs for daily household arti
142、cles,promote cultural and leisure consumption,facilitate the consumption of green and smart products,and encourage new types of consumption such as online shopping,etc.13 COUNTRY SOURCING REPORT ISSUE 18 November 2020 CHINA Country&sourcing updates On 29 April,the Chinese authorities announced measu
143、res to stabilize and expand car consumption,including favorable tax policies for purchases of new energy vehicles,and encouraging financial institutions to conduct businesses related to auto consumption finance.The National Development and Reform Commission(NDRC)said on 24 May that it would take mul
144、tiple measures to promote the further rebound in consumption,including promoting consumption upgrade,expanding service consumption,prompting the growth of digital and online consumption,encouraging the use of green products,and speeding up construction of new infrastructure.Chinese leaders have prop
145、osed the dual circulation strategy for Chinas medium and long-term development.It is a new development model whereby domestic and international circulation can boost each other,with the domestic circulation as the mainstay.The dual circulation strategy is widely seen as the most important policy dir
146、ection in the coming years,and will likely serve as the policy framework of the upcoming 14th Five-Year Plan(2021-25).Priority efforts will be focused on stimulating domestic demand and domestic drivers of growth to improve economic resiliency and self-sufficiency as a first step.Efforts will also b
147、e taken on deepening reform on the supply side through creating a unified and open domestic market and better matching capabilities and resources to the needs of the domestic market.Industry&sourcing developments The US Customs and Border Protection(CBP)agency announced on 14 September five Withhold
148、 Release Orders,banning cotton,apparel,hair products and computer parts from five Xinjiang companies and all products from a vocational training centre in Xinjiang.Chinas manufacturing industry took a big hit from the COVID-19 outbreak during the first few months of 2020 before recovering strongly l
149、ately.With the COVID-19 spreading rapidly from Wuhan,Hubei to throughout China in January,a lockdown was imposed in Hubei and a partial lockdown was imposed in dozens of major cities across China.Also,local governments in at least 24 provinces requested businesses not to resume work before 10 Februa
150、ry at the earliest.These measures,together with restrictions on inter-provincial transport and supply chain disruptions in various industries,led to nationwide factory shutdowns and production outages.Most manufacturers had resumed work by end-February amid the successful containment of COVID-19 out
151、break in China and efforts by the Chinese government to promote work resumption.However,manufacturers started to experience order cancelations,requests for shipment delays and even non-payment by foreign buyers since mid-March,after the COVID-19 outbreak became a global pandemic which led to a plung
152、e in global demand.Meanwhile,some manufacturers or exporters lacked the confidence to take new orders,as they were worried about last-minute cancellation of orders or non-payment.Chinas manufacturing industry has started to recover at a faster pace since mid-to late April,as production disruptions i
153、n alternative production countries hit hard by the COVID-19 outbreak have pushed foreign buyers to shift orders to China instead.In addition,a lot of manufacturers have repurposed their production lines to produce face masks and other personal protective equipment,leading to a surge in the productio
154、n and exports of these items.Since July,some manufacturers have even received requests for reinstatement of cancelled orders or shipments of previously cancelled 14 COUNTRY SOURCING REPORT ISSUE 18 November 2020 goods by foreign buyers,which signals that external demand is recovering amid the gradua
155、l reopening of the developed economies.Politics&geopolitics Despite the fact that the phase one economic and trade agreement came into effect on 14 February,the China-US relations have worsened due to tensions over the COVID-19 pandemic,Chinas passage of the national security law on Hong Kong,and th
156、e escalating tech war.For a few months in early 2020,China and the US had been engaging in a war of words regarding the COVID-19 outbreak.The US claimed a lack of transparency and even cover up in Chinas handling of the COVID-19 outbreak,which China dismissed as unfair and untrue.Responding to China
157、s passage of the national security law imposed on Hong Kong,the US has announced a flurry of punitive measures against China,including revoking visas for graduate students and researchers with ties to the Chinese government;signing into law the Hong Kong Autonomy Act;and imposing economic sanctions
158、on 11 current and former Chinese and Hong Kong officials.The US has also ended Hong Kongs special status with the US,including banning high-tech and defence-related exports to Hong Kong,and requiring imported goods produced in Hong Kong be marked to indicate that their origin is“China”,which also me
159、ans that the China Section 301 tariffs will be applied to Hong Kong as well.The China-US tech war has also heated up.On 6 August,citing the threats to US national security,foreign policy,and economy,US President Donald Trump signed executive orders to ban any transactions with TikToks parent company
160、 ByteDance and Wechats parent company Tencent.The Trump administration also pressed ByteDance to sell the US operations of TikTok to US companies.On 19 September,Oracle and Walmart announced that they have agreed to buy a total of 20%stake in TikTok Global.The final transaction will need the approva
161、l by both the Chinese and US governments.CHINA Country&sourcing updates 15 COUNTRY SOURCING REPORT ISSUE 18 November 2020 CHINA Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quarterly GDP(real yoy growth%)3.2(2Q20)4.9(3Q20)Manufacturing PMI(seasonally adjusted)50.8 50.6 50.9 51.1 51.0
162、 51.5 Purchaser price index of industrial products(yoy growth%)-3.8-5.0-4.4-3.3-2.5-2.3 Producer price index of industrial products(yoy growth%)-3.1-3.7-3.0-2.4-2.0-2.1 Consumer price index(yoy growth%)3.3 2.4 2.5 2.7 2.4 1.7 Exports(yoy growth%)3.4-3.2 0.5 7.2 9.5 9.9 Exports(US$bn)200.1 207.1 213.
