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1、BANGLADESH CAMBODIA CHINA INDIA INDONESIA PAKISTANPHILIPPINES THAILAND TURKEY VIETNAM CENTRAL AMERICACOUNTRY SOURCINGREPORTNovember 2022Country overviewSourcing&industry updatesMinimum wage comparisonsGlobal trade policy regimeInput price trendsMacroeconomic dataHelen Chin,Sophie Zhang,Winnie Lo,Wil

2、liam Kong,Marco Chen,Doris FungIssue 20 COUNTRY SOURCING REPORT ISSUE 20 EXECUTIVE SUMMARY Preparing for a Highly Uncertain Future:Stay Resilient and Flexible While the negative impacts of COVID-19 are receding,the Russia-Ukraine war that started in February this year has created new and difficult c

3、hallenges to the already fragile global supply chains.The war has caused severe disruptions to traditional logistics routes,impeding the flow of goods and adding to inflationary pressures for energy,food,and other commodities.In the US,for example,inflation remains persistently high,and hit an annua

4、lized rate of 9.1%in June,the highest level in more than 40 years.The apparel and footwear supply chain is under pressure from soaring manufacturing and sourcing costs.Most notably,global shortage of cotton has driven the spikes in cotton prices,which,as measured by the Cotlook A Index(Far East),cli

5、mbed to an 11-year high in early May,before falling back in recent months due to weakened global demand and increased cotton production.Many apparel sourcing destinations have also substantially raised minimum wages to support their low-paid workers through the rising cost of living.As of October 20

6、22,19 out of 23 garment-producing countries monitored by Fung Business Intelligence had increased minimum wages,including Cambodia,China,Egypt,Guatemala,Haiti,Honduras,India,Indonesia,Kenya,Lesotho,Malaysia,Mauritius,Mexico,Nicaragua,Pakistan,the Philippines,Thailand,Turkey,and Vietnam.Among them,Tu

7、rkey raised its minimum wage twice this year,up 94.7%from the level a year ago,while Haiti raised its minimum wage by 37%from its previous level set in 2019.On the currency front,the hawkish monetary policy stance of the US Fed to curb inflation has pushed the US dollar,as measured by the US dollar

8、Index,to hit a 20-year high in late September.Over the first eight months of 2022,Asian currencies had depreciated sharply against the US dollar,including the Turkish lira(-28.8%),the Bangladeshi taka(-9.7%),the Chinese yuan(-7.8%),the Indian rupee(-5.5%)and the Indonesian rupiah(-3.9%).Apparel make

9、rs may face increasing cost pressures from imported raw materials,as well as price bargaining from buyers.Meanwhile,heightened geopolitical tensions between China and the US continue to cast a shadow over the global recovery.While the scheduled four-year review of Section 301 tariffs on imports from

10、 China is undergoing,the so-called“Uyghur Forced Labour Prevention Act”of the US came into force on 21 June,banning cotton and other products from Xinjiang to the US.Against this backdrop,many fashion companies have continued to make effort to diversify their sourcing base.China accounted for about

11、37%of US textiles and apparel imports in 2018,when the China-US trade war began.The share has declined to 28%in 2021,and 25%in the first eight months of 2022,while other Asian countries such as Vietnam and Bangladesh have filled the gap.Despite this,China has continued to diversify its export destin

12、ations and remained an important sourcing base for apparel.On the positive side,the re-opening of the world from the COVID-19 pandemic has not only helped ease supply-chain bottlenecks,but also fuelled post-pandemic spending sprees in many countries.Fashion retailers have enjoyed booming sales for t

13、he year so far.Nevertheless,consumers are starting to become more cautious amid the persistent inflation,and are likely to cut back on fashion spending in the months ahead.The establishment of a modern and comprehensive multilateral trading system has made some progress as many bilateral/multilatera

14、l free trade agreements(FTAs)have come into effect throughout the year.In particular,the Regional Comprehensive Economic Partnership(RCEP)entered into force on 1 January,which will create the worlds largest free trade bloc in terms of GDP,population,and trade,upon full ratification.Other important d

15、evelopments of the year include:the China-Cambodia FTA came into force on 1 January;the India-UAE CEPA came into effect on 1 May;the US-led Indo-Pacific Economic Framework(IPEF)was launched on 23 May;the UKs Developing Countries Trading Scheme(DCTS)was launched on 15 August;the EU and India relaunch

16、ed bilateral negotiations to forge a free trade agreement.Individual countries have also implemented favourable domestic policies to strengthen their positions in global supply chains,including infrastructure development,tax reductions and other business incentives.For example,COUNTRY SOURCING REPOR

17、T ISSUE 20 China unveiled the National Highway Network Planning to build 79,000 kilometres of highways by 2035;Bangladesh extended the existing reduced 15%corporate tax for the textile sector for another three fiscal years to increase the global competitiveness of the“Made in Bangladesh”brand;the Ph

18、ilippines is preparing to set up a new Regional Yarn Production and Innovation Centre(RYPIC)in Northern Luzon to promote textile research and development activities in the region.Looking ahead,global economic growth will slow further amid tightening financial conditions triggered by high inflation w

19、orldwide and the escalation of the Russia-Ukraine war in recent months.While prices are increasing with no end in sight,consumers may tighten their belts on non-essential spending and businesses may also struggle with increasing costs.Navigating the“new normal”of volatility,apparel supply chains wil

20、l need to be enhanced with increasing speed,flexibility,and resilience.On one hand,some fashion companies may turn to nearshoring or onshoring for improved speed to market and greater certainty about compliance;others may continue to diversify their sourcing destinations in response to supply chain

21、disruptions.In any case,Asia will remain a manufacturing powerhouse for fashion products,not only because of its comparative advantage in labour and overhead costs,but also because of the integrated regional supply chains that provide sourcing flexibility and agility.As the largest exporter of texti

22、les and clothing in the world,China will maintain its leading position as a textile supplier for apparel-exporting countries in the region.The“China plus one”,or even“China plus many”,sourcing strategy will remain dominant over the near term and present enormous opportunities to Asia as a whole.COUN

23、TRY SOURCING REPORT ISSUE 20 SECTIONS CONTRIBUTORS PAGE Country overview 1 Bangladesh Uday Pathak,Rahul Dhand,Anamica Bhardwaj,Shah Emran,Bushra Sabah 2-6 Cambodia Bunna Long,Regina Villamiel 7-13 China Rodger Lee 14-19 India Uday Pathak,Anamica Bhardwaj 20-24 Indonesia Irene Yustitia 25-28 Pakistan

24、 Umar Bin Asad 29-33 The Philippines Haluk Demirtel,Anna Tran 34-38 Thailand Supreeda Keeratiwasin 39-43 Turkey Yesim Tekin 44-47 Vietnam Haluk Demirtel,Anna Tran 48-52 Central America Lucas Mayorga,Eugenia Canizales 53-56 Global trade policy regime 57-67 Currency appreciation/depreciation 68 Input

25、prices 69-75 Minimum wages across Asian countries 76-81 TABLE OF CONTENTS This 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 c

26、ountries.This report covers country and sourcing updates,major multilateral/bilateral free trade agreements,input price trends,macroeconomic indicators and foreign exchange rates.COUNTRY SOURCING REPORT ISSUE 20 COUNTRY OVERVIEW Population(million),2021 Median age,2021 Literacy rate(%),2020 or most

27、recent year Real GDP growth(%),2021 Inflation(%),2021 Share in world clothing exports(%),2020 Monthly base wages for manufacturing workers(US$),2021*China 1,412.4 37.9 96.8 8.1 0.9 31.5 557.6 Bangladesh 166.3 26.3 74.9 6.9 5.6 6.1 123.3 India 1,393.4 27.6 74.4 8.7 5.5 2.9 286.2 Pakistan 225.2 20.2 5

28、8.0 5.7 8.9 1.4 172.9 Turkey 85.0 30.9 96.7 11.4 19.6 3.4 349.7 Cambodia 16.9 26.5 80.5 3.0 2.9 1.7 230.0 Indonesia 276.4 29.4 96.0 3.7 1.6 1.7 374.8 Philippines 111.0 24.5 96.3 5.7 3.9 0.1 282.1 Thailand 70.0 39.3 93.8 1.5 1.2 1.0 459.5 Vietnam 98.2 32.0 95.8 2.6 1.8 6.3 262.8 Mexico 130.3 29.0 95.

29、2 4.8 5.7 0.8 258.3 El Salvador 6.5 26.3 90.0 10.3 3.5 0.3 359.2 Guatemala 17.1 22.1 80.8 8.0 4.3 0.3 378.8 Honduras 10.1 23.4 88.5 12.5 4.5 0.7 385.3 Nicaragua 6.7 24.5 82.6 10.3 4.9 0.3 208.6 Haiti 11.5 23.0 61.7-1.8 15.9 0.1 172.7 Source:Population(2021):World Bank database,accessed on 28 October

30、 2022 Median age(2021):United Nations World Population Prospects 2022 Literacy rate(2020 or most recent year):World Bank database,accessed on 28 October 2022 Real GDP growth and inflation(2021):IMF World Economic Outlook,October 2022 Share in world clothing exports(2020):WTO database,accessed on 28

31、October 2022 Monthly wages(2021):JETRO Survey of Japanese-Affiliated Companies in Asia and Oceania,December 2021*Wages of Asian countries were estimated using the monthly base wages for manufacturing workers in 2020 and the year-on-year wage increase rates in 2021 for the manufacturing sector;wages

32、of Central American and Middle Eastern countries are monthly minimum wages as of mid-Oct 2022.Turkeys wage is the gross minimum wage nationwide effective in 2022 before taxes and social security deductions.All wage rates are converted to US dollar terms based on official exchange rates or Bloombergs

33、 spot exchange rates on 15 September 2022.1 2 COUNTRY SOURCING REPORT ISSUE 20 BANGLADESH Country&sourcing updates Macroeconomic trends In the 2021-22 fiscal year(July 2021 June 2022),Bangladeshs exports reached US$52.1 billion,up 34.4%year-on-year(yoy).It is the first time in Bangladeshs history th

34、at its export earnings crossed the milestone of US$50 billion.For the current fiscal year,the country sets an ambitious export target at US$67 billion.During the first quarter of the current fiscal year(July 2022 June 2023),the countrys exports grew by 13.4%yoy to US$12.5 billion.However,Bangladesh

35、saw a negative export growth of 6.3%yoy in September 2022.Exports in this September was US$3.9 billion,down from US$4.2 billion in September of the previous year.GDP grew 7.2%yoy in the 2021-22 fiscal year,exceeding the 6.9%projection made by the Asian Development Bank.The growth was mainly driven b

36、y the industry sector(up by 10.4%yoy)and the service sector(6.3%yoy).Inflation in August escalated to 9.5%,the highest in the last 135 months,due to the rising commodity prices and the record hike of fuel prices.The inflation rate eased slightly in September and stood at 9.1%.Foreign direct investme

