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Bangladesh’s government has decided to reserve three special economic zones for Indian enterprises. The High Commissioner of Bangladesh informed that by opening country-specific economic zones, the exportable base for foreign investment will broaden.
H E Syed Muazzem Ali, the High Commissioner, speaking at a session hosted by the Southern India Chamber of Commerce and Industry (SICCI) emphasised saying “Bangladesh’s progress in setting up country-specific economic zones is getting affected due to factors such as non-availability of soft loans and cumbersome process to select developers. But the considerable increase in foreign investment in the past year will speed up this initiative.”
The Special Economic Zone will be set up in three locations including Mongla, Bheramara, and Shoronkhola. “By opening country specific economic zones, the exportable base for foreign investment will broaden. Recently, the Indian government has invested five billion USD in Bangladesh for economic and technical development,” Bangladesh’s High Commissioner said.
The Bangladesh government is waiting for clearance to set up a Deputy High Commission in Chennai from the Indian Ministry of External Affairs. “Bangladesh has a strong connection with southern India as many come to undergo treatment and advanced medical procedures, and to seek employment in the IT, automobile and garment sector. A Deputy High Commission will act as a catalyst in such a situation,” said the High Commissioner.
“Nine hundred USD worth ready-made garments have been imported from Bangladesh. There has been a 113 per cent increase in trade between the two countries since July 2017. India also has exported nearly two hundred thousand tons of raw cotton from AP and Telangana to Bangladesh, which is the second largest producer of ready-made garments,” said the President of SICCI, M Ganapathi adding to the fact that in past one year, there has been a sharp increase in terms of general trade between India and Bangladesh.
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Vi?t Nam’s capital earned an estimated US$2.24 billion from exports in the first two months of this year, up 21.3 per cent year-on-year, according the municipal Statistics Office.
Staples posting encouraging export turnover growth included machinery, equipment and parts, textiles and garments, telephones and components.
The domestic sector experienced a positive turnover rise of 14 per cent, accounting for 53.3 per cent of the city’s total export value in two month period, the office said.
The two-month performance was a good signal for the city’s economy in the context of the country witnessing an export turnover reduction of 1.3 per cent in January compared to the same month last year, director of the municipal Department of Industry and Trade Lê H?ng Th?ng told kinhtedothi.vn.
However, Th?ng said it would not be easy for the capital to reach its target of raising export value by between 7.5 per cent and 8 per cent this year.
The director attributed the situation to strong fluctuations in the global financial and monetary markets and a stretched trade war between the US and China.
In order to achieve the export target and facilitate the city’s exporters, Hà N?i would continue to help enterprises access loans, improve administrative reforms and accelerate trade promotions.
At the same time, it would help local firms diversify the design of their products, access new technologies, promote their brands and origin traceability in a move to increase the added value of their products.
The city would also call for investment to develop infrastructure, concentrated industrial zones, clusters, logistics infrastructure and service systems as well as build an information database for business and export activities.
Th?ng also urged local businesses to develop their own trademarks while improving product quality and personnel to meet the strict demands of international markets.
Last year, Hà N?i shipped $14.23 billion worth of goods overseas, a year-on-year increase of 21.6 per cent, the department’s statistics revealed.
The US, Japan and China remained the city’s biggest markets, with values accounting for 16 per cent, 13 per cent and 12 per cent, respectively
Production level, new orders, supplier delivery time, employment level and inventories grew at a slower rate in February 2019.
The Central Bank of Nigeria disclosed this in its Purchasing Managers’ Index Survey Report for the month of February.
It stated that the Manufacturing PMI in the month under review stood at 57.1 index points, indicating expansion in the manufacturing sector for the 23rd consecutive month.
The index grew at a slower rate when compared to the index in the previous month.
It stated, “13 of the 14 subsectors surveyed reported growth in the review month in the following order: petroleum and coal products; electrical equipment; transportation equipment; plastics and rubber products; food, beverage and tobacco products; textile, apparel, leather and footwear; non-metallic mineral products; chemical and pharmaceutical products.
Others were furniture and related products; printing and related support activities; cement; fabricated metal products; and paper products. The primary metal subsector recorded decline in the review period.”
According to the report, the production level index for the manufacturing sector grew for the 24th consecutive month in February 2019.
The index indicated a slower growth in the current month, when compared to its level in the preceding month. Nine of the 14 manufacturing subsectors recorded increased production level, three remained unchanged while two recorded a decline.