163、6 237.6 235.3 239.8 Of which:-Garments(US$bn)6.7 8.9 12.9 15.3 16.2 15.2 -Footwear(US$bn)1.9 2.1 2.9 3.6 3.4 3.3 -Toys(US$bn)1.8 1.9 2.5 3.5 3.9 4.1 Imports(yoy growth%)-14.2-16.6 2.7-1.4-2.1 13.2 Imports(US$bn)154.9 144.1 167.2 175.3 176.3 202.8 Source:National Bureau of Statistics,PRC;China Custom
164、s;China Federation of Logistics&Purchasing EXCHANGE RATES Source:Federal Reserve Bank of New York 6.66.76.86.97.07.17.2USD:CNY spot exchange rate(AprilSeptember 2020)16 COUNTRY SOURCING REPORT ISSUE 18 November 2020 INDIA Country&sourcing updates Macroeconomic trends Indias merchandise exports incre
165、ased by 6.0%yoy to US$27.58 billion in September,the first year-on-year increase in the past seven months,driven by higher shipments of drugs and pharmaceuticals and readymade garments.In the first half of the current fiscal year(April 2020March 2021),exports plunged by 21.3%yoy to US$125.25 billion
166、.Exports of readymade garments increased by 10.2%yoy to US$1.19 billion in September,while the figures plummeted by 39.3%yoy to US$4.78 billion in the first half of the 202021 fiscal year.In September,exports of carpets,handicrafts excluding handmade carpets,jute manufactures including floor coverin
167、g,and cotton yarn/fabrics/made-ups/handloom products increased by 42.9%,21.8%,18.6%and 15.4%,respectively,compared with the same month last fiscal year,while exports of man-made yarn,fabrics and made-ups posted a decline of 9.1%yoy.Indias real GDP growth contracted by a record 23.9%yoy in the AprilJ
168、une quarter,making it among the worst hit countries amid the COVID-19 pandemic.The worst-than-expected GDP figure in the quarter reflects the severe impacts of one of the worlds strictest lockdowns,as most factories in India were shut down throughout April and May and subsequent lockdowns were impos
169、ed on various districts and localities.In fact,Indias economic growth has already lost steam pre-pandemic,with GDP growth slowing to a 11-year low of 4.2%yoy in the 201920 fiscal year.As the second-worst affected country amid the COVID-19 pandemic,Indias economic recovery prospects remain bleak.The
170、IHS Markit India Manufacturing Purchasing Managers Index(PMI)surged to 56.8 in September,the highest since January 2012,from 52.0 in August,amid eased COVID-19 restrictions.Output rose for the second straight month,with the growth rate being the third quickest in the surveys history.Also,there were
171、back-to-back rises in new orders,with the rate of expansion picking up to the fastest since early 2012;and new export orders returned to growth,the first since prior to the escalation of the outbreak.Meanwhile,manufacturers input buying levels hit the strongest in over eight-and-a-half years.Inflati
172、on,as measured by the consumer price index,accelerated to an eight-month high of 7.34%yoy in September from 6.69%yoy in August,well beyond the central banks 6%upper-band target.Price increases in food items have led to higher inflation.Foreign direct investment(FDI)inflows in India stood at US$73.46
173、 billion in the 201920 fiscal year,a 18.5%increase from the 201819 fiscal year.Of which,US$49.98 billion was FDI equity inflows,with services,computer software and hardware,trading and telecommunications sectors receiving the largest amount of investment.During the said period,India received the hig
174、hest FDI equity inflows from Singapore,followed by Mauritius,the Netherlands,the US and Japan.The Indian rupee has strengthened against the US dollar since July.It closed at 73.27 per US dollar on 12 October,appreciating by 3.2%since 1 July this year,according to spot exchange rates provided by Bloo
175、mberg.This is partly due to the recent weakness of the US dollar and the huge foreign portfolio inflows into Indias equity market.Policies®ulations The COVID-19 pandemic has prompted the Narendra Modi-led Administration to launch the“Atmanirbhar Bharat Abhiyan”(Self-reliant India Campaign).The go
176、vernment has so far identified 12 priority 17 COUNTRY SOURCING REPORT ISSUE 18 November 2020 sectors with potential for import substitution and boosting exports,including food processing,organic farming,iron and steel,aluminium and copper,agrochemicals,electronics,industrial machinery,furniture,leat
177、her and footwear,auto parts,textiles,and marine products.The Indian government announced five tranches of economic stimulus packages in May under Prime Minister Narendra Modis“Atmanirbhar Bharat Abhiyan”(Self-reliant India Campaign)to boost the economy.These measures,together with the previous fisca
178、l package announced in late March and monetary measures taken by the central bank since the lockdown began in March,are worth 20 trillion Indian rupees(US$274 billion)and equivalent to nearly 10%of Indias GDP.The first tranche is focused largely on infusing liquidity into micro,small and medium ente
179、rprises(MSMEs),which lie at the heart of the industrial ecosystem and employment.In particular,collateral-free automatic loans worth 3 trillion rupees are now available for MSMEs with a turnover of up to 1 billion rupees.Besides,the definition of MSMEs has been revised,with higher investment caps an
180、d an additional criterion of turnover.The second tranche of measures is focused on various vulnerable sectors and groups in the economy,including migrant workers,farmers and street vendors.The third tranche is focused on supporting the agriculture sector and allied activities by improving infrastruc
181、ture,building capacity,providing better logistics,and facilitating governance and administrative reforms.In the fourth tranche of the economic stimulus package,the government announced the easing of limits on FDI in defence manufacturing,privatisation of six more airports,opening up more air space a
182、nd allowing private sector in commercial coal mining.Also,self-reliance on defence production will be boosted.The fifth tranche is focused on the Mahatma Gandhi National Rural Employment Guarantee Act(MGNREGA)for job creation,public health,technology-driven education sector,and ease of doing busines
183、s,etc.In the wake of COVID-19 outbreak,the Indian government launched“Garib Kalyan Rojgar Abhiyaan”,a massive employment and rural public works campaign,on 20 June to boost employment and livelihood opportunities for migrant workers returning to villages.With initial funding of 500 billion rupees(US
184、$6.8 billion),the campaign covers 25 categories of works/activities in 116 districts across six states.Indias Department of Revenue has launched a new set of“rules of origin”regulations the Customs(Administration of Rules of Origin under Trade Agreements)Rules,2020 effective from 21 September 2020.T
185、he new norms will impose stricter customs checks on imports of low-quality products and prevent the dumping of goods by a third country routed through one of Indias free trade agreement(FTA)partner countries.Under the new rules,in order to claim preferential rate of duty under any FTA,Indian importe
186、rs are now required to demonstrate that the imported products have undergone a prescribed value addition in the countries of origin,and maintain all supporting documents for at least five years from the date of filing the bill of entry.The new rules have imposed significant obligations on importers.