37、nt(FDI)in Bangladesh increased by 39%yoy to US$4.7 billion in the 2021-22 fiscal year,compared with US$3.4 billion in the 2020-21 fiscal year.The increase in FDI was mainly due to the resumption of global economic activities after the COVID-19 disruption.However,global inflation,the Russia-Ukraine w

38、ar and the resultant supply chain disruptions may hinder FDI growth in the country in the second half of 2022.The significant depreciation of the local currency could also pose a heavy drag on FDI inflow.As of 29 September,the taka has depreciated by 20%against the US dollar since 1 January 2022.Pol

39、icies and Regulations The Bangladeshi government unveiled the budget for the current fiscal year(July 2022 June 2023)on 9 June.The government set a 7.5%GDP growth target for the current fiscal year and made several proposals on taxation,including:To encourage export diversification,the government pr

40、oposed to reduce corporate tax for all export sectors from 30%to 12%and introduce a 10%tax rate for green factories exporting goods and services.In the previous fiscal year,the corporate tax rate for the export oriented ready-made garment(RMG)sector was set at 12%.To increase the global competitiven

41、ess of the Made in Bangladesh brand and strengthen the apparel supply chain,the government extended the current 15%corporate tax for the textile sector to another three fiscal years.The government doubled the tax deduction at source(TDS)for all export items from the existing 0.5%to 1%.According to t

42、he Index of Economic Freedom released by The Heritage Foundation in mid-February 2022,Bangladesh slipped 17 positions to become the 137th freest economy.The country was in the 120th position in 2021,122nd in 2020,121st in 2019,and 128th in both 2018 and 2017.The Heritage Foundation measures the Inde

43、x of Economic Freedom for 177 countries based on four aspects:the rule of law,government size,regulatory efficiency,and open markets.The slip in 2022 indicates that Bangladesh failed to maintain the momentum to become a freer economy.Among the 39 countries in Asia-Pacific region,Bangladesh ranked 29

44、th in 2022,and its overall score of 52.7 was below the regional average of 58.5 and the world average of 60.3 COUNTRY SOURCING REPORT ISSUE 20 Industry&sourcing developments During the 2021-22 fiscal year,the RMG exports reached US$42.6 billion,up by 35.5%yoy and contributing nearly 82%to the total

45、export values of the country.In the first quarter of the current fiscal year,the RMG exports were US$10.3 billion,up by 13.4%from the same period of the previous fiscal year.However,the RMG exports in September 2022 reduced to US$3.2 billion from US$3.4 billion in September 2021,down by 7.5%yoy.The

46、Bangladeshi RMG exporters have to prepare for potential order reductions from its major importers in the US and the EU due to the severe inflation faced by the importing countries.Major RMG importers from the US,such as Walmart,Macys,and Gap,saw a 30-40%increase in unsold inventories and planned to

47、sell them at discounted prices.The US importers are therefore expected to lower their buying prices or reduce orders for RMG imports in the coming months.To reduce the countrys foreign exchange expenditure,the Bangladeshi government stopped buying liquified natural gas from the spot market in June.T

48、he government also suspended the power generation of power plants running on expensive diesel,leading to an electricity shortage.As a result,many manufacturers have to halt production for hours daily Some production lines may even remain idle for up to 12 hours daily.To cope with the situation,some

49、RMG manufacturers and exporters resort to using their own diesel generators.However,this would incur additional costs.Due to the lower demand from RMG manufacturers,prices of local yarns have been falling over the past few months.On 19 December 2021,the commerce ministry revised the maximum wastage

50、rates*from 16%to 27%for the production of basic knit items,including t-shirts,polo shirts,trousers,shorts,skirts,and pajamas.Apart from the basic items,the ministry,for the first time,created separate categories and set a wastage rate of 4%for sweaters,socks,jumpers,pullovers,cardigans,vests,socks,a

51、nd gloves,and 30%for special items including rompers,gowns,tank tops,dresses,lingerie,and hoodies.*The wastage rate refers to the permissible amount of wastage of apparel items made from yarn and fabrics.If the actual wastage rate is higher than the prescribed rate,the government imposes duty on the

52、 extra wastages.During two inter-ministerial meetings held in Bangladesh in mid-April,participants from Bangladesh and the US discussed withdrawing the requirements of double fumigation of cotton imported from the US.Currently,all imported cotton from the US is required to go through a compulsory fu

53、migation process at Chittagong port,though all US cotton has already gone through pre-shipment fumigation in the US.The double fumigation requirement of US cotton increased the operating cost and handling time of local manufacturers.It is expected that the withdrawal of compulsory double fumigation

54、of US cotton will encourage the use of US cotton in Bangladesh.Currently,domestically grown cotton in Bangladesh comprises less than 2%of the countrys total cotton consumption,according to a report released by the Foreign Agricultural Service of the US Department of Agriculture(USDA)this April.Due t

55、o its high demand for yarn and fabric,Bangladesh has to import cotton from overseas.The USDA forecasts that Bangladesh may import one million bales of cotton from the US during August 2022 to July 2023.BANGLADESH Country&sourcing updates 4 COUNTRY SOURCING REPORT ISSUE 20 Labour&workplace compliance

56、 The Ministry of Labour and Employment(MOLE),in collaboration with the International Labour Organization(ILO)and the Deutsche Gesellschaft fr Internationale Zusammenarbeit(GIZ)GmbH,launched the first-ever pilot employment injury scheme(EIS)for the Bangladeshi RMG sector in June.Bangladesh is upgradi

57、ng its social protection systems for the benefit of workers.Bangladeshs government and industry partners have been working with the ILO and the GIZ to ensure workers social and financial security since 2013.The EIS is expected to contribute to the social well-being of workers and employers and impro

58、ve the social security system of Bangladesh.The EIS provides income protection for occupational injuries,disabilities,and deaths in the RMG industry.In a gazette notification published on 1 September 2022,The MOLE has made 101 amendments and additions to the Bangladesh Labour Rules 2015.The amended

59、Labour Rules 2015 will empower trade unions in factories and make more provisions to prevent sexual harassment in workplaces.The youth unemployment rate of Bangladesh stood at 10.6%,more than twice the overall national unemployment rate of 4.2%,announced by the ILO in mid-August.FTAs,trade preferenc

60、es&facilitation Australia made a commitment to Bangladesh at a meeting of the first Joint Working Group(JWG)on trade and investment held in Canberra in February.Exports from Bangladesh will officially continue to get duty-and quota-free access to the Australian market,even after Bangladeshs graduati

61、on from the least developed country(LDC)status in 2026.During the JWG meeting,Australia and Bangladesh discussed on various trade issues,trade facilitation,and promotion of investment,energy and defence collaboration.The two countries agreed to enhance industry connections between Australian exporte

62、rs of raw materials like cotton and wool,and Bangladeshi importers and manufacturers.Australia also expressed its willingness to explore investment opportunities in infrastructure,energy,mining,information,communications,and technology sectors in Bangladesh.The next JWG meeting will be held in Bangl

63、adesh early next year.The Canadian Minister for International Development and the Bangladeshi Foreign Minister held a virtual meeting in mid-February,marking the 50th anniversary of the establishment of diplomatic ties between the two countries.In the meeting,the two ministers discussed several issu

64、es including the Rohingya crisis,Bangladeshs graduation from LDC status,and promotion of bilateral trade and investment.Canada expressed its willingness to consider an extension of duty-free quota-free(DFQF)facilities to Bangladesh until 2030 and signing either a free trade agreement(FTA)or a prefer

65、ential trade agreement(PTA)with Bangladesh.The PTA among the Developing Eight(D8)member countries has become fully operational in October 2022.The D8 Organization for Economic Cooperation,officially launched in 1997,is an organization for promoting development and cooperation of eight developing cou

66、ntries,namely Bangladesh,Egypt,Indonesia,Iran,Malaysia,Nigeria,Pakistan and Turkey.The volume of intra-trade among the D8 member countries has reached around US$129 billion today,compared with US$14 billion in 1997,when the organization was established.BANGLADESH Country&sourcing updates 5 COUNTRY S

67、OURCING REPORT ISSUE 20 Bangladesh and India have decided to start the negotiations on the proposed Comprehensive Economic Partnership Agreement(CEPA)this year.A joint-feasibility study,initiated in 2018,showed that the Indo-Bangla CEPA would boost Bangladeshs export earnings by 190%and Indias by 18

68、8%.If the CEPA comes into force,it will be the first comprehensive bilateral economic and free trade deal for Bangladesh.In August,the UK announced a new scheme named Developing Countries Trading Scheme(DCTS)in place of the existing Generalized Scheme of Preferences(GSP).After graduating from the le

69、ast developed countries(LDC)status,98%of Bangladeshs exports,including garment exports,to the UK will continue to enjoy zero-duty entry under the DCTS.Infrastructure&environmental sustainability The Chattogram Port is one of the key drivers of the Bangladeshi economy.In 2021,the port handled a recor

70、d 3.2 million TEUs(twenty equivalent units),attaining double digit growth in container handling(13.2%yoy),cargo handling(14.1%)and ship handling(12.6%)amid the COVID-19 pandemic.The New Mooring Overflow Container Yard at the Chattogram port started operations on 2 January.The yard can accommodate 4,

71、000 TEUs of containers,increasing the ports container capacity from 49,000 TEUs to 53,000 TEUs.On 21 July,the new Patenga Container Terminal(PCT)at the Chattogram port started trial operations.The PCT,with a quay length of 600 metres,will increase the ports annual capacity to 500,000 TEUs.It is the

72、deepest terminal at the port and is able to handle vessels up to 4,500 TEUs.Prime Minister Hasina inaugurated the countrys new landmark,the Padma bridge,on 25 June.The 6.15-km multipurpose bridge links the southern region with Dhaka and major ports of Chattogram.People crossing the Padma River no lo

73、nger need to wait for a ferry boat but can drive through the Padma bridge in 6 minutes.The bridge also carries a gas pipeline which expands the gas network to the south-western districts of the country.This December,the bridge will be ready for rail movement connecting Dhaka with greater Barishal,Ja

74、shore,and Khulna.The bridge,as part of the envisaged Trans-Asian Highway and Trans-Asian Railway,will help facilitate trading between Bangladesh,India,Nepal,and Bhutan.The US Green Building Council has recognized 3 more garment factories in Bangladesh as Leed-certified green factories in October 202

75、2.According to the Bangladesh Garment Manufacturers and Exporters Association(BGMEA),the Leed-certified green factories are expected to help reduce energy use by 40%,water consumption by over 30%,and carbon dioxide emissions,and ensure environmental safety.As of 12 October 2022,there have been 176 L