At 56.9 points, the new orders index grew for the twenty-third consecutive month, indicating increase in new orders in February 2019.
Twelve subsectors reported growth, one remained unchanged, while one contracted in the review month.
The manufacturing supplier delivery time index stood at 58.2 points in February 2019, indicating slower supplier delivery time.
The index had recorded growth for 21 consecutive months. All 14 subsectors recorded improved suppliers’ delivery time in the review period.
The employment level index for February 2019 stood at 56.3 points, indicating growth in employment level for 22 consecutive months.
Of the 14 subsectors, eight reported increased employment level, five reported unchanged employment level while one reported decreased employment in the reviewed month.
The manufacturing sector inventories index grew for the 23rd consecutive month in February 2019.
At 56.2 points, the index grew at a slower rate when compared to its level in January 2019.
Nine of the 14 subsectors recorded growth, one recorded unchanged, while four reported declined raw material inventories in the review month.
Business activity, new orders, employment level and inventories grew at a slower rate in February 2019
The composite PMI for the non- manufacturing sector stood at 58.4 points in February 2019, indicating expansion in the non-manufacturing PMI for the 22nd consecutive month.
The index grew at a slower rate when compared to that in January 2019.
All 17 surveyed subsectors recorded growth in the following order: management of companies; arts, entertainment and recreation; utilities; information and communication; finance and insurance; repair, maintenance/washing of motor vehicles; educational services; real estate rental and leasing; wholesale/retail trade; transportation and warehousing; health care and social assistance; electricity, gas, steam and air conditioning supply; agriculture; accommodation and food services; construction; professional, scientific, and technical services; and water supply, sewage and waste management.
At 59.7 points, the business activity index grew for the 23rd consecutive month, indicating expansion in non-manufacturing business activity in February 2019.
The index grew at a slower rate when compared to its level in the previous month.
15 subsectors recorded growth in business activity, one remained unchanged while one recorded decline in the review month.
FAISALABAD: The Spanish ambassador will visit Faisalabad very soon to evaluate the opportunities in the wake of CPEC. Zia Alumdar Hussain, president Faisalabad Chamber of Commerce and Industry (FCCI), had a meeting with Spanish Ambassador Manuel Duran and discussed various issues regarding the bilateral trade.
Spanish Ambassador Manuel Duran acknowledged the importance of Faisalabad in the economy of Pakistan, saying it could not be ignored because of its excellence in the textile field. “I shall personally visit Faisalabad to interact with the business community. Spain is ready to support Pakistan by transferring the latest technology for the up-gradation of its existing industrial units,” he added.
The FCCI president said that predominantly Pakistan was an agro-industrial country. He said that despite its production edge, Pakistan was still exporting raw or semi-finished goods to other countries and it needs the latest technology to produce the fully-finished products to cater to the needs of developed countries. He also invited the Spanish ambassador to visit the FCCI to personally evaluate its export potential in addition to interacting with the local businessmen.
He also floated a proposal of sending a trade delegation to Spain so that direct relations could be cultivated between the business communities of the two countries. Later, Jawad Asghar presented the FCCI shield to the Spanish envoy.
It will have all basic amenities, uninterrupted power supply: Minister
The district’s first integrated apparel manufacturing park called “Gobi Apparel Park” that is to come up at Rs. 106.58 crore at Kolapalur village at Gobichettipalayam is expected to provide jobs to 7,000 persons.
Under funding from the Ministry of Textiles of the Government of India and under the Scheme for Integrated Textile Parks (SITP) of the State Government, the park is being established that will have common facilities and other infrastructure to house 12 companies.
While the foundation was laid for establishing 11 companies, one company was inaugurated by Minister for School Education, Youth and Sports Development K.A. Sengottaiyan and Minister for Environment K.C. Karuppannan in the presence of Collector C. Kathiravan, Tirupur MP V. Sathyabama, MLAs and other officials here on Monday.
Mr. Sengottaiyan said the park would come up on 80 acre and provide jobs directly to 7,000 people.
The park would be provided with all the basic amenities, effluent and sewage treatment plants, uninterrupted power supply and wider roads. Also, quality testing centre, skill development centre, and modern accommodation for 3,000 works would also be established.
The Minister said that children’s home, sports ground, old age home, community hall and other facilities would also be established in the park. He said that 2,500 people would be trained in the park every year and they could secure jobs anywhere in the country.