187、Previously,a Certificate of Origin(CoO)was sufficient.Indian customs officials have long suspected that Chinese exporters may divert their supplies to India through ASEAN countries by abusing the rules of origin under the IndiaASEAN FTA.INDIA Country&sourcing updates 18 COUNTRY SOURCING REPORT ISSUE
188、 18 November 2020 The Indian government has recently stepped up efforts to attract manufacturers seeking to move out of China.In April,the government reportedly reached out to more than 1,000 companies in the US through overseas missions to offer incentives to those considering production diversific
189、ation away from China.It is also reported that India has set aside a total land area of 461,589 hectares across the country for manufacturers moving out of China.Electrical,pharmaceuticals,medical devices,electronics,heavy engineering,solar equipment,food processing,chemicals and textiles are said t
190、o be among the priority sectors for promoting manufacturing.Indias investment promotion and facilitation agency has received enquiries mainly from Japan,the US,South Korea and China for investing in India post-COVID-19 pandemic.Industry&sourcing developments The USs restrictions on certain cotton an
191、d apparel imports from specific producers in Chinas Xinjiang Region due to alleged concerns on forced labour is likely to prove beneficial for Indian textile exporters.Several major apparel exporters from India have either already started receiving increased orders or are in active discussions with
192、large international buyers,who are looking at increasing their sourcing from India.The shift,which was previously expected to take place gradually over the medium term,could be expedited in light of this recent development.The Uttar Pradesh state government earmarked in September more than 77 acres
193、of land for the proposed Apparel Export Cluster in Noida,aiming to get private investment worth 9 billion rupees(US$123 million)in infrastructure.The proposed textile cluster,consisting of nearly 55 manufacturing and export units,is expected to generate employment for more than 100,000 people.Beside
194、s,the state government is also planning to establish integrated textile parks across the state.So far,six developers have expressed interest in setting up such parks at Agra,Meerut,Gautam Budh Nagar(Noida),Chandauli,Jhansi,Kanpur and Gorakhpur districts.The Indian Government announced the formation
195、of the National Technical Textiles Mission in February with a four-year implementation period from the 202021 fiscal year to the 202324 fiscal year and a total outlay of 14.8 billion rupees(US$203 million),to position India as a global leader for man-made fibres and technical textiles categories.Ind
196、ia imports significant quantities of technical textiles worth US$16 billion every year.The initiative will put Indian firms on a level playing field with international players in these sectors.The government is laying a lot of importance on developing Indias strength in man-made fibres and technical
197、 textiles to gain from the current trend of shifting of business from China.Labour&workplace compliance The Indian Parliament in September passed three of the four labour codes that comprise the governments flagship labour reforms,namely the Industrial Relations Code,the Code on Social Security,and
198、the Occupational Safety,Health and Working Conditions Code.The three bills are now sent to President of India for his assent.Out of the four,the Code on Wages was passed by parliament last year.These four key labour reform bills,which are consolidated from over 29 labour laws,are aimed to simplify e
199、xisting labour laws,accelerate labour reform,improve the ease of doing business and attract foreign investment to the country.Major legislative changes covered in the three newly approved bills include but not limited to:1)Companies with up to 300 workers will be allowed to perform closures,lay-offs
200、 or retrenchments without prior approval of the government,instead of the current threshold of 100 workers;2)The social security net is now INDIA Country&sourcing updates 19 COUNTRY SOURCING REPORT ISSUE 18 November 2020 INDIA Country&sourcing updates extended to cover all classes of workers across
201、the board,including migrant workers,unorganised workers,platform workers(hired by app-based firms)and gig workers(such as delivery personnel employed in the logistics sector,uber drivers,etc.);3)Daily work hour limit is now fixed at a maximum of 8 hours per day;4)Unions in all industries will now ha
202、ve to give 60 days strike notice,which means flash strikes are now outlawed;5)Workers on fixed-term employment will now receive the same benefits as regular workers.These changes in labour codes are expected to bring in more flexibility for small and medium-sized factories and encourage them to expa
203、nd the scale of production and hire more formal workers.Meanwhile,the new provisions and benefits for migrant workers will lead to higher manpower costs for employers.Concerns have arisen among brands over newly proposed changes to state labour laws that may infringe labour rights.To curb the impact
204、s of the COVID-19 mandated lockdown,some states in India have adopted legislative proposals to significantly relax or suspend labour protections.For example,several states,including Odisha,Madhya Pradesh and Gujarat,have increased the working hours to 72 hours a week due to worker shortage amidst th
205、e ongoing pandemic.The State of Uttar Pradesh has promulgated an ordinance to exempt all factories and establishments engaged in manufacturing from complying with a majority of labour laws,except with regard to child labour,for a period of three years.The changes have affected a number of industries
206、,including textiles.However,these changes made by the states have been criticized as they might contribute further to informalisation of the workforce and compromise working conditions.Politics&geopolitics The ChinaIndia relations have deteriorated rapidly due to military standoff along the ChinaInd
207、ia borders and Indias subsequent economic sanctions against China,including boycotting Chinese products,banning the usage of Chinese apps in India,and cancelling and placing additional scrutiny on certain contracts with Chinese firms.India,Japan and Australia have begun discussions on launching a tr
208、ilateral Supply Chain Resilience Initiative(SCRI)in the Indo-Pacific region to reduce dependency on China.The initiative,first proposed by Japan,is now taking shape.FTAs,trade preferences&facilitation The US and India are reportedly close to reaching a limited“quick trade deal”that may include 50-10
209、0 goods and services,before moving to a broad-based FTA in the long term.The US indicated earlier that the initial trade deal could also include restoration of Indias eligibility for trade preferences under the Generalised System of Preferences(GSP)in exchange for certain market access commitments b
210、y India.The EU and India held the 15th EUIndia Summit in virtual format on 15 July.The leaders agreed to establish a regular high-level dialogue at ministerial level aiming at addressing long-standing barriers that have come in the way of reaching bilateral trade and investment agreements.However,no
211、 timeline was set at the summit on when to restart the long-stalled trade talks.Major sticking points in the EUIndia trade and investment negotiations have been over tariffs on automobiles,wines and spirits and the restrictions on free movement of professionals.Moreover,India previously suggested a
212、limited trade pact with the EU before concluding a broad-based FTA,while the EU insisted on a full-fledged trade agreement with tariff reduction covering 90%of the goods traded.20 COUNTRY SOURCING REPORT ISSUE 18 November 2020 INDIA Country&sourcing updates Indian Prime Minister Narendra Modi announ
213、ced his countrys decision to pull out of the Regional Comprehensive Economic Partnership(RCEP)last November,citing negotiations on the RCEP failed to address Indias“outstanding issues and concerns”.The remaining 15 participating nations are committed to signing the deal in November this year,while w
214、hether India will stay on as a member of the framework remains uncertain.In India,there is strong and widespread opposition against the countrys joining the RCEP.New Delhi feared that its domestic industries,particularly in key employment sectors such as agriculture and textiles,would be hit hard if
215、 the country was flooded with cheap Chinese goods.In the 2018-19 fiscal year(April 2018March 2019),India had trade deficits with 11 of the 15 other RCEP members,many of which were sizable,according to data from Indias Department of Commerce.China accounted for about 50%of Indias total trade deficits
216、 with RCEP countries.21 COUNTRY SOURCING REPORT ISSUE 18 November 2020 INDIA Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quarterly GDP(real yoy growth%)-23.9(1Q20)Index of industrial production(yoy growth%)-57.3-33.4-15.8-10.8-8.0 Manufacturing PMI(IHS Markit)27.4 30.8 47.2 46.0 52.