76、eed-certified green garment factories in Bangladesh,of which,57 are platinum rated,105 gold,10 silver,and 4 have no rating.Another 550 factories are in the process of obtaining the Leed certification.BANGLADESH Country&sourcing updates 6 COUNTRY SOURCING REPORT ISSUE 20 BANGLADESH Macroeconomic data

77、 EXCHANGE RATES Source:Bangladesh Bank 60.0070.0080.0090.00100.00110.00120.00USD:BDT buy rate(April September 2022)Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Quantum index of medium and large-scale manufacturing(Base:2005-06=100,yoy growth%)4.3 2.6 11.2 12.2 -Consumer price index(yoy growth%)6.3 7.4

78、7.6 7.5 9.5 9.1 Exports(yoy growth%)51.2 23.2 37.2 14.7 36.2 (6.3)Exports(US$mn)4,738.7 3,830.3 4,908.0 3,984.8 4,607.0 3,905.1 Of which:-Knitwear(US$mn)2,122.7 1,743.3 2,228.4 1,854.2 2,061.5 1,733.8 -Woven garments(US$mn)1,811.5 1,415.3 1,863.6 1,512.8 1,684.2 1,427.9 -Home textile(US$mn)173.6 135

79、.8 154.7 96.0 172.6 85.0 -Footwear*(US$mn)104.1 99.3 124.2 96.5 125.1 114.8 -Leather products(US$mn)31.2 29.5 35.0 25.1 28.4 29.0 Imports(yoy growth%)40.3 38.5 26.5 57.1 -Imports(US$mn)6,958.9 6,881.4 7,706.4 7,153.5 -*Includes leather footwear Source:Bangladesh Bureau of Statistics,Bangladesh Bank,

80、Export Promotion Bureau of Bangladesh 7 COUNTRY SOURCING REPORT ISSUE 20 CAMBODIA Country&sourcing updates Macroeconomic trends The Cambodian government has successfully managed the latest wave of COVID-19 outbreak caused by the Omicron variant.The country has sporadic infection cases after it re-op

81、ened its border in November 2021 and has had no death case since April 2022.The World Bank has raised its growth forecast for Cambodia to 4.8%in 2022,up from its previous projection of 4.5%,despite worsening global demand and rising commodity prices.Traditional export-oriented growth drivers,especia

82、lly the garment,footwear and travel goods(GFT),electronics and bicycle manufacturing industries,and agriculture continue to underpin Cambodias economic recovery,says the World Bank East Asia and Pacific Economic Update released on 26 September.Cambodias merchandise exports increased by 22.1%yoy to U

83、S$17.3 billion in the first nine months of 2022,according to the General Department of Customs and Excise.During this period,garment,the largest export category of Cambodia,increased by 23.1%yoy to US$7.2 billion,accounting for 41.6%of Cambodias total goods exports.The US remained the biggest market

84、 for Cambodias exports during the period,with an export value of US$7.0 billion,followed by Vietnam(US$1.6 billion),Japan(US$897.7 million),China(US$895.5 million),and Canada(US$874.9 million).While exports have grown strongly since the start of this year,garment manufacturers in the country are wor

85、rying that export orders for textile-related goods from the US and the EU,two Cambodias key buyers,would decline in the coming months.Negative factors affecting export orders include a potential economic slowdown in major developed countries amid global situation and rising inflation worldwide.On th

86、e other hand,the implementation of two regional free trade agreements(FTAs),the Regional Comprehensive Economic Partnership(RCEP)and the Cambodia-China FTA(CCFTA),both effective on 1 January 2022,will give a boost to Cambodias trade growth.Policies®ulations On 20 June 2022,Prime Minister Hun Sen

87、issued a sub-decree on the establishment of the Capital-Provincial Investment Sub-Committees(CPISCs).According to this sub-decree,25 CPISCs have been established in place of the existing investment sub-committees.The CPISCs,as units of the Council for the Development of Cambodia(CDC),will review and

88、 approve registrations,incentives,guarantees,mergers,sales and purchases,cancellations and dispute resolutions of private investment projects under US$5 million(up from US$2 million for the former investment sub-committees)within their respective capital and provincial jurisdictions,while larger ven

89、tures will still be subject to the approval of the CDCs Cambodian Investment Board(CIB).The sub-decree was the first legal document drafted based on Cambodias new investment law promulgated on 15 October 2021,which aims to improve and modernize Cambodias investment environment,bring regulations clos

90、er in line with ASEANs best practices,and diversify the locations of investment across the country and thus reduce inequality among different regions.On 15 October 2021,Cambodia promulgated its new Law on Investment.From its promulgation date,the new investment law replaces the existing 1994 Law on

91、Investment and the 2003 Law on the Amendment to the Law on Investment.The law brings a new legal framework to 8 COUNTRY SOURCING REPORT ISSUE 20 foreign investment,notably by establishing an important investment incentive scheme for 19 sectors,covering investment in digital infrastructure;environmen

92、tal management,protection,and energy efficiency;tourism;training and upskilling;logistic supply chains;research and development;infrastructure;and many others.The law consists of 12 chapters and 42 articles.It is designed to provide a comprehensive,transparent and predictable legal framework to attr

93、act both domestic and foreign investment to support the socio-economic development of the country.Cambodias first Law on Competition was approved by the Senate on 20 September 2021 and came into effect on 6 October 2021.The law is composed of seven chapters and 41 articles.It addresses three key pro

94、hibitions:anti-competitive agreements,abuses of a dominant position,and anti-competitive business combinations(behaviours that significantly prevent,restrict,or distort competition in the market).The law also sets the framework for investigations,decisions,penalties and the regulatory authorities.Ad

95、opting a competition law was one of Cambodias key commitments to the Association of Southeast Asian Nations(ASEAN)and the World Trade Organization.Cambodia has been working on its competition law since 2006.With the passage of Cambodias competition law this year,all ten members of the ASEAN now have

96、 competition laws in place.Industry&sourcing developments Cambodia has approved 150 fixed-asset investment projects worth about US$3.45 billion in the January-September period of 2022,according to a CDC report released on 6 October.The number of new projects increased by 16 while the investment valu

97、e surged by US$100 million as compared to the same period last year.The approved projects,which include GFT factories,tire factories,hotels,hospitals,automobile assembly factories,electronic factories and fruit processing and packaging factories,are expected to generate tens of thousands of new jobs

98、 for locals.Domestic investment accounted for a large part(50.9%)of the total approved investment projects in the period,while investment from China accounted for 43.9%.The garments,footwear and travel goods(GFT)sector is Cambodias largest export sector.In January-September 2022,exports of GFT produ

99、cts increased by 25.8%yoy to US$9.98 billion,accounting for 57.8%of Cambodias total export in the period,according to the General Department of Customs and Excise of Cambodia.On 22 March 2022,Cambodia launched the Cambodia Garment,Footwear and Travel Goods(GFT)Sector Development Strategy 2022-2027,a

100、iming to further strengthen and support the development of the GFT sector.The vision of the strategy is to develop the GTF industry in Cambodia into an environmentally sustainable,high value-added industry,focusing on products that can be sold at high prices,competitive and fundamentally supportive

101、of economic diversification by 2027,according to Phan Phalla,Secretary of State at the Ministry of Economy and Finance.Five key measures are launched under the strategy to achieve the vision,including further strengthening human resource capabilities to increase productivity and create viable career

102、 paths for workers;continuing to improve working conditions and worker welfare;promoting domestic and foreign investment in high value-added industries and focusing on high-value and unique products;attracting investment in connected industries;and promoting market diversification for GTF exports.CA

103、MBODIA Country&sourcing updates 9 COUNTRY SOURCING REPORT ISSUE 20 The Cambodian GFT sector is currently at the low-value segment of the global supply chain.The sector is heavily dependent on imported raw materials,equipment,and designs.It also relies on a low-skilled workforce and a labour-intensiv

104、e model driven by low wages.The strategy shows Cambodias ambition to transform its low value-added manufacturing into high value-added and sustainable production,so as to meet the upcoming competition and environmental requirements.On 16 March 2022,the Garment Manufacturers Association in Cambodia(G

105、MAC)and the European Chamber of Commerce in Cambodia(EuroCham)signed in Phnom Penh a memorandum of understanding(MoU)to foster closer cooperation between the two associations and their members,and to support European garment companies and fashion brands in Cambodia.Under the MoU,EuroCham will set up

106、 a public training programme with the Cambodian Garment Training Institute in Phnom Penh,focusing on sustainable textile sourcing,occupational safety and health and compliance.Other areas of cooperation include sustainable production-related issues and environmental awareness along the production ch

107、ain,exploring opportunities of Industry 4.0,and assisting European brands with responsible sourcing from Cambodia.The EU is a key destination of Cambodian textile-related exports.In 2021,Cambodian exports of textile-related products to the EU was US$2.7 billion,accounting for 23.6%of Cambodias total

108、 textile-related exports in the year.However,as the GMAC chairman Kong Sang points out,the success and export growth of the Cambodian garment industry are in large part attributed to the preferential market access to the EU market granted by the Everything But Arms(EBA)scheme under the Generalised S

109、ystem of Preferences(GSP)of the EU,which was partially withdrawn from Cambodia on 12 August 2020.Therefore,it is important for Cambodian exports to further strengthen its competitiveness,so as to maintain its growth momentum.This MoU is considered to be an important step towards this goal through ca

110、pacity building in specific areas and through joint advocacy to influence relevant policies.Labour&workplace compliance On 21 September 2022,the Ministry of Labour and Vocational Training announced that the minimum wage for workers/employees in the textile,garment,footwear,travel goods and bag indus

111、tries for 2023 was officially set at US$200 per monthup from this years US$194.The new minimum wage will take effect from 1 January 2023.On 21 January 2022,the Ministry of Labour and Vocational Training of Cambodia announced that it decided to stop providing the US$40 monthly allowance for textile,g

112、arment,footwear,and travel goods workers whose contracts had been suspended due to the COVID-19 pandemic.This allowance is still available to workers in the tourism sector.This subsidy measure was unveiled by the Cambodian government in April 2020 to mitigate the impact of the COVID-19 pandemic.The

113、subsidies were available to workers in textile,garment,footwear,travel goods and tourism sectors.Furloughed workers in the above-mentioned sectors could receive up to US$40 of financial aid.The government made this decision based on the fact that factories in the country had adopted a number of meas

114、ures to successfully control the spread of the pandemic,which enabled the majority of factories to resume their activities.Many workers can therefore go back to work and get their normal salary as usual.CAMBODIA Country&sourcing updates 10 COUNTRY SOURCING REPORT ISSUE 20 FTAs,trade preferences&faci

115、litation The Cambodia-Korea Free Trade Agreement(CKFTA)will enter into force on 1 December 2022.The CKFTA was signed on 26 October 2021 and was then waiting for the two countries to complete their respective domestic procedures for the agreement to enter into force.It is the second bilateral free tr