Mr. Karuppannan said the other 11 companies would be established soon and called upon entrepreneurs to utilise the facilities in the park.
Para 3.06 (i) of FTP deals with exports of goods through courier or the foreign post office, using e-commerce
We are a manufacturer-exporter of engineering goods (automobile parts). We make regular exports through couriers. Para 3.06 (i) of FTP restricts MEIS benefits to only Appendix-3C items for exports through couriers. Our item finds no mention in Appendix-3C. We are not sure whether our products, exported through courier are eligible for MEIS. Please clarify.
Para 3.06 (i) of FTP deals with exports of goods through courier or the foreign post office, using e-commerce. As per Para 9.17 (a) of FTP, “‘e-commerce’ for the purpose of Merchandise Exports from India Scheme (MEIS) under Foreign Trade Policy (2015-20) (FTP) shall mean the export of goods hosted on a website accessible through the internet to a purchaser. While the dispatch of goods shall be made through courier or postal mode, as specified under the MEIS, the payment for goods purchased on e-commerce platform shall be done through international credit /debit cards and as per the Reserve Bank of India Circular (RBI/2015-16/185) [A.P. ( DIR Series) Circular No. 16 dated September 24, 2015.] as amended from time to time.” Since your exports are not through e-commerce platform, you are eligible for MEIS under the general provisions for MEIS. You must, however, ask the courier to file a shipping bill in your name indicating your intent to claim MEIS.
We are merchant exporters having an export order in our name from a buyer abroad. Can we ask our supporting manufacturer to export the goods and file the shipping bill?
As per Para 2.42 of FTP, “Third party exports (except Deemed Export) as defined in Chapter 9 shall be allowed under FTP. As per Para 9.60 of FTP, “‘Third-party exports’ means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, export documents such as shipping bills shall indicate names of both manufacturer exporter/manufacturer and third party exporter(s). Bank Realisation Certificate (BRC), Self Declaration Form (SDF), export order and invoice should be in the name of third party exporter.” So, the manufacturer can file the shipping bill on behalf of the merchant exporter.
Can an Indian resident (buyer) place an export order with another Indian resident (seller) for shipping goods to a consignee abroad?
No. As per Regulation 8 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, “Unless otherwise authorised by the Reserve Bank, the amount representing the full export value of the goods exported shall be paid through an authorised dealer in the manner specified in the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 as amended from time to time.” This is reiterated at Para A3 of RBI Master Direction no. 16/2015-16 dated January 1, 2016. Para A2 of the same Master Direction says that it is obligatory on the part of the exporter to realise and repatriate the full value of goods/software/services to India within a stipulated period from the date of export. These stipulations cannot be complied with where the Indian party (resident) makes payment in Indian rupees.
The draft national e-commerce policy put up for consideration and discussion of all stakeholders by the Department for Promotion of Investments and Internal Trade on Saturday although imperative to the growing e-commerce industry, has strong elements of protectionism in it, say players.
As a consequence, instead of creating a fair marketplace environment to both foreign and domestic e-commerce firms, the Government will end up providing an unfair advantage to local sellers and make it difficult for foreign-controlled e-commerce firms to do business in India.
One of the key issues which the draft policy raises is about data being a national asset and wants foreign companies to localise data in India which will require investments in data infrastructure from e-commerce companies like Amazon and Walmart.
The draft e-commerce policy addresses six broad issues of the e-commerce ecosystem including data, infrastructure development, e-commerce marketplaces, regulatory issues, stimulating domestic digital economy and export promotion through e-commerce.
Given the scale, size and reach of the e-commerce industry which has transcended the start-up stage of evolution, it is important for the Government to lay out a framework and ground rules for regulating the industry, especially with regulations to protect consumer data, ensure cross border data privacy, create domestic infrastructure for data localisation as there is huge potential for misuse of this data, observed serial entrepreneur and partner K Ganesh.
“However, certain parts of the policy such as promoting domestic alternatives to foreign-based clouds and e-mail facilities and regulating advertising charges in e-commerce for small enterprises and start-ups reek of protectionism, that is targeted at companies like Google and Facebook. The question to ask here is, do we have efficient and cost effective domestic alternatives that the e-commerce industry can turn to,” he said.
Hurdle for foreign firms
K Vaitheeswaran, founder of India’s first e-commerce firm Indiaplaza, said: “One the one hand the Government is encouraging FDI in e-commerce and on other it is bringing down the ease of doing business for foreign firms.”