217、0 56.8 Wholesale price index(yoy growth%)-1.6-3.4-1.8-0.3 0.2 1.3 Consumer price index(yoy growth%)*6.2 6.7 6.7 7.3 Exports(yoy growth%)-60.6-35.7-12.5-9.9-12.7 6.0 Exports(US$mn)10,270.9 19,181.3 21,911.9 23,642.4 22,701.2 27,584.3 Of which:-Knitwear(US$mn)57.7 248.2 401.0 572.5 609.8 651.2 -Woven
218、garments(US$mn)69.1 268.8 403.1 492.9 475.2 541.5 -Footwear(US$mn)15.2 63.2 139.7 202.1 206.3 197.7 -Furniture(US$mn)8.5 59.8 117.9 170.5 168.5 196.2 Imports(yoy growth%)-59.7-52.4-48.7-29.6-26.0-19.6 Imports(US$mn)17,080.9 22,202.1 21,068.8 28,468.7 29,473.4 30,308.0 Financial year in India starts
219、in April.*Due to unavailability of data for several sub-groups during nationwide lockdown,the general consumer price index was not released for the months of April and May.Source:Ministry of Statistics and Programme Implementation,Ministry of Commerce and Industry,IHS Markit PMI t EXCHANGE RATES Sou
220、rce:Bloomberg 72.073.074.075.076.077.078.0USD:INR spot rate(AprilSeptember 2020)22 COUNTRY SOURCING REPORT ISSUE 18 November 2020 INDONESIACountry&sourcing updates Macroeconomic trends Indonesias GDP contracted by 5.3%yoy in thesecond quarter,the first time since 1999 that theeconomy saw a negative
221、quarterly growth,aslockdown measures to curb the COVID-19 pandemicdealt a blow to the nations economy.Compared tothe first quarter,the economy shrank by 4.2%.The World Bank,the International MonetaryFund and the Asian Development Bank forecastthe Indonesian economy to contract by 0%,0.3%and 1%respec
222、tively in the full year of2020.Indonesias exports reached US$13.70 billion inJuly,dropped by 10.1%yoy but jumped by 14.1%mom,posting positive mom growth for the secondconsecutive month.However,exports in Augustdecreased by 4.6%mom to US$13.07 billion.Cumulatively,exports in the first eight months of
223、2020 reached US$103.16 billion,down by 6.5%yoy.Exports of garments and textile goods in theeight-month period contracted 20%yoy toUS$6.12 billion.Garments and textiles remainIndonesias fifth largest export commodity,which accounted for 6%of the total exports in the firsteight months of 2020.Imports
224、plunged by 32.6%yoy to US$10.46 billionin July,2.8%lower than the June,as domesticdemand for consumption and raw materials remainsubdued amid the COVID-19 pandemic.In August,imports reached US$10.74 billion,up by 2.7%mombut down by 24.2%yoy.IHS Markits Manufacturing PurchasingManagers Index(PMI)for
225、Indonesia fell from 50.8in August to 47.2 in September,which was the firstdecline in the index since April.In April,when theCOVID-19 containment measures forced factories toshut,the index reading plunged to 27.5,posting arecord low in the surveys nine-year history and thesteepest drop recorded in As
226、ia.The re-implementation of the large-scale socialrestrictions(PSBB)policy in mid-September amid the recurring virus infections had an adverse impact on manufacturing activities.Indonesias inflation decelerated to 1.32%yoy in August,falling below Bank Indonesias 2020 inflation target of 2%4%and the
227、lowest inflation in two decades,as the COVID-19 crisis continued to hit the economy hard and weigh on consumer spending.In September,the inflation rate slightly rose to 1.42%yoy.Among all,price of food,beverages and cigarettes registered the highest growth at 1.78%yoy.The Indonesian rupiah plunged t
228、o 16,625 against the US dollar on 24 March,the currencys weakest level since the 1998 Asian Financial Crisis,as investors sold off Indonesian assets amid pessimism over the impact of the COVID-19 pandemic.By early October,the rupiah has depreciated by 5.7%since the beginning of the year,slowly reduc
229、ing its loss from nearly 20%in March and April.Policies®ulations Domestically,the Indonesian governmentannounced several rounds of stimulus packages inthe first half of 2020.For instance,some stimulus foremployees are as follows:The government exempted income tax for sixmonths(from April to Septe
230、mber 2020)forworkers in the manufacturing sector with anannual income not exceeding 200 million rupiah(US$13,793).The government offered a monthly cashassistance of 600,000 rupiah(US$41)for fourmonths(from September to December 2020)toprivate employees who receive a monthlyincome below five million
231、rupiah(US$344).However,stimulus spending faced delays due to administrative challenges.Only 34.1%of thepackages had been spent by mid-September.23 COUNTRY SOURCING REPORT ISSUE 18 November 2020 The Indonesian government submitted the Omnibus Bill on Taxation and the Omnibus Bill on Job Creation to t
232、he parliament on 28 January and 12 February,respectively,to officially start deliberations.The Omnibus Bill on Taxation is expected to simplify tax regulations and boost investment in Indonesia.The business community in Indonesia generally welcome the bills as the reforms are expected to cut regulat
233、ory red tape.However,the Omnibus Bill on Job Creation was met with strong resistance because it includes reforms that may undermine labour rights,such as the use of contract labour,the abolition of city minimum wage and the elimination of severance pay.The confederation of Indonesian Trade Unions,th
234、e National Welfare Movement and 32 other trade union federations agreed to run a national strike on 6-8 October.Right after the Indonesian Parliament passed the bills on 5 October,some labour unions started demonstrations on the same day.Organizers claimed protests were held in over 60 locations acr
235、oss the country with an estimated one million people joining every day during 6-8 October.To keep the real sector afloat amid the COVID-19 pandemic that disrupted business activity and global supply chains,the Indonesian government rolled out a series of measures to ease trade restrictions.Such meas
236、ures include reducing the number of export restrictions,omitting the requirement to provide a health certificate and export licences(“VLegal Documents”)unless required by the importing countries.Industry&sourcing developments The number of workers in the textile and textile products industry dropped
237、 by 50%yoy so far in 2020,according to the Indonesian Fiber and Filament Producers Association.Due to the COVID-19 outbreak,many companies lay off or furlough their staff.The textile industry workforce in 2019 reached 4.5 million,according to the Central Statistics Agency.Indonesia-based viscose pro
238、ducer Asia Pacific Rayon opened what it claimed to be Indonesias largest integrated viscose rayon facility in February,a move that will help the countrys garment industry reduce its dependency on imported textiles,particularly cotton.The US$1.1 billion facility has an annual production capacity of 2
239、40,000 tonnes.It is located in the same production complex as the pulp manufacturer APRIL Group in Riau province,Sumatra,allowing raw materials from the latter to feed directly to the production of viscose rayon.Amid the pandemic,South Korea revealed a number of investment plans to strengthen busine