116、ade agreement(FTA)for Cambodia following the bilateral FTA it signed with China.Under the CKFTA,Cambodia is expected to import over 95%of the tariff lines from South Korea and export 92%of all of its goods to the latter at zero customs duty.The CKFTA is expected to foster Cambodias exports to South

117、Korea,such as garments,textiles,footwears,bags,accessories,electronic devices,rubbers and agricultural products.The agreement will also present opportunities for value-added investments in Cambodias downstream processing industries through a plus one business model,in which South Korean companies co

118、uld expand their supply chain network developed in Vietnam and Thailand to Cambodia.help attracts South Korean investment to Cambodias manufacturing industries.The bilateral Cambodia-China Free Trade Agreement(CCFTA),which was signed on 12 October 2020,came into force on 1 January 2022.According to

119、the Agreement,both sides enjoy zero tariffs on over 90%of their tariff lines,and the two sides will strengthen cooperation in trade in services,investment,the Belt&Road Initiative,e-commerce,technology,etc.China is the largest trading partner of Cambodia.Trade with China accounted for 21%of Cambodia

120、s total trade value of US$32.8 billion during the January-July period this year.Infrastructure&environmental sustainability Cambodia is active in improving its transport infrastructure to enhance its investment,trade,and tourism potential.Just in last few months,several major port construction,expan

121、sion,and improvement projects were either completed,underway,or being planned in Sihanoukville,Phnom Penh,Kampot,and Koh Kong.On 7 October 2022,the US$20 million Kampot tourist port,which will play an important role in connecting sea tourism in Cambodia to neighbouring countries,has been completed.N

122、ecessary infrastructure has also been built to serve the needs of cruise ships and tourists.The infrastructure includes:a port with a wharf of more than 123 meters long and more than 11 meters wide,passenger and restaurant buildings,roads,garbage collection facilities,technical buildings,public bath

123、rooms,reservoirs,ponds and other facilities.Kampot tourist Port was built under a loan of more than US$18 million from the Asian Development Bank.The Kampot tourist port can be connected to the port in Sihanoukville,Koh Kong,Koh Rong,and also to the port of Koh Tral and other ports in Vietnam and Th

124、ailand.On 2 October 2022,the Chinese-invested Phnom Penh-Sihanoukville Expressway in Cambodia was opened to the public for one months free trial use to attract motorists driving on the first-ever expressway in Southeast Asia.Invested by the China Road and Bridge Corporation,the two-billion-US dollar

125、 expressway,with a total length of 187 km,connects the capital Phnom Penh to the deep sea port Sihanoukville of Preah Sihanouk province.On 17 August 2022,the Port Electronic Data Interchange(Port EDI)system made a soft launch to navigate large-scale inbound and outbound traffic control at the Sihano

126、ukville Autonomous Port(SAP)and Phnom Penh Autonomous Port(PPAP).This pilot system aims to put an end to the paper-based procedures for private sectors vessels using the two ports.CAMBODIA Country&sourcing updates 11 COUNTRY SOURCING REPORT ISSUE 20 The Port EDI system was developed using a grant by

127、 Japan via the Japan International Cooperation Agency(JICA).Cambodia entered into an agreement for the grantover US$12 millionon 20 February 2019 to start the Port EDI project and signed another agreement with JICA on 26 February 2019 to conduct financial management and project implementation monito

128、ring.According to the figures of the Ministry of Public Works and Transport(MPWT),there are about 6,000 foreign vessels entering and leaving sea and river ports annually in Cambodia.The switch of the navigational control of the ship clearance procedures from manual to online systems will substantial

129、ly improve the effectiveness,efficiency,and transparency of the procedure,reduce costs of shippers,and significantly reduce port congestion as well On 5 May 2022,Cambodia started to build a US$1.5 billion logistics and multi-purpose seaport in the southwestern Kampot province.This multi-purpose port

130、 in Kampot will be the third largest port in Cambodia after the Sihanoukville Autonomous Port and the Phnom Penh Autonomous Port,according to Sun Chanthol,the Senior Minister of the Ministry of Public Works and Transport.It is connected to Phnom Penh and other Cambodian provinces through National Ro

131、ads No.3,41,4 and 48 and the Phnom Penh-Sihanoukville Expressway.It is also connected to the north of the country by the southern railway.It will be a new international gateway to facilitate Cambodias trade with other countries and will enhance Cambodias logistics and transportation sector.Built on

132、a total area of 600 hectares,this mega-port with a depth of 15 metres will be able to accommodate vessels weighing up to 100,000 tonnes.It will include a container terminal,a special economic zone,a free trade area,a logistics hub,an oil refinery,and a terminal for tourist vessels,among others.The p

133、ort is planned to be constructed in three phases over a time span of 15 years and is expected to create about 10,000 direct and indirect jobs when put in use.The first phase will take three years with an investment of US$200 million.By 2025,when the first phase is completed,the port will be able to

134、handle 300,000 TEUs(Twenty-Foot Equivalent Unit)annually.It is hoped that the port will be able to handle up to 600,000 TEUs annually in 2030.In October 2021,Cambodias Ministry of Economy and Finance entered into a consultancy contract with the Urban Planning and Design Institute of Shenzhen,China f

135、or the transformation of the Preah Sihanouk province into a multi-purpose special economic zone(SEZ),after Cambodian Prime Minister Hun Sen signed a sub-decree to upgrade the Preah Sihanouk province to a multi-purpose SEZ on 9 June 2021.The multi-purpose SEZ aims to become a major economic zone in S

136、outheast Asia,empowered by smart technology,as well as an advanced industrial zone serving regional and global production chains.It reflects the Cambodian governments ambitions to further develop the Preah Sihanouk province into a major player in export-driven manufacturing and trade.It is noteworth

137、y that the existing Sihanoukville SEZ located inside the Sihanoukville city,the capital of Preah Sihanouk province,is currently Cambodias largest SEZ,contributing to the Sihanoukville citys emergence as an economic centre alongside Phnom Penh,the capital city,and Siem Reap,the second-largest city of

138、 the country.With greater investments in infrastructure and incentives by the government,the Preah Sihanouk province stands to become one of the most attractive locations for foreign investment into Cambodia.CAMBODIA Country&sourcing updates 12 COUNTRY SOURCING REPORT ISSUE 20 Environmental sustaina

139、bility On 31 August 2022,the Cambodian government and the United Nations Development Program(UNDP)jointly launched the Cambodia Sustainable Development Goals(SDGs)Investor Map,a market intelligence tool that identifies viable investment opportunities aligned with the Cambodia SDGs.According to a joi

140、nt press statement,the Cambodia Map is added to the SDG Investor Maps of another 22 countries accessible on the SDG Investor Platform.The Cambodia Map highlights 15 investment opportunity areas across six SDG priority sectors agriculture and allied industries,financial services,infrastructure,renewa

141、ble energy,education,and healthcare.It also identifies another 10 white spaces aligned with national development needs.These areas have potential for growth but would require more private sector participation or more policy support.CAMBODIA Country&sourcing updates 13 COUNTRY SOURCING REPORT ISSUE 2

142、0 CAMBODIA Macroeconomic data Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Consumer price index(yoy growth%)7.2 7.3 7.2 7.8 5.4-Exports(yoy growth%)33.1 65.1 49.1 32.1 18.7 2.1 Exports(Cambodian riel billion)6,815.8 6,818.0 7,007.7 7,736.6 9,311.0 7,253.5 Of which:-Garments(Cambodian riel billion)2,747

143、.6 2,974.8 3,123.9 3,527.5 4,533.2 3,480.1 -Footwear(Cambodian riel billion)580.1 603.6 533.4 587.5 811.5 564.1 -Electrical parts(Cambodian riel billion)349.2 400.0 396.5 354.8 540.4 500.6 -Bicycles(Cambodian riel billion)371.7 323.7 290.9 354.6 362.6 398.3 Imports(yoy growth%)-19.7 29.1 34.2 16.1 3

144、6.8 44.2 Imports(Cambodian riel billion)9,279.4 10,511.2 12,228.6 11,408.5 13,010.5 11,122.5 Source:National Bank of Cambodia EXCHANGE RATES Source:Bloomberg 3,9804,0004,0204,0404,0604,0804,1004,1204,140USD:KHR spot rate(April September 2022)14 COUNTRY SOURCING REPORT ISSUE 20 CHINA Country&sourcing

145、 updates Macroeconomic trends Chinas foreign trade sector has delivered a better-than-expected performance so far this year.In the first nine months of 2022,merchandise exports rose by 12.5%yoy to US$2,698.6 billion.Merchandise exports totalled US$322.8 billion in September,up by 5.7%yoy.In the firs

146、t nine months of 2022,textile and garment exports totalled US$248.3 billion,up by 9.1%yoy.Of which,exports of garments reached US$134.0 billion,up by 9.5%yoy,while exports of textiles amounted to US$114.3 billion,up by 8.7%yoy.In the nine-month period,exports of shoes reached US$43.0 billion,up by 2

147、7.5%yoy.Meanwhile,exports of toys totalled US$36.9 billion,up by 14.6%yoy.Chinas trade and investment with countries along the Belt and Road(B&R)maintained robust growth in the first nine months of 2022.Chinas trade with B&R countries jumped by 20.7%yoy to 10.0 trillion yuan in the period.Meanwhile,

148、Chinese companies made outward direct investment(ODI)of US$14.9 billion in B&R countries,up by 14.2%yoy,and signed contracts of new projects worth US$80.8 billion.Consumer prices:CPI growth increased to 2.8%yoy in September from 2.5%yoy in August.In the first nine months of 2022,Chinas CPI growth wa

149、s 2.0%yoy.Midstream prices:Ex-factory prices of industrial products have retreated lately after a significant rise in the first half of 2022.The producer price index(PPI)fell by 1.2%mom in August and 0.1%mom in September.In the first nine months of 2022,Chinas PPI growth was 5.9%yoy.Upstream prices:

150、Domestic prices of production inputs have declined lately after a surge in the first half of 2022.The purchaser price index of industrial products went down by 1.4%yoy in August and 0.5%yoy in September.In the first nine months of 2022,the growth in Chinas purchaser price index was 8.3%yoy.Real GDP

151、growth accelerated from 0.4%yoy in 2Q22 to 3.9%yoy in 3Q22.In the first nine months of 2022,Chinas economy expanded by 3.0%yoy.Total profits of industrial companies with annual revenue over 20 million yuan declined by 2.3%yoy to 6.2 trillion yuan in the first nine months of 2022.Among the industries

152、,profits of the textile manufacturing industry dropped by 15.3%yoy to 62.7 billion yuan,while profits of the wearing apparel and ornament manufacturing industry climbed 1.8%yoy to 49.6 billion yuan in the period.Industrial production by the textile industry declined by 2.0%yoy in the first nine mont