Arvind Singhal, CMD of Technopak, said, the e-commerce policy is unlikely to create major hurdles for foreign e-commerce players like Amazon and Flipkart as they are largely compliant to Indian regulations with registered business entities in India. The policy is targeting under-the-radar entry by Chinese e-commerce players which are shipping goods to India but avoiding customs duty by bringing them in as gifts.
Analysts and lawyers BusinessLine spoke to feel that the draft e-commerce policy needs more clarity. “Under WTO there is a moratorium on imposition of customs duty on intangible transactions such as electronically transmitted data services. With data as an asset class becoming a valuable source for monetisation by foreign entities, the policy seeks to utilise a combination of customs regulations and foreign exchange management regulations under the RBI to identify commercial transactions on which it can potentially levy a duty or impose restrictions going forward,” said L Badri Narayanan, Partner, Lakshmikumaran & Sridharan.
Punjab Minister for Agriculture Malik Nauman Ahmad Langrial has said that the provincial government has planned to attract farmers towards cotton growing and a target of 5 million acres has been set for cotton cultivation. Speaking at the Lahore Chamber of Commerce and Industry, the minister said that quality seed for one lakh acres will also be provided by the government to encourage cotton cultivation because farmers prefer to grow wheat, rice and oil seed due to high profit margins as compared to cotton. Punjab Seed Corporation’s Managing Director Waheed Akhter Ansari also spoke on the occasion.
He said the Punjab government attaches priority to the development of agriculture sector to give a boost to the national economy. All possible measures including agriculture marketing, good price of crops for the farmers and facilitation are being taken in this regard, he added.
The minister further said that Punjab Agriculture Marketing Regulatory Authority is in the formation process that would ensure good price of crops for the farmers. During the current year, per acre cotton production will be increased from 18 maund to 25 maund. Farmers are also being encouraged to grow edible seeds that would help save huge foreign exchange, he added. He said the Punjab Seed Corporation is organizing motivational seminars for the farmers.
LCCI President Almas Hyder said the agriculture and economy are vital for each other. Development of the agriculture sector will bring economic issues under control besides getting rid of the IMF. Though Pakistan is an agrarian country but cotton production is not enough to meet the local demands and the country is spending billions of dollars on import of this commodity, he said. Almas Hyder said that Pakistan has produced around 10 million bales of cotton on average for the last several years against consumption of over 14 million bales. The modern techniques and hybrid seed can help Pakistan produce 30 to 40 million bales of cotton, he said. He also highlighted the issues of sugar industry, flour mills and tractor manufacturers and said that the government must support tractor manufacturers as this sector is vital for agriculture.
Six months down the road, government has yet to show any actionable performance in handling the energy mess. Inefficiencies in energy related sector are at the core of the twin deficit problem, yet the incumbents have nothing concrete to demonstrate.
The energy related ministries and finance ministry combined have failed so far in handling the circular debt, and other energy related governance and management issues. At the time PTI assumed power, the energy circular debt was Rs1.2 trillion and now news reports suggest that it is standing around Rs1.4-1.5 trillion. In 150 days, the toll has increased by an average Rs1.5-2 billion per day.
Did the government come unprepared? If six months are not enough, how many are? The talks of issuing Sukuk initiated 4 months ago and to-date no TFC or Sukuk has been issued. This could have happened in weeks. Dar in 2013 was spot on. An anchor to tackle the energy mess is missing.
Rs200 billion Sukuk is likely to be issued this week or the next. But government’s indecisiveness and slow decision making is not the right recipe for reforming energy sector. The problem is that no one is taking onus, and collectively, they do not seem to have comprehended the gravity of the issue.
The decisions were wrong from the onset – be it handling of furnace oil imports, managing RLNG demand, clearing circular debt, sacking gas companies board or appointing MDs, gas subsidy to textile – For details read “Textile gas and comedy of errors”, published on 8th November, 2018, or gas price revision formula. The challenges are big, but the government does not seem to have team to tackle the same.
The focus is on fixing power sector thefts which is a small problem in bigger scheme of things. The energy management team is penny wise but pound foolish. The first step in resolving any mess is to work on the big hurdles, before delving into the petty matters. What is the fun in stopping a few billion rupees leakages when the buildup of circular debt is Rs1.5-2 billion per day?