240、ss ties with Indonesia.For instance,PT Sejin Fashion Indonesia,a garment factory under South Korean footwear manufacturer Parkland Co.,Ltd.,plans to relocate its production base from China to Indonesia.With an investment of 1.2 trillion rupiah(US$80.8 million),the move will provide 4,000 new jobs fo
241、r Indonesians.According to the Investment Coordinating Board,143 foreign companies from the US,Taiwan,South Korea,Hong Kong,Japan and the Chinese Mainland plan to relocate their investments from the Chinese Mainland to Indonesia.The potential investment value will be US$830 million,and the plans may
242、 generate 300,000 new jobs.FTAs,trade preferences&facilitation Indonesia and Australia ratified the IndonesiaAustralia Comprehensive Economic Partnership Agreement(IACEPA)in February 2020 and the IACEPA entered into force on 5 July 2020.The IACEPA was signed between the two countries in March last y
243、ear.The trade deal eliminates tariffs on all INDONESIA Country&sourcing updates 24 COUNTRY SOURCING REPORT ISSUE 18 November 2020 Indonesian exports to Australia,while 99%of Australian goods(by value)will enter Indonesia duty-free or under significantly improved preferential arrangements.Indonesia a
244、nd South Korea signed a joint declaration on the completion of the IndonesiaKorea Comprehensive Economic Partnership Agreement(IKCEPA)negotiations in November last year in Busan,South Korea.Negotiations on the IKCEPA commenced in 2012 but came to a halt in 2014,before being reactivated in February 2
245、019.Under the agreement,South Korea will eliminate tariffs on 95.5%of Indonesian imports,while Indonesia will eliminate tariffs on 93%of South Korean imports.Considering the South KoreaASEAN FTA eliminated tariffs on a respective 90.2%and 80.1%of imports,the IKCEPA marks a significant increase in ta
246、riff-free trade.The IKCEPA will also improve flows of services,people and investment and facilitate economic cooperation in various fields.Infrastructure&environmental sustainability Indonesia plans to build one of its largest industrial parks on the north coast of Java island in a renewed drive to
247、attract manufacturers relocating out of China.The proposed industrial park,located in Brebes,Central Java,is 270 km east of Jakarta and already has a road link to the capital and two nearby ports.About 4,000-hectare large,the proposed park is estimated to cost 3.8 trillion rupiah in the first phase
248、of construction.INDONESIA Country&sourcing updates 25 COUNTRY SOURCING REPORT ISSUE 18 November 2020 INDONESIA Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quarterly GDP(real yoy growth%)-5.3(2Q20)Manufacturing PMI(IHS Markit)27.5 28.6 39.1 46.9 50.8 47.2 Real retail sales index(yoy
249、growth%)-16.9-20.6-17.1-12.3-9.2-7.3 Consumer price index(yoy growth%)2.7 2.2 2.0 1.5 1.3 1.4 Exports(yoy growth%)-6.9-29.1 2.1-10.1-8.2-0.5 Exports(US$mn)12,163.1 10,454.3 12,009.3 13,702.7 13,095.8 14,008.4 Of which:-Textile and textile products(US$mn)619.4 590.8 823.0 970.4 914.6 -Footwear(US$mn)
250、382.5 313.4 386.2 372.7 308.8 -Furniture(US$mn)123.9 105.6 135.6 159.6 152.6 -Sports requisites(US$mn)35.2 28.6 42.3 47.0 44.6 Imports(yoy growth%)-18.6-42.2-6.4-32.6-24.2-18.9 Imports(US$mn)12,535.2 8,438.6 10,760.3 10,464.3 10,741.8 11,570.9 Source:Statistics Indonesia,Bank Indonesia,IHS Markit PM
251、I reports EXCHANGE RATES Source:Bank Indonesia 13,50014,00014,50015,00015,50016,00016,50017,000USD:IDR buy rate(AprilSeptember 2020)26 COUNTRY SOURCING REPORT ISSUE 18 November 2020 PAKISTAN Country&sourcing updates Macroeconomic trends Exports of Pakistan fell by 14.8%yoy to US$1.58 billion in Augu
252、st.In the JulyAugust period,the first two months of the 202021 fiscal year(July 2020June 2021),exports amounted to US$3.58 billion,down by 4.3%yoy.In rupee terms,exports increased by a marginal 1.0%yoy in the period.During the JulyAugust period,exports of textiles and garments edged down by 1.0%yoy
253、to US$2.28 billion.In rupee terms,they expanded by 4.5%yoy to 381.20 billion rupees.Within the textiles and garments group,exports of knitwear,woven garments and bed linen recorded positive growth of 4.4%yoy,2.1%yoy,and 5.9%yoy,respectively,in US dollar terms in the two-month period.Production of la
254、rge-scale manufacturing industries grew by 5.0%yoy in July,the first expansion in the past seven months.On a month-on-month basis,production of large-scale manufacturing industries posted the third consecutive growth of 9.5%in July,according to the Pakistan Bureau of Statistics(PBS).The latest produ
255、ction index has indicated that the countrys manufacturing sector is on the path of recovery.Inflation accelerated to 9.0%yoy in September from 8.2%yoy in August,driven mainly by sharp price increases in food and non-alcoholic beverages.Foreign direct investment(FDI)in Pakistan amounted to US$266.7 m
256、illion in the JulyAugust period,the first two months of the 202021 fiscal year,up sharply by 39.9%compared to the same period of the previous fiscal year,according to data released by the State Bank of Pakistan(SBP).By source of investment,Norway became the largest foreign investor in Pakistan in th
257、e two-month period,followed by the Netherlands and Malta.By industry,financial services accounted for over one-third of total FDI inflows in the period,followed by communications and electrical machinery.The Pakistani rupee closed at an all-time low of 168.5 against the US dollar on 26 August,a year
258、-to-date depreciation of 8.1%,according to spot exchange rates provided by Bloomberg.Low supply of US dollars in the local market and high loan repayment by the government have kept the rupee under pressure against the greenback.Since then,the rupee has started to stabilise and closed at 163.81 agai
259、nst the US dollar on 12 October.Policies®ulations To mitigate the impacts of the COVID-19 outbreak,the federal government announced a relief package worth 1.2 trillion Pakistani rupees(US$7.5 billion)in late March.The package consists of a wide range of fiscal measures,including tax breaks,cash t
260、ransfers,tax refunds,and subsidies on electricity bill and fuel prices.For small and medium-sized enterprises(SMEs),financial support of 100 billion rupees is provided in the form of relief on electricity bill payments and bank loans.The government has also announced a risk-sharing mechanism to supp
261、ort concessional bank loans to SMEs to prevent layoffs during the lockdown period.In addition,the government has accelerated tax refunds and released cash subsidies to export-oriented manufacturers to improve their liquidity position.To fuel new investment in modernising or expanding existing produc
262、tion facilities,the State Bank of Pakistan has announced a subsidised Temporary Economic Relief Facility,under which subsidised loans will be provided to eligible new investment projects.The Commerce Ministry announced in late June that the countrys new Strategic Trade Policy Framework 2020-25(STPF)
263、was finalised.One of 27 COUNTRY SOURCING REPORT ISSUE 18 November 2020 the objectives of the proposed STPF is to diversify exports from traditional sectors textiles,sports goods,surgical products,carpets and leather to emerging sectors such as engineering,pharmaceuticals,auto parts,processed food an