153、hs of 2022,compared to a growth of 1.4%yoy in full year 2021.In the first nine months of 2022,Chinas fabric production reached 26.8 billion metres,down by 5.5%yoy.Fixed asset investment(excluding rural households)in the textile industry rose by 6.3%yoy in the first nine months of 2022.Foreign direct

154、 investment(FDI)into China jumped by 15.6%yoy to 1,003.8 billion yuan(US$155.3 billion,up by 18.9%yoy in US dollar terms)in the first nine months of 2022.China is witnessing a new trend in foreign investment activities,with FDI in high tech industries expanding rapidly with a growth rate of 32.3%yoy

155、 in the period.Chinas total retail sales of consumer goods reached 32.0 trillion yuan in the first nine months of 2022,up by 0.7%yoy,of which,retail sales of 15 COUNTRY SOURCING REPORT ISSUE 20 garments,footwear,hats and knitwear amounted to 927.3 billion yuan,down by 4.0%yoy.In the period,online re

156、tail sales of physical goods grew 6.1%yoy to 8.2 trillion yuan,accounting for 25.7%of total retail sales of consumer goods.Due partly to the tightening monetary policy of the US,the Chinese yuan depreciated by 10.7%against the US dollar in the first nine months of 2022.The USD-CNY spot exchange rate

157、 depreciated from 6.3561 on 31 December 2021 to 7.1159 on 30 September 2022,according to Bloomberg.From January to October 2022,the minimum wage levels in Fujian,Hunan,Sichuan,Chongqing and Yunnan were adjusted upward.Chinas job market has improved in recent months after sharp deterioration earlier

158、this year.The surveyed urban unemployment rate in 31 major cities in China jumped from 5.4%in February to 6.9%in May,before dropping to 5.8%in September.The high freight rates that have plagued Chinese exporters since late 2020 have tumbled more than 40%since its peak in February.However,freight rat

159、es remain twice the pre-pandemic levels.The China Containerized Freight Index,which reflects the freight rates paid by shippers for containers leaving from China,dropped from an all-time high of 3,587.91 on 11 February to 1,959.96 on 21 October.Policies®ulations A meeting of the Political Bureau

160、of the Communist Party of China(CPC)Central Committee was held on 28 July to make arrangements for the economic work for the second half of the year.The meeting urged efforts to consolidate the upward trend of economic recovery,keep employment and prices stable,keep the economy running within an app

161、ropriate range,and strive for the best possible outcome.It stressed that macro policies should play an active role in expanding demand,and fiscal policies should effectively make up for the lack of social demand.Monetary policies should seek to ensure reasonably sufficient liquidity,credit to firms

162、should be boosted,and new loans from policy banks and investment funds for infrastructure construction should be better leveraged,the meeting said.Chinas State Council issued on 31 May a wide-ranging package of policies aimed at boosting the economy.The new package includes 33 administrative measure

163、s in six areas,including fiscal support,investment,consumption,food and energy security,and supply chain stability,in an effort to stabilize the economy while maintaining effective pandemic control.China will accelerate the issuance of local-government special bonds,speed up investment on transporta

164、tion infrastructure,and promote spending on major purchases such as automobiles and home appliances.China will also extend more loans to micro and small businesses,provide more support for logistics hubs and enterprises,and help ease the burden on sectors and industries severely affected by the pand

165、emic.The Chinese government has implemented various measures to promote foreign trade this year.For example,The State Council,in a circular on 19 January,unveiled measures to advance the integrated development of domestic and foreign trade.China will further align domestic trading rules and standard

166、s with global ones.Efforts would be made to help enterprises to navigate operations in markets at home and abroad.New business models,such as customer-to-manufacturer(C2M)production and smart factories backed by advanced information technology,will be nurtured.China will also promote the development

167、 of free trade ports and pilot free trade zones,which can act as pioneers in integrating domestic and foreign trade in line with international economic and trade rules.CHINA Country&sourcing updates 16 COUNTRY SOURCING REPORT ISSUE 20 CHINA Country&sourcing updates On 26 May,the State Council announ

168、ced 13 measures to support foreign trade enterprises through challenges and help the sector maintain steady and high-quality development.Local governments should establish services and safeguard systems for key foreign trade enterprises to support their production and operation.Support from governme

169、nt departments will be provided to stabilize foreign trade supply chains for enterprises affected by the COVID-19.Smooth logistics for foreign trade goods will be ensured,and marine logistics services will be strengthened.Policies facilitating export goods return and exchange will be put in place to

170、 accelerate and upgrade cross-border e-commerce trade.China will also expand short-term export credit insurance and export credit,while further enhancing financial support to micro,small and medium-sized enterprises.On 27 September,Chinas Ministry of Commerce issued a circular on stabilizing foreign

171、 trade to help companies navigate current difficulties.China will strengthen the capability of foreign trade companies to deliver contracts and further expand their presence in the international market.Efforts will be made to enhance services for companies to participate in overseas exhibitions and

172、conduct business negotiations.The government will pilot market procurement trade on a new list of markets,develop a new group of innovation demonstration zones for the import trade and establish a number of new integrated pilot zones for cross-border e-commerce.Moreover,measures are in place to impr

173、ove the efficiency and speed of domestic transportation of goods as well as the inbound and outbound transport of goods.The Chinese authorities have unveiled a series of measures to promote consumption this year,in a bid to stimulate the domestic economy.For example,On 14 January,the National Develo

174、pment and Reform Commission(NDRC)released a notice aimed at boosting consumption for the Chinese New Year holiday and the Olympic Winter Games.It set out measure to meet peoples festive needs,upgrade online festival consumption,and expand consumption in rural areas.Consumption related to the ice-and

175、-snow industry was also encouraged.On 7 July,Chinas 17 key departments,including the Ministry of Commerce and the National Development and Reform Commission,jointly issued a notice aimed at promoting new-energy vehicle sales.As part of the plan,the Chinese government will extend the tax exemption gi

176、ven for buying new-energy vehicles,promote new-energy vehicle sales in rural regions,and accelerate development of the charging infrastructure.On 28 July,13 departments jointly issued a guideline to promote the consumption of green and smart home appliances.Measures will be taken to promote sales of

177、 green and smart home appliances in rural areas.Efforts will be made to improve after-sales services and recycling facilities for home appliances.China will also propel new infrastructure such as 5G services networks and gigabit fiber-optic networks,providing a solid foundation for the use of smart

178、home appliances.Industry&sourcing developments The pace of industrial automation across China has been accelerating rapidly in the past couple of years.In 2021,China installed almost as many robots(243,000)in its factories as the rest of the world combined.Data show that robot installations by elect

179、ronics manufacturers and auto makers rose by 30%yoy and 90%yoy in 2021.Other sectors that make significant investment in robotics include plastics,rubber,metals and machinery.Automation not only helps Chinese factories adapt to the shrinking labour force and rising wages,but also allows them to shif

180、t to higher-end manufacturing tasks.17 COUNTRY SOURCING REPORT ISSUE 20 CHINA Country&sourcing updates Chinas manufacturing industry took a hit from the COVID-19 outbreaks in Guangdong and Shanghai,two of the top manufacturing regions in China.A one-week lockdown of Shenzhen and Dongguan in March ma

181、inly disrupted the production of mechanical and electrical products,such as autos,consumer electronics and mobile phones.Since the lockdown was short term and targeted(i.e.,districts and industrial parks with no new COVID-19 cases could continue production or resume production earlier),the impact on

182、 the manufacturing sector was rather short-lived.However,the two-month lockdown of Shanghai during April to May,which is a major producer of autos,machinery,integrated circuits and mobile phones,had a much more significant impact.Shanghai suffered drops of 61.5%yoy and 27.6%yoy in industrial product

183、ion in April and May,respectively.As one of the highest profile consequences of the lockdown,the Tesla Gigafactory Shanghai was forced to halt its production for 22 days.The Yangtze River Delta,which contributes a quarter of national industrial production,was also hit hard by Shanghais lockdown,as S

184、hanghai is a hub for local supply chains and logistics networks.Take the textile and apparel industry for example.Overall freight costs for textile/apparel enterprises in the region increased as restrictions and delays on trucks entering and exiting ports or traveling between regions limited transpo

185、rt and delivery options.The logistics challenges,in turn,led to delays in receiving raw materials,manufacturing equipment,and other apparel components.These challenges,combined with worker shortages due to lockdowns,led to a reduction in textile and apparel production.According to a survey conducted

186、 in mid-April,25.1%of textile/apparel enterprises in Jiangsu reported a production decline of 50%;18.1%reported a production decline of 30%to 50%;and 32.7%reported a production decline of 20%to 30%.FTAs,trade preferences&facilitation On 1 November last year,China submitted an official application to

187、 join the Digital Economy Partnership Agreement(DEPA),a trade agreement among Chile,New Zealand and Singapore to bolster digital trade.On 18 August this year,the DEPA Joint Committee established a working group to formally commence the accession process for China.China aims to further open up the co

188、untry and form a high-standard FTA network by signing more FTAs and upgrading existing ones.The China-Cambodia FTA came into effect on 1 January,while the ChinaNew Zealand FTA upgrade protocol took effect on 7 April.China is also negotiating a number of FTAs with its trade partners,such as the China

189、JapanRepublic of Korea FTA,ChinaGulf Cooperation Council FTA,ChinaNorway FTA,and ChinaIsrael FTA.Politics&geopolitics The so-called Uyghur Forced Labor Prevention Act of the US took effect on 21 June.The law,which presumes that all products from Chinas Xinjiang autonomous region have been tainted by

190、 forced labour unless importers can prove otherwise,effectively bans imports from Xinjiang.The US ban on Xinjiang cotton and cotton products caused a drop in Chinas domestic cotton prices,as many yarn producers shift to imported cotton.Domestic cotton prices underperformed international cotton price

191、s by 30%during March to June as the US ban approached.The price gap has narrowed significantly since late August.As of mid-October,the prices of domestic cotton in China were about 5%lower than that of imported cotton.18 COUNTRY SOURCING REPORT ISSUE 20 To help stabilize the cotton market,the Chines

192、e government announced on 8 July that it intends to buy up to 500,000 tonnes of Xinjiang cotton for its state reserves.About 69,400 tonnes of cotton had been bought as of 20 October.On 7 October,the US Department of Commerce announced new export controls on advanced computing and semiconductors to C

193、hina.The export controls will restrict Chinas ability to both purchase and manufacture certain high-end chips.Both US companies and companies from a third-party country that sell US-made chips to China will be affected.On 2 September,the Office of the US Trade Representative(USTR)announced it would

194、continue the Section 301 tariffs against Chinese products.The USTR said that it made the decision based on requests from domestic businesses.As a legal requirement,USTR will launch a full review of Section 301 tariff action in the coming months.On 23 August,the US Department of Commerce added seven