There is an energy task force, and cabinet committee of energy, but no one is seemingly in control. The minister of Petroleum is the weak link – earlier he was the head of the CCoE, but now Asad has assumed the role. The PTI government needs to get it straight by having one energy ministry. (read “Power sector needs powerful centre” published on 20th November, 2018)
The next step is to have right people at right place and coordination amongst relevant departments and ministries. How can you expect the NTDC in existing capacity to perform when the next year forecast on energy mix is out of proportion? The NTDC estimated FY19 FO consumption at 2.7 billion units while in 7 months; the consumption is already 7.4 billion units.
In FO fiasco, earlier there was a supply glut (read “No end to furnace oil lover affair” published on November 9, 2018). This was followed by import ban on FO and the way RLNG demand and supply is being handled, there is a chance that more FO would be imported this year. The mismanagement in RLNG is simply due to lack of coordination of power and petroleum divisions within the so called energy ministry. The power division does not give firm demand to petroleum and the latter does not import enough RLNG cargos.
This and other problems demonstrate lack of understanding and capacity constraints. For example, the idea of gas prices revision was right, but it should have been on averages instead of abrupt jump in bill on cut off slabs – such decisions require simple math and commonsense. Another example was sacking gas companies’ board which is not a jurisdiction of executives in government – the gas problem was due to being presented incorrect demand by the petroleum ministry, but nobody was fired there. Now acting MDs are working in gas distribution companies. Similarly, top executives are missing in E&P companies.
Energy is the epicenter of the fiscal problem. And to get out of the rut of boom-bust cycle, the most pressing need is to strengthen and straighten the energy sector.
Amidst moves to revive stressed thermal assets of 45,000-MW capacity, what has slipped under the radar is the need for coal linkages if the projects are to be made viable. For, it is estimated that, operating at 70% PLF, these plants would annually require in excess of 125 million tonne of coal, with a possible reliance on imports increasing costs and threatening project viability.
The original plan mandated such producers developing captive greenfield mines to meet their coal needs. However, it would now be difficult for the stressed assets to mobilise capital to restart projects and develop coal mines at the same time. “If a resolution for the sector has to be achieved, then a collective solution for fuel supply is needed. This could entail tasking an independent coal company to finance, develop and supply coal at notified rates to all stressed thermal assets,” says Kameswara Rao, Partner, GRID at PwC India.
With more than Rs 1 lakh crore of debt stuck in stressed thermal plants, their lenders have been trying to protect the value of the assets through resolution outside the bankruptcy courts. In the wake of an RBI order which had threatened to push all stressed power companies to the National Company Law Tribunal (NCLT), 34 power producers with a cumulative 40,000-MW capacity moved in November the Supreme Court, which offered them relief.
A Crisil report has said that “a 40-60% haircut, along with financial safeguards, can resolve as much as Rs 1 lakh crore of debt stuck in coal-based power projects.” Jaiprakash Associates’ Prayagraj Power plant became the first of the nearly dozen stressed projects to be resolved outside the bankruptcy law after Resurgent Power acquired a 75% stake in the company. In October, the apex court allowed three power projects run by Adani Power, Tata Power and Essar Power to renegotiate their power purchase agreements (PPAs) to reflect the higher cost of imported coal.
Somesh Kumar, Partner and Leader-Power & Utilities at E&Y, says, “the existence of guidelines to ensure offtake of power by state discoms, and coal linkages in the form of mine allocation or e-auctions could make the revival of stressed assets smoother.” PwC’s Rao stresses that most stressed projects are inland and closer to mines. “The transportation cost itself would make it prohibitive to undertake imports. At best, a limited percentage could be used in a blend.”
As it is, oversupply in the market means these projects would find it difficult to run at above 30-40% PLF range. “Unless industrial and commercial demand improves, the stressed plants would take at least 3-4 years to take their utilisation levels beyond 40%,” says Rupesh Sankhe, a senior analyst with Reliance Securities.
At the same time, thermal power would continue to be critical for India’s needs. Commenting on the growing preference for renewable energy, Prashant Khankhoje, director Global Energy, says, “while all recent renewable tenders have discovered tariffs below the Rs 3/kWh level, we need to wait for such projects to get operational before the last word is said on them. For one, the quality of equipment they have used owing to cut-throat competition remains a grey area. For another, grid penetration and balancing would be challenging given that renewable power is not available round the clock.”