264、d beverages,footwear,gem and jewellery,chemicals,meat and poultry,seafood,and marble and granite.Under the proposed STPF,the government has targeted to boost the countrys exports to US$26 billion in the current fiscal year from US$21.4 billion in the previous fiscal year,and further to US$46 billion
265、 in the 2024-25 fiscal year.The Economic Coordination Committee of the Cabinet formally approved in late September the withdrawal of customs duties,regulatory duties and additional customs duties on more than 163 tariff lines of textile items,including mainly fibres,yarn and fabrics of nylon,viscose
266、,acrylic,rayon,silk,wool and vegetable-based fibres like hemp,etc.Overall duties withdrawn range from 5%to 27%,depending on specific items.By reducing duties on the import of raw materials and intermediates,the move is expected to promote the manufacturing of manmade fibre textile products in the co
267、untry,improve their competitiveness in the global market and encourage Pakistani manufacturers to expand their product range and increase value addition.Industry&sourcing developments Demand for home textile products has surged from both the US and the EU markets since June,thanks to pent-up demand
268、and low levels of inventories with most retailers.Most of the orders cancelled due to the pandemic have been reinstated and there is a strong demand for Fall/Holiday products for a short lead time.Meanwhile,the sudden surge in demand has led to an increase in local prices of raw materials by about 1
269、0%20%.The apparel sector is hurt by a slowdown in demand,and there is still somewhat limited capacity utilisation.However,demand is coming back slowly in the denim industry.The Withhold Release Orders issued by the US Department of Homeland Security on some business entities allegedly related to for
270、ced labour in the Xinjiang region in China has raised concerns about the future stability of the textile supply chain in China.This is prompting some retailers to seek alternative sourcing bases for cotton-based products outside of China,among which Pakistan has emerged as a viable option.Currently,
271、Pakistan is receiving a lot of price inquiries from buyers for sourcing and developing products which have been sourced from China.FTAs,trade preferences&facilitation The International Trade Committee of the EU Parliament has extended the Generalised Scheme of Preferences Plus(GSP+)status to Pakista
272、n till 2022,enabling the countrys exports to continue to enjoy duty-free access to the EU market for around two-thirds of EU tariff lines.Pakistan has enjoyed its eligibility for GSP+since January 2014.According to the third biennial report on GSP covering the period 201819 published by the European
273、 Commission on 10 February,Pakistan was the No.1 beneficiary among the nine countries eligible for GSP+scheme in 2018,with textiles and garments representing over 70%of the 5.89 billion euros worth of EUs GSP+preferential imports from Pakistan.The second phase of the ChinaPakistan Free Trade Agreeme
274、nt(CPFTA)became effective last December,further liberalising merchandise trade between the two countries.Under the second phase of CPFTA,both countries will liberalise 75%of tariff lines for each other over a period of ten years by China and 15 years by Pakistan.Moreover,China will immediately elimi
275、nate tariffs on 313 top priority PAKISTAN Country&sourcing updates 28 COUNTRY SOURCING REPORT ISSUE 18 November 2020 tariff lines of Pakistans export interests,including agricultural products,textiles and garments,and leather goods on top of the 724 products that have already enjoyed duty-free acces
276、s to the China market under the original FTA.Infrastructure&environmental sustainability The Chinese and Pakistani leaders have recently shown mutual commitment in revitalizing the ChinaPakistan Economic Corridor(CPEC)programme,following a series of setbacks over the past two years and disruptions o
277、f the COVID-19 pandemic.The CPEC programme,which was launched in 2013,has entered its second phase with a focus on industrialisation,agriculture and socio-economic development.Several notable projects under the CPEC have been signed or approved recently,including two major hydropower generation proj
278、ects worth a total US$3.9 billion and a deal to upgrade the 1,872-kilometre-long railway track spanning from Peshawar to Karachi,a big milestone for the second phase of the CPEC.In July,the Government of Sindh allocated 1,530 acres of land to establish the Dhabeji Special Economic Zone(SEZ),one of t
279、he nine SEZs scheduled to be established under CPEC to promote industrialization in the country.PAKISTAN Country&sourcing updates 29 COUNTRY SOURCING REPORT ISSUE 18 November 2020 PAKISTAN Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quantum index of large-scale manufacturing(yoy gro
280、wth%)-41.6-25.5-5.1 6.1 1.2 Consumer price index(yoy growth%)8.5 8.2 8.6 9.3 8.2 9.0 Exports(yoy growth%)-54.2-33.4-6.1 6.1-14.8 7.0 Exports(US$mn)957.3 1,396.4 1,598.9 2,000.8 1,583.7 1,889.2 Of which:-Garments(US$mn)153.7 316.5 406.4 589.9 451.6 520.7 -Bed linen(US$mn)76.8 146.1 166.3 243.2 181.0
281、227.3 -Sporting goods(US$mn)7.4 13.8 18.5 26.2 19.2 21.4 Imports(yoy growth%)-32.0-42.9-14.6-0.7-10.7 14.8 Imports(US$mn)3,204.1 2,862.8 3,718.9 3,673.9 3,315.7 4,321.4 Balance of trade(US$mn)-2,246.9-1,466.4-2,120.0-1,673.1-1,732.0-2,432.2 Source:Pakistan Bureau of Statistics EXCHANGE RATES Source:
282、State Bank of Pakistan 150.0155.0160.0165.0170.0175.0USD:PKR weighted average customer buy rate(AprilSeptember 2020)30 COUNTRY SOURCING REPORT ISSUE 18 November 2020 PHILIPPINES Country&sourcing updates Macroeconomic trends Philippines merchandise exports contracted by 18.6%yoy to US$5.13 billion in
283、 August,a deterioration from the 9.1%yoy decline recorded in July.This was mainly attributed to the re-implementation of modified enhanced community quarantine in Metro Manila and surrounding provinces in the month.In the first eight months of 2020,the countrys merchandise exports shrank by 16.6%yoy
284、 to US$39.29 billion.During the eight-month period,exports of electronics,apparel and accessories,woodcrafts and furniture,and travel goods and handbags registered year-on-year declines of 14.0%,37.8%,11.9%and 34.4%,respectively.Real GDP shrank by 16.5%yoy in the second quarter of 2020,the deepest c
285、ontraction in the data series which started in 1981.Household consumption fell by 15.5%yoy and exports declined by 37.0%yoy in the second quarter,while government expenditure rose by 22.1%yoy.The economic recession was mainly attributed to the countrys tough and prolonged lockdown to curb the spread
286、 of the COVID-19.It is expected that the Philippine economy will still take time to heal,as uncertainty is heightened surrounding the countrys effectiveness in containing the COVID-19.Confirmed cases in the Philippines rose exponentially after lockdown measures were eased in June,making the country