195、Chinese entities to the Entity List and severely restricted their access to US software and technologies.Currently,the Department of Commerce has approximately 600 Chinese entities on the Entity List more than 110 of which have been added since the start of the Biden administration.Infrastructure&en

196、vironmental sustainability On 12 July,the NDRC and the Ministry of Transport unveiled the National Highway Network Planning,which is an upgrade of the countrys national highway plan released in 2013.The new plan involves highways with a total length of 461,000 kilometers,of which 162,000 kilometers

197、will be expressways.The highway networks will cover cities and counties with populations of more than 100,000 and important land border ports.Links between national highways and railway terminals,airports and ports will be strengthened.From late July to late August,record high temperatures and droug

198、ht led to power shortages and factory shutdowns in some regions.Regions that implemented electricity rationing include Sichuan,Chongqing,Zhejiang,Jiangsu and Anhui.Among these provinces,Sichuan and Chongqing,which rely mostly on hydropower,had the most intense power rationing.All industrial enterpri

199、ses in Sichuan were ordered to suspend production from 15 August to 25 August,while industrial enterprises in Chongqing halted production from 17 August to 29 August.The power supply and industrial production has returned to normal since September.CHINA Country&sourcing updates 19 COUNTRY SOURCING R

200、EPORT ISSUE 20 CHINA Macroeconomic data Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Quarterly GDP(real yoy growth%)0.4(2Q22)3.9(3Q22)Manufacturing PMI(seasonally adjusted)47.4 49.6 50.2 49.0 49.4 50.1 Purchaser price index of industrial products(yoy growth%)10.8 9.1 8.5 6.5 4.2 2.6 Producer price inde

201、x of industrial products(yoy growth%)8.0 6.4 6.1 4.2 2.3 0.9 Consumer price index(yoy growth%)2.1 2.1 2.5 2.7 2.5 2.8 Exports(yoy growth%)3.5 16.3 17.4 17.8 7.1 5.7 Exports(US$bn)272.7 306.6 330.0 332.6 314.9 322.8 Of which:-Garments(US$bn)11.3 15.2 18.0 19.6 18.5 16.0 -Footwear(US$bn)3.8 5.1 5.8 6.

202、0 5.5 4.7 -Toys(US$bn)3.6 4.2 4.7 5.2 5.3 5.2 Imports(yoy growth%)0.2 3.9 0.7 2.1 0.3 0.3 Imports(US$bn)223.1 229.1 232.6 231.2 235.5 238.0 Source:National Bureau of Statistics,PRC;China Customs;China Federation of Logistics&Purchasing EXCHANGE RATES Source:State Administration of Foreign Exchange 6

203、.06.26.46.66.87.07.27.4USD:CNY official exchange rate(April September 2022)20 COUNTRY SOURCING REPORT ISSUE 20 INDIA Country&sourcing updates Macroeconomic trends Indias exports rose by 4.8%yoy to US$35.5 billion,and imports jumped by 8.7%yoy to US$61.2 billion in September 2022.The country became a

204、 net importer for the month with a trade deficit of US$25.7 billion,compared to the trade deficit of US$28 billion in the previous month and of US$22.5 billion in September 2021.In September,exports of engineering goods,ready-made garments of all textiles,plastic,cashew,and carpet recorded negative

205、growth.The exports of RMG of all textiles dipped by 18%yoy to US$1 billion.In contrast,exports of gems and jewellery,petroleum products,leather,pharmaceutics,chemicals,and rice recorded positive growth.Indias gross domestic product(GDP)in the April-June quarter grew by 13.5%yoy,compared to the 20.1%

206、yoy growth in the same period of 2021.For the entire fiscal year(April 2021-March 2022),GDP growth of the country was 8.7%.The seasonally adjusted S&P Global India Manufacturing Purchasing Managers Index(PMI)edged up from 55.1 in September to 55.3 in October,showing signs of resilience of the manufa

207、cturing sector.Indias consumer price index(CPI)rose to 7.4%in September 2022,a five-month high,while the wholesale price index(WPI)inched down to 10.7%.This is the ninth straight month that the inflation rates were above the target levels set by the Reserve Bank of India.In terms of year-on-year gro

208、wth,fuel inflation softened in September,while both food and core inflations went up.However,all three inflation rates showed positive month-on-month changes in September.During the 2021-22 fiscal year,foreign direct investment(FDI)inflows to India reached US$83.6 billion,up by 2%yoy.Singapore remai

209、ned the largest FDI source,accounting for 27%of the total FDI inflow,followed by the US(18%)and Mauritius(16%).The computer software and hardware sector was the top recipient of FDI equity inflows in the fiscal year,accounting for 25%of the total FDI equity inflows,followed by the services sector(12

210、%)and the automobile sector(12%).The strong US dollar,together with expensive oil prices and weakened demand in developed markets,continues to put pressure on the currencies of emerging markets.The Indian rupee closed at 81.55 per US dollar on 30 September,depreciating by 7.61%since 1 January this y

211、ear,according to the International Monetary Fund.Policies®ulations On 31 December 2021,the Goods and Services Tax(GST)Council announced to defer the proposed rise in tax rate for the textile and apparel sector from the current 5%to 12%.Earlier in November 2021,the Finance Ministry announced a uni

212、form 12%rate for manmade fibre,yarn,fabrics and apparels,along with a 12%uniform rate for footwear.The rate hikes were scheduled to be effective from 1 January 2022.In October 2022,the ministry of textiles released a draft on the second round of production-linked incentive(PLI 2.0)scheme for the tex

213、tile sector.The remaining funds from the PLI 1.0,about 40 billion Indian rupees,will be used for launching the PLI 2.0.The notification for the PLI 1.0 was issued in September 2021 and operational guidelines for the PLI 1.0 were issued in December same year.The PLI 1.0 for textile sector,particularl

214、y in the production of 14 categories of manmade fabrics,10 categories of technical textiles and manmade apparel,was aimed at enhancing the manufacturing capabilities and promoting 21 COUNTRY SOURCING REPORT ISSUE 20 exports of the sector.Under the PLI 1.0,64 out of 67 applications were approved with

215、 an investment potential of 197.98 billion Indian rupees and projected turnover of 1.94 trillion Indian rupees in the next five years.Under the PLI 2.0,participating companies,including the textile units producing apparel,home textiles and textile accessories like embellishments,zippers,trimmings,an

216、d elastic tapes,have to complete their investment during the two-year gestation period,i.e.,2022-23 and 2023-24;and these companies have to achieve the required minimum turnover from the subsequent year,i.e.,2024-25.Industry&sourcing developments The textiles committee(TC)of the Indian government ha

217、s signed an agreement with the United Nations Environment Programme(UNEP)and the Cotton Corporation of India(CCI)In October 2022 to promote sustainability and circularity in the textile sector.The agreement is aiming at minimizing the negative environmental impacts of the Indian Textile Industry by

218、promoting sustainable practices and best practices of circular production in the textile and apparel sector.Labour&workplace compliance According to a report,named Youth in India 2022,released by the Ministry of Statistics and Programme Implementation(MOSPI),the proportion of the youth population*to

219、 the total population of India was 26.6%in 1991,increased to 27.9%in 2016,then dropped to 27.2%in 2021,and would further reduce to 22.7%by 2036.On the contrary,the proportion of the elderly population*was 6.8%in 1991,increased to 9.2%in 2016,then rose to 10.1%in 2021,and is projected to reach 14.9%i

220、n 2036.(*According to the MOSPI,the youth population refers to the age group of 15 and 29 years,and the elderly population refers to the people aged 60 and above.)Due to a dip in fertility,the total youth population in India was 371.4 million in 2021,which is projected to fall to 345.5 million by 20

221、36.This changing demographic structure and the ageing population may put pressure on Indias labour supply and economic development.FTAs,trade preference&facilitation Commerce Minister Piyush Goyal and US Trade Representative Katherine Tai held the twelfth ministerial-level meeting of the India-US Tr

222、ade Policy Forum(TPF)in New Delhi in November 2021.The two ministers discussed building stronger linkages in critical sectors of both countries,including cyber space,semiconductors,AI,5G,6G and future generation telecommunications technology.At the India-US TPF,India emphasized the importance of res

223、toring the Generalised System of Preferences benefits,which may help industries from both sides to efficiently integrate their supply chains.The India-US TPF was established in 2005,aiming at resolving trade concerns and investment issues between the two countries.It has five focus groups:agricultur

224、e,investment,innovation and creativity(intellectual property rights),services,and tariff and non-tariff barriers.A regular engagement between the two countries under the India-US TPF mechanism will help remove barriers to trade and facilitate higher levels of investment.The previous India-US TPF was

225、 held in October 2017,and the forum was then replaced by negotiations between the two sides on a trade deal.The next TPF ministerial meeting has been rescheduled for the first quarter of 2023.INDIA Country&sourcing updates 22 COUNTRY SOURCING REPORT ISSUE 20 In mid-February 2022,India and the United

226、 Arab Emirates(UAE)signed an FTA,named the Comprehensive Economic Partnership Agreement(CEPA),effective 1 May.The two sides formally launched the FTA negotiations in September 2020.The pact covers various areas including goods and services,rules of origin,customs procedures,government procurement,in

227、tellectual property rights,and e-commerce.The agreement will enhance market access and reduce tariffs for the two countries.The CEPA is expected to boost the bilateral trade from the current US$60 billion to US$100 billion in the coming five years.The CEPA will particularly help the Indian exporters

228、 from various labour-intensive sectors,including textiles and garments,leather and footwear,and agriculture.The UAE will allow 90%of the Indian exports to enter its market at zero tariffs,immediately after the CEPA comes into force.And the duty-free access will further increase to 99%in 5 to 10 year

229、s.Similarly,India will allow 80%of goods from the UAE into the country at zero tariffs,immediately after the CEPA comes into force.The duty-free access will further go up to 90%in 10 years.Indian Commerce and Industry Minister Piyush Goyal and his Australian counterpart Dan Tehan signed the India-Au

230、stralia Economic Cooperation and Trade Agreement(ECTA),an interim deal between the two countries,simultaneously in New Delhi and Canberra on 2 April.Under the ECTA,Australia offers duty free access for 96.4%of Indian goods immediately after the pact comes into effect and for all Indian goods in five

231、 years.On the other hand,85%of Australian goods(from 70%to start with)will get duty free access to the Indian market in 10 years.In 2021,bilateral trade in goods and services between the two countries stood at US$27.5 billion.According to Goyal,the ECTA will boost the bilateral trade to US$40-50 bil

232、lion in the next five years.The ECTA is expected to benefit many Indian manufacturers,who can source cheaper raw materials and intermediate goods from Australia.Besides,the ECTA is paving the way for a full trade pact,the India-Australia Comprehensive Economic Cooperation Agreement(CECA),which is ex

233、pected to be signed by the end of 2022.The CECA will cover government procurement,digital trade,rules of origin,etc.India and the UK launched formal FTA negotiations on 13 January 2022 and the fifth round of negotiations was concluded on 29 July.According to negotiators from both sides,the negotiati

234、ons are progressing well,although the difficult topics include liquor,automobiles,and intellectual property rights,and both sides are working intensively towards reaching a conclusion.The FTA will ultimately cover more than 90%of tariff lines.With the FTA,the two countries aim to double bilateral tr

235、ade of goods and services to around US$100 billion by 2030.Indian exporters are expecting to gain more access to the UK market under the FTA,particularly in the pharma and healthcare,textiles and clothing,food and drink,and information and communications technology sectors.UK businesses have strong

236、confidence in Indias economy.They are willing to increase trade with and investment in India and build partnerships with Indian companies,such as sharing and co-creating new technology and intellectual property.The FTA is an important driver to realise the huge potential of the India-UK bilateral tr

237、ade relationship.INDIA Country&sourcing updates 23 COUNTRY SOURCING REPORT ISSUE 20 INDIA Country&sourcing updates India and Canada resumed FTA negotiations on 22 April 2022 after a gap of almost five years,and the two countries targeted at achieving an interim trade deal first.The two countries lau

238、nched negotiations towards a Comprehensive Economic Partnership Agreement(CEPA),as the FTA is formally known,in 2010.The previous round of negotiations was held in August 2017.Both sides agreed to consider an interim agreement,the Early Progress Trade Agreement(EPTA),that are easier to negotiate as

239、a transitional step towards the CEPA.The EPTA should include high-level commitments in goods and services,rules of origin,sanitary and phytosanitary measures,technical barriers to trade,and dispute settlement.India and Canada have committed to enhance their partnership and cooperation in certain are

240、as,such as agro-products,chemicals,footwear,textiles,automobiles,energy,electronics,minerals and metals,urban development,information technology,and tourism.The fourth round of negotiations on the EPTA was concluded on 26 September,bringing both parties one step closer to the full-fledged CEPA.On 25

241、 April,the European Union(EU)and India announced the decision to establish a trade and technology council to step up cooperation.During a meeting between President of the European Commission Ursula von der Leyen and Indian Prime Minister Narendra Modi in April,the two leaders reviewed progress in th

242、e India-EU strategic partnership and the FTA negotiations.Both sides decided to further deepen cooperation in trade,climate,digital technology,etc.This June,India and the EU restarted the FTA negotiations after a gap of nine years.The second round of negotiations was held in Brussels in October,and

243、the third round will be held in India from 28 November to 2 December.According to the Indian Minister of Commerce and Industry Piyush Goyal,India will be able to conclude the FTA with the EU by next year.The negotiations of the India-EU FTA were launched in 2007 but have been stalled since May 2013.

244、Both parties were reluctant to accept all requests raised by its counterpart.For instance,the EU demanded India to scrap or slash heavy import duties on certain products such as automobiles,alcoholic beverages and dairy products;and the EU wanted India to open up its legal and accountancy services;m

245、eanwhile,India was seeking greater access for its skilled professionals to the EU market.24 COUNTRY SOURCING REPORT ISSUE 20 INDIA Macroeconomic data Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Quarterly GDP(real yoy growth%)13.5(1Q22)Index of industrial production(yoy growth%)7.1 19.6 2.4 2.2 (0.8)-M

246、anufacturing PMI(IHS Markit)54.7 54.6 53.9 56.4 56.2 55.1 Wholesale price index(yoy growth%)15.4 15.9 15.2 13.9 12.4 -Consumer price index(yoy growth%)7.8 7.0 7.0 6.7 7.0 7.4 Exports(yoy growth%)31.2 20.7 23.5 8.7 1.9 4.9 Exports(US$mn)40,186.9 38,937.0 40,133.7 38,492.6 33,923.0 35,445.4 Of which:-

247、Knitwear(US$mn)728.5 711.9 787.9 737.9 637.4 -Woven garments(US$mn)847.5 704.1 713.8 645.3 597.2 -Footwear(US$mn)239.4 248.7 272.1 297.7 267.3 -Furniture(US$mn)227.3 222.2 218.8 205.1 195.6 -Imports(yoy growth%)31.9 64.0 58.4 42.8 31.5 8.5 Imports(US$mn)60,295.8 63,222.6 66,311.9 66,253.8 61,901.5 6

248、1,158.4 Financial year in India starts in April.Source:Ministry of Statistics and Programme Implementation,Ministry of Commerce and Industry,IHS Markit PMI reports EXCHANGE RATES Source:Bloomberg 74.075.076.077.078.079.080.081.082.0USD:INR spot rate(April September 2022)25 COUNTRY SOURCING REPORT IS

249、SUE 20 INDONESIA Country&sourcing updates Macroeconomic trends In the second quarter of 2022,the Indonesian economy grew by 5.4%yoy,despite global economic uncertainty and price hike in the country.In late August,the Indonesian government predicted the economy will grow 5.2%for the full year of 2022

250、.Indonesias exports in August 2022 reached US$27.9 billion,while imports were US$22.2 billion.A trade surplus of US$5.7 billion was recorded in the month,the 28th consecutive month that the country had a trade surplus since May 2020.The largest non-oil and gas exports were shipped to China with an e

251、xport value of US$6.2 billion,followed by the US(US$2.6 billion)and India(US$2.5 billion).The S&P Global Indonesia Manufacturing Purchasing Managers Index(PMI)edged up from 51.7 in August to 53.7 in September,the highest level since this January.The expansion of the manufacturing sector was mainly d

252、riven by the motor vehicle industry and food processing industry.Foreign direct investments(FDI)in Indonesia jumped by 39.7%yoy to 163.2 trillion rupiah in the second quarter of 2022,according to the Investment Ministry/Investment Coordinating Board(BKPM).During the same period,domestic direct inves

253、tments also increased to 139 trillion rupiah,up by 30.9%yoy.The FDI inflow mainly went to the basic metal,metal goods,non-machinery,and equipment industries(48.2 trillion rupiah),followed by the mining sector(33 trillion rupiah),the housing,industrial estates,and offices sector(26.7 trillion rupiah)

254、,the transportation,warehouse,and telecommunications sectors(25.6 trillion rupiah),and the food industry(22.4 trillion rupiah).Inflation in September 2022 reached 5.95%,the highest level since October 2015.The high inflation rate in the month was attributable to the hike in subsidized fuel price in

255、early September,which has led to an increase in energy and transport costs.The Indonesian government raised subsidized fuel price by 30%starting 3 September,aiming at controlling the costly energy budget.As a result,the price of subsidized gasoline per litre increased from 7,650 rupiah to 10,000 rup

256、iah.The price of subsidized diesel per litre rose from 5,150 rupiah to 6,800 rupiah.Due to the rising global oil prices and the depreciation of rupiah,Indonesias energy subsidies in 2022 had already been jacked up to 502 trillion rupiah(US$34 billion),triple the original budget.The aggressive intere

257、st rate hikes in the US have led to massive capital outflows from emerging markets,prompting the rupiah to weaken against the US dollar.The Indonesian rupiah closed at 15,232 per US dollar on 30 September,depreciating by 6.3%since 1 January this year.Policies®ulations The Ministry of Finance adju

258、sted the value-added tax(VAT)rate from 10%to 11%,effective 1 April.The increase in VAT is aimed at redistributing wealth from the rich to the poor and reducing the economic gap.Considering the current situation of the domestic economy,the government raised the VAT rate by only 1 ppt.The VAT rate adj

259、ustment has been accompanied by a reduction in personal income tax rate(from 15%to 5%)for individuals with income below 60 million rupiah.Certain goods and services are not subject to VAT,such as basic foodstuff,water,electricity,health services,education services,social services,insurance services,

260、financial services,public transportation services,labour services,etc.26 COUNTRY SOURCING REPORT ISSUE 20 The government also lowered taxes for micro-,small-and medium-sized enterprises(MSME)with a turnover of up to 500 million rupiah,and applied a final VAT at certain smaller rates,specifically 1%,

261、2%or 3%.The Indonesian government decided to postpone the imposition of carbon tax,which should have been effective on 1 April.The government will make the new carbon tax scheme synchronize with the countrys roadmap for reaching the zero-emission goal by 2060.Under the initial plan,the government ha

262、d wanted to introduce a US$2.1 tax per metric ton of carbon dioxide equivalent(CO2e)emission,starting with the coal-fired power factories.Industry&sourcing developments On 8 June,President Joko Widodo officially inaugurated the second development phase of the Batang Integrated Industrial Estate(KITB

263、)for electric battery production.The Korean consortium,the LG Energy Solution,is set to invest in the KITB and produce batteries for electric vehicles(EVs)with a capacity of 3.5 million units and 200 gigawatts annually.The consortium has invested US$9.8 billion,and its electric battery factory will

264、be able to employ 20,000 workers.The Indonesian president claimed that the LG investment is the first in the world to integrate EVs upstream and downstream productions,starting from nickel mining,smelting,precursor and cathode plant to EVs electric power units.FTAs,trade preferences&facilitation Ind

265、onesia attended a session held by the World Trade Organization in November 2021 as a follow-up to a lawsuit filed by the EU against Indonesias nickel ore export ban.As nickel ore is a vital ingredient for stainless steel production,the nickel ore export ban may affect the overseas stainless steel in

266、dustry.Nickel is one of the important strategic commodities for Indonesias national economy.Indonesia bans the exports of nickel ore,effective on 2 January 2020,and requires nickel to be processed in Indonesian smelters before being sold overseas.Indonesias President claims that the nickel ore expor

267、t ban is aimed at developing the countrys nickel downstream industry for the sake of its people and sustainability.Instead,he welcomes foreign businesses to establish or invest in smelter facilities in Indonesia.The President also notes that Indonesia will also ban raw material exports of bauxite an

268、d copper in the future,once the installation of the refining and processing smelters has been completed.Bank Indonesia(BI)and the Peoples Bank of China(POBC),Chinas central bank,renewed the Bilateral Currency Swap Arrangement(BCSA),effective from 21 January 2022.The BCSA agreement between BI and POB

269、C,first signed in March 2009,has gone through several rounds of amendments and extensions.The BCSA allows the partnered central banks to exchange payments in one currency for equivalent amounts in the other currency to facilitate bilateral trade settlements and provide liquidity support for financia

270、l markets.The BCSA targets at encouraging bilateral trade and direct investment in the local currencies of the partnered countries.Furthermore,the agreement represents that both central banks commit to maintain financial market stability.Under the BCSA,the maximum amount for exchanging the two curre

271、ncies is 250 billion Chinese yuan(equivalent to about 550 billion rupiah).Apart from the POBC,BI and the Reserve Bank of Australia have agreed to renew their BCSA,effective from 18 January 2022.Also,BI has also sought cooperation with central banks of INDONESIA Country&sourcing updates 27 COUNTRY SO

272、URCING REPORT ISSUE 20 other countries,such as South Korea,Malaysia,and Singapore.In late August 2022,BI and the Monetary Authority of Singapore(MAS)agreed to initiate a cross-border quick response code-based payment linkage between the two countries to encourage payment connectivity in trading,e-co

273、mmerce,and other financial transactions.The cooperation will be launched in the second half of 2023.Infrastructure&environmental sustainability Indonesian President Joko Widodo announced a relocation plan of the Indonesian capital in 2019.However,due to the COVID-19 disruption,the project,with an es

274、timated cost of over US$30 billion,was put on hold.In mid-January 2022,the Indonesian House of Representatives approved the shift of capital from Jakarta to Nusantarain East Kalimantan,a jungle-covered area on the east of Borneo Island.The new capital will be developed in five stages,of which,the fi

275、rst stage from 2022 to 2024 will be the most critical one.The last stage will be completed by 2045.Since most of the economic activities in the country have been concentrated at the current capital and in the Java Island,the relocation will assist the development of Kalimantan as well as the eastern

276、 part of Indonesia.The government also envisions the new capital as a low-carbon“super hub”,which will support the growth of pharmaceutical,healthcare and technology sectors and promote sustainable growth beyond the Java Island.As Indonesias capital,Jakarta is the gateway between Indonesia and the r

277、est of the world.In the future,Jakarta will no longer be the capital of the country,but will continue to be the center of economy,culture and cross-ethnic activities.On 28 March,Jakartas provincial government announced ten development goals for Jakarta in 2023,including reduction of inequality,impro

278、vement of public services,urban health and urban infrastructure,economic growth,digital transformation,empowerment of the workforce,and low-carbon development.INDONESIA Country&sourcing updates 28 COUNTRY SOURCING REPORT ISSUE 20 INDONESIA Macroeconomic data Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22

279、 Quarterly GDP(real yoy growth%)5.4(2Q22)Manufacturing PMI(IHS Markit)51.9 50.8 50.2 51.3 51.7 53.7 Real retail sales index(yoy growth%)8.5 2.9 4.1 6.2 4.9 5.5 Consumer price index(yoy growth%)3.5 3.6 4.4 4.9 4.7 6.0 Exports(yoy growth%)47.8 27.0 41.0 32.0 30.0 20.4 Exports(US$mn)27,321.7 21,509.8 2

280、6,150.1 25,563.2 27,862.1 24,801.3 Of which:-Textile and textile products(US$mn)1,311.0 972.4 1,269.9 1,241.8 1,247.9 -Footwear(US$mn)718.4 523.9 710.9 654.5 672.1 -Furniture(US$mn)252.1 149.5 222.1 188.8 189.2 -Sports requisites(US$mn)68.8 51.4 73.7 72.1 71.4 -Imports(yoy growth%)21.9 30.7 22.0 39.

281、8 32.8 22.0 Imports(US$mn)19,757.4 18,609.3 21,003.9 21,345.0 22,150.6 19,808.1 Source:Statistics Indonesia,Bank Indonesia,IHS Markit PMI reports EXCHANGE RATES Source:Bank Indonesia 14,00014,20014,40014,60014,80015,00015,20015,400USD:IDR buy rate(April September 2022)29 COUNTRY SOURCING REPORT ISSU

282、E 20 PAKISTAN Country&sourcing updates Macroeconomic trends In its October 2022 Pakistan Development Update,the World Bank sets Pakistans economic growth in the current fiscal year(July 2022 to June 2023,hereafter FY2023)at 2%.The slower growth will reflect damages and disruptions caused by catastro

283、phic floods,a tight monetary stance,high inflation,and a less conducive global environment.The World Bank expects that recovery will be gradual,with real GDP growth projected to reach 3.2%in the next fiscal year.Pakistans exports increased by 26.6%yoy in FY2022(July 2021 to June 2022)to US$31.8 bill

284、ion.In the first quarter of FY2023(July-September 2022),exports stood at US$7.2 billion,a growth of 2.7%yoy.In FY2022,textile exports increased by 26.0%yoy to US$19.4 billion,accounting for 61.9%of Pakistans total export value in the fiscal year.In the first quarter of FY2023,textile exports rose 3.

285、7%yoy to US$4.6 billion,accounting for 63.8%of Pakistans total export value in the period.In FY2022,the US remained the top export destination of Pakistani products,followed by China and the UK.Exports to the US during this period were 1,201.9 billion rupees(about US$5.9 billion),accounting for 21.2

286、%of Pakistans total exports in the period.This was followed by China,where Pakistan exported 567.1 billion rupee(about US$2.8 billion)worth of goods(10.0%of total exports).UK was the third top export destination,where Pakistan exported 382.7 billion rupees(about US$1.9 billion)worth of goods,account

287、ing for 6.8%of total exports.Some Pakistani exporters have reported cancellation of export orders by international buyers against the backdrop of global recession fears.Textile and technology sectors in Pakistan have also reported job cuts amid dim economic prospect of the country.Imports in the fir

288、st quarter of FY2023 dropped 21.4%yoy to US$16.3 billion;it is the result of the governments efforts in reducing the soaring trade deficits of the country.Net FDI inflows into Pakistan were US$1,867.8 million in FY2022,a 2.6%yoy increase from US$1,820.5 million in the previous fiscal year.However,in

289、 the first two months of FY2023(July and August 2022),net FDI inflows into Pakistan dropped by 26.1%yoy to US$169.5 million,from US$229.5 million in the same period of the previous fiscal year.In July-August 2022,the power sector(thermal,hydro,and coal generation)attracted the highest FDI of US$80.4

290、 million(47.4%of the total value of net FDI inflows),followed by the financial business sector(US$50.7 million,29.9%),communications(US$25.0 million,14.8%),cosmetics(US$9.2 million,5.4%),and trade(US$7.6 million,4.5%),as data from the State Bank of Pakistan showed.China was the largest foreign inves

291、tor in Pakistan during this period:its investment was US$32.7 million,accounting for 19.3%of the total value of net FDI inflows.United Arab Emirates was the second largest foreign investor during this period(US$25.5 million,15.0%),followed by Switzerland(US$23.3 million,13.7%),the Netherlands(US$16.

292、8 million,9.9%),Germany(US$11.9 million,7.0%),and Malaysia(US$11.1 million,6.5%).The Pakistani rupee closed at 227.839 against the US dollar on 30 September,a year-to-date depreciation of 22.6%.Policies®ulations On 13 January 2022,the National Assembly of Pakistan passed the Finance Supplementary

293、 Bill 2021(the Bill),in which the exemption of 17%sales tax on imported machinery,equipment and materials to be utilized in the Export Processing 30 COUNTRY SOURCING REPORT ISSUE 20 Zones(EPZs)is withdrawn.Passing of the Bill is a requisite condition for release of the next tranche of US$6 billion E

294、xtended Fund Facility by the International Monetary Fund(IMF),as IMF believes that the numerous exemptions in the tax laws,especially in the sales tax regime,of Pakistan have been creating distortions in the countrys economy.The Bill proposes to impose a 17%sales tax,worth 360 billion rupees,on near

295、ly 144 items.These goods are currently either completely exempted from General Sales Tax(GST)or being taxed at a 5%to 12%rate.Before the Bill was sent to the National Assembly for approval,representatives of the EPZs suggested exempting the tax on sales at the import stage in the EPZs,arguing that c

296、ollecting sales tax upon importation stage in a free trade zone is not applicable anywhere in the world.It does not benefit the government in anyway as 100%of the tax collected would be refunded,making it a tedious exercise with no actual benefit to the government.However,their suggestions were not

297、accepted in the final procedure.This extra tax burden on manufacturers and firms in the EPZs will make foreign and local investors more cautious when considering investing in the EPZs in Pakistan.Industry&sourcing developments The textile industry is the pillar exporting sector of Pakistan,contribut

298、ing more than 60%to the countrys exports in value.It also provides employment to 40%of the countrys labour force,according to estimations by the Lahore Chamber of Commerce and Industry.While the textile sector is the largest export sector of Pakistan,it is not a key target of FDI.The FDI investment

299、in this sector only accounted for 0.2%of the net FDI inflows in FY2022,even though the value of FDI investment attracted to this sector increased by 37.4%yoy to US$3.6 million in the fiscal year.Labour&workplace compliance Since April 2022,three of the five provinces in Pakistan have raised the mont

300、hly minimum wage in their respective provinces.These decisions came after Pakistan Prime Minister Shehbaz Sharif,in his speech on the floor of the national assembly on 11 April,announced to increase Pakistans national minimum wage to 25,000 rupees per month,effective 1 April 2022.The Punjab province

301、 increased its monthly minimum wage from 20,000 rupees to 25,000 rupees,effective since 1 July.The Sindh province increased its monthly minimum wage for unskilled workers from 19,000 rupees to 25,000 rupees,effective since 1 June.On 24 June,the Chief Minister of the Khyber Pakhtunkhwa province Mahmo

302、od Khan announced to raise the monthly minimum wage in the province from 21,000 rupees to 26,000 rupees,effective immediately.FTAs,trade preferences&facilitation On 12 August 2022,Pakistan and Turkey signed a Preferential Trade Agreement(PTA)to promote trade liberalization and enhance bilateral trad

303、e.The PTA includes comprehensive provisions on bilateral safeguards,balance of payment exceptions,dispute settlement,and periodic review of the agreement.Under the PTA,Turkey offers concessions to Pakistan on 261 tariff lines,while Pakistan offers concessions to Turkey on 130 tariff lines.It should

304、be noted that the total trade between PAKISTAN Country&sourcing updates 31 COUNTRY SOURCING REPORT ISSUE 20 Pakistan and Turkey was US$883 million in FY2022,with Pakistans exports to Turkey amounting to US$366 million and Pakistans imports from Turkey amounting to US$517 million.On 9 June 2022,South

305、 Korea signed a Framework Arrangement with Pakistan in Islamabad to provide long term highly concessional financing of up to US$1 billion to Pakistan within five years from 2022 to 2026.Under the signed Framework Arrangement(2022-26),this capital will be used in supporting development projects in he

306、alth,communications,agriculture,and energy,with a special focus on information technology.The Ambassador of South Korea Suh SangPyo,who signed the Framework Arrangement on behalf of the South Korean government,hoped that this Framework Arrangement would be instrumental in backing up the economic pol

307、icies and initiatives being pursued by the new government of Pakistan,which would be conducive to promoting the two countrys bilateral relations in the years ahead.This is at least the third such framework agreements signed between South Korea