287、the worst hit by the COVID-19 in Southeast Asia.The IHS Markit Philippines Manufacturing Purchasing Managers Index(PMI)rose to a seven-month high of 50.1 in September,up from 47.3 in August.It was the first time since February that the PMI reading rose above the neutral 50.0 threshold,showing early
288、signs of stabilisation of the manufacturing sector.Due to the partial reopening of the economy,new business expanded for the first time since February,albeit marginally,while production volumes fell only slightly in the month.Inflation moderated to a four-month low of 2.3%yoy in September,reflecting
289、 lacklustre demand for goods and services amid lockdowns to curb the COVID-19.Average inflation in the first nine months of this year stood at 2.5%,well within the governments 2%4%target range for the years 20202022.Foreign direct investment(FDI)net inflows into the country reached US$3.00 billion i
290、n the first half of 2020,down by 18.3%compared to the same period last year,due to uncertainties caused by the COVID-19 pandemic.In the period,the bulk of equity capital placements,which accounted for 30%of all FDI net inflows,originated primarily from Japan,the Netherlands,Singapore and the US,and
291、were mainly invested in the manufacturing,financial and insurance,real estate,and administrative and support service industries.The Philippine peso has continued to strengthen since June this year,closing at 48.322 against the US dollar on 9 October,the strongest position in four years,according to
292、spot exchange rates provided by Bloomberg.It represented a year-to-date appreciation of 4.8%against the greenback,outperforming other major Asian currencies.High foreign reserves and a strong balance-of-payment(BOP)position,resulting from slower imports and lower outward payments,have contributed to
293、 the pesos resilience at an unprecedented time of crisis.A strong peso,however,could erode the price competitiveness of the countrys exports amid sluggish external demand and lower the value of dollar remittances by overseas Filipino workers,a key driver for domestic consumption and investment.31 CO
294、UNTRY SOURCING REPORT ISSUE 18 November 2020 Policies®ulations The Philippine government has launched a four-pillar socioeconomic strategy against the COVID-19 pandemic,which includes emergency support to vulnerable groups and individuals,expanded resources for frontline medical workers,fiscal an
295、d monetary measures to keep the economy afloat,as well as an economic recovery plan to create jobs and sustain growth.As of 19 May,the total budget of the four-pillar strategy amounted to 1.7 trillion pesos or 9.1%of the countrys GDP in 2019.The strategy includes a direct financial assistance progra
296、mme for 18 million low-income households,wage subsidies for employees in small businesses,credit guarantee for affected small businesses,and a grace period for public and private institutions affected by lockdown measures on residential and commercial rent and loan payments.Besides,as of early Octob
297、er,the central bank so far had reduced the policy rate four times this year by a cumulative 175 basis points to 2.25%to boost liquidity in the banking system.The Duterte Administration is pushing for the passage of the Corporate Recovery and Tax Incentives for Enterprises(CREATE)Act to cut corporate
298、 income taxes immediately to 25%from the current 30%,and further by 1%every year from 2023 until 2027.The bill will also place a“sunset clause”on“unlimited”incentives to ensure that the government can profit from industries that have been enjoying tax breaks and tax holidays for decades.The governme
299、nt hopes this will benefit more than 90,000 small businesses in the country as well as attract high-value foreign investments.The Act was already approved by the House of Representatives last September but is still undergoing plenary debates at the Senate.The Philippines Department of Trade and Indu
300、stry(DTI)is finalising a ten-year roadmap(20202029)to revive the countrys textile and garment sector.The roadmap envisages the country to become one of the worlds top ten garment exporting countries in ten years time.The roadmap seeks to strengthen links between the government and the private sector
301、,establish a dedicated trade office,and put an end to the proliferation of second-hand clothing imports from North America and Europe that lead to unfair competition for local manufacturers.Other strategies featured in the roadmap include providing capital and land to increase textile and garment pr
302、oduction,promoting the purchase of new equipment,reducing value-added taxes and power rates,tackling infrastructure and logistics bottlenecks,and establishing vertically integrated supply chains.Industry&sourcing developments Utilisation of production capacity in the garment industry was reduced to
303、just 40%in the third quarter of the year due to a lack of orders and over 30%of the garment workers in the country could be placed on furlough until the end of the year,according to the Confederation of Wearable Exporters of the Philippines.Infrastructure&environmental sustainability The Duterte Adm
304、inistration approved a total of 12 new special economic zones(ecozones)worth 6.4 billion pesos(US$130 million)during the first half of this year.The ecozones,which will provide tax holidays and other fiscal incentives to eligible investors,are expected to become drivers for the Philippines economic
305、recovery,and to help create jobs for the locals and complete the supply chains in the country.The acceleration of ecozone construction is also part of the governments efforts to decentralize economic and business activities from traditional PHILIPPINES Country&sourcing updates 32 COUNTRY SOURCING RE
306、PORT ISSUE 18 November 2020 economic centres.The Administrative Order No.18 issued last year imposes a moratorium on building new ecozones in Metro Manila,where the bulk of existing ones operate,and promotes the development of ecozones in the countryside.PHILIPPINES Country&sourcing updates 33 COUNT
307、RY SOURCING REPORT ISSUE 18 November 2020 PHILIPPINES Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quarterly GDP(real yoy growth%)-16.5(2Q20)Value of production index,manufacturing(yoy growth%)-40.1-30.1-19.2-17.2-13.8 Volume of production index,manufacturing(yoy growth%)-37.6-27.4-1
308、5.9-14.6-9.9 Manufacturing PMI(IHS Markit)31.6 40.1 49.7 48.4 47.3 50.1 Producer price index for total manufacturing(yoy growth%)-4.0-3.6-3.9-3.0-4.4 Consumer price index(yoy growth%)2.2 2.1 2.5 2.7 2.4 2.3 Exports(yoy growth%)-49.9-26.9-12.5-9.1-18.6 Exports(US$mn)2,834.0 4,533.8 5,381.1 5,681.0 5,
309、128.2 Of which:-Woodcrafts and furniture(US$mn)11.5 25.0 42.6 49.4 50.0 -Garments and accessories(US$mn)7.0 18.8 64.5 77.0 63.1 -Travel goods and handbags(US$mn)5.4 4.8 25.9 55.4 36.2 Imports(yoy growth%)-65.3-40.6-23.1-23.8-22.6 Imports(US$mn)3,282.7 5,855.0 6,756.5 7,540.6 7,204.1 Source:Philippin
310、e Statistics Authority,IHS Markit PMI reports EXCHANGE RATES Source:Bangko Sentral ng Pilipinas(BSP)47.548.048.549.049.550.050.551.051.5USD:PHP BSP reference rate(AprilSeptember 2020)34 COUNTRY SOURCING REPORT ISSUE 18 November 2020 THAILAND Country&sourcing updates Macroeconomic trends Exports amou
311、nted to US$20.21 billion in August,a 7.9%drop compared to the same month last year.The contraction was softer than the 23.2%yoy and 11.4%yoy export declines recorded in June and July,respectively,indicating that the countrys exports are likely to bottom out.In the first eight months of 2020,exports
312、declined by 7.7%yoy to US$153.49 billion.The National Economic and Social Development Council(NESDC)forecast in August that the countrys exports will decline by 10%this year,worse than the previous projection of an 8%contraction.Real GDP shrank by 12.2%yoy in the AprilJune quarter,the countrys worst
313、 contraction since the Asian Financial Crisis in 1998.Following a revised contraction of 2.0%yoy in the first quarter,Thailands GDP shrank by 6.9%yoy in the first half of 2020.The COVID-19 pandemic has dealt a heavy blow to the Thai economy,which relies heavily on exports and tourism.The IHS Markit
314、Thailand Manufacturing Purchasing Managers Index(PMI)edged up to 49.9 in September from 49.7 in August,the highest level since January this year,indicating the stabilisation of the manufacturing sector.Driven by stronger domestic demand,new business inflows increased at the fastest rate for nearly a
315、 year,while new export orders continued to contract in the month,albeit at the slowest pace in the current sequence of decline.Consumer price index(CPI)fell 0.7%yoy in September,the seventh consecutive month that recorded a year-on-year drop,mainly attributed to a decline in energy prices.In the fir
316、st nine months of 2020,the countrys inflation stood at-1.0%yoy.Total value of investment applications received by the Thailand Board of Investment(BOI)dropped by 17%yoy to 158.9 billion baht in the first half of this year,while the total number of investment applications filed rose by 7%yoy to 754 p
317、rojects.The lower average investment value of projects reflects the uncertainty facing investors amid the unprecedented COVID-19 crisis.Sectors that received the highest value of investment pledges were electrical appliances and electronics,agriculture and food processing,automotive industry,medical
318、 industry and petrochemical industry.The Thai baht has remained fluctuated since the beginning of this year.Weakening by 9.3%in the first quarter,the currency appreciated by around 7%against the US dollar in the second quarter.It then started to stabilise since July,closing at 30.994 against the US
319、dollar on 9 October and depreciating by 4.2%year to date,based on exchange rates provided by Bloomberg.Policies®ulations The Thai government has so far launched four stimulus packages to counter the effects of the COVID-19 pandemic and the accompanying economic recession.These four stimulus packa
320、ges,amounting to about 14.5%of the countrys GDP,have made Thailand one of the big spenders in the COVID-19 crisis.Measures include financial assistance for affected workers,farmers,and businesses through cash handouts,soft loans,tax relief and debt deferral,lower water and electricity charges and so
321、cial security contributions,as well as extensive support for the local tourism industry.Industry&sourcing developments The impacts of the COVID-19 pandemic on specific manufacturing industries in Thailand are mixed.For example,capacity utilization rates of textiles,wearing apparel and leather and le
322、ather product industries in August were still substantially below pre-COVID-19 levels,35 COUNTRY SOURCING REPORT ISSUE 18 November 2020 according to the Office of the Industrial Economics.The COVID-19 pandemic is hitting Thailands textile and garment industry hard,with potential losses from external
323、 market and domestic market amounting to more than 150 billion baht this year,according to Yuttana Silpsarnvitch,president of the Thai Garment Manufacturers Association.As more than 70%of foreign buyers have cancelled their orders so far,it is estimated that exports of textiles and garments will dec
324、line by 50100 billion baht this year.However,some sectors,such as computers,electronics,and electrical appliance,have proven their resilience against the crisis.These sectors are potentially among the biggest winners from the fallout of the ChinaUS trade war,thanks to the well-developed infrastructu
325、re,skilled workforce,strong manufacturing capabilities and favourable investment policies in Thailand.Politics&geopolitics In the past three months,there have been almost daily student-led anti-government rallies across the country.Protesters reaffirmed their“three core demands”.Some protesters even
326、 called for the reform of the monarchy.Although the protest movement is escalating,protests held so far are relatively peaceful and on a smaller scale compared with previous anti-government demonstrations,which had hundreds of thousands of protesters.Business activities in the country have not been
327、impacted so far.FTAs,trade preferences&facilitation Thailand has missed the chance to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP)this year as it did not submit its application for membership at the annual meeting of CPTPP members held on 5 August.A parliamen
328、tary committee,which is responsible for studying the costs and benefits of joining the CPTPP,did not finalise the study until mid-September.Advocates said joining the CPTPP would boost the countrys economy and offset the impacts of the COVID-19 outbreak,while making industries such as electronics an
329、d agriculture more competitive against regional rivals such as Vietnam and Malaysia.Opponents,however,are concerned that joining the CPTPP might undermine the countrys pharmaceutical and agriculture industries,and that the trade pacts stringent standards in intellectual property might put Thai compa
330、nies at a disadvantage.Meanwhile,Thailand will have low negotiation power as all provisions of the agreement have been formed.THAILAND Country&sourcing updates 36 COUNTRY SOURCING REPORT ISSUE 18 November 2020 THAILAND Macroeconomic data Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Quarterly GDP(real y
331、oy growth%)-12.2(2Q20)Industrial production index(value added weight,not seasonally adjusted,yoy growth%)-18.2-23.8-17.8-12.9-9.3 Manufacturing PMI(IHS Markit)36.8 41.6 43.5 45.9 49.7 49.9 Producer price index(yoy growth%)-4.3-4.8-3.1-2.5-1.3-1.3 Consumer price index(yoy growth%)-3.0-3.4-1.6-1.0-0.5
332、-0.7 Exports(yoy growth%)2.1-22.5-23.2-11.4-7.9-3.9 Exports(US$mn)18,948.2 16,278.4 16,444.3 18,819.5 20,212.4 19,621.3 Of which:-Textiles and apparel(US$mn)390.8 383.0 463.8 470.5 484.6 476.0 -Furniture(US$mn)84.5 90.7 109.4 126.4 136.7 142.1 -Footwear(US$mn)30.1 33.3 41.2 50.2 43.2 34.6 Imports(yo
333、y growth%)-17.2-34.4-18.1-26.4-19.7-9.1 Imports(US$mn)16,485.9 13,583.8 14,833.9 15,476.2 15,863.0 17,391.2 Source:National Economic and Social Development Council,Office of Industrial Economics,Bank of Thailand,Ministry of Commerce,IHS Markit PMI reports EXCHANGE RATES Source:Bank of Thailand 30.030.531.031.532.032.533.033.5USD:THB mid-rate(AprilSeptember 2020)37 COUNTRY SOURCING REPORT ISSUE 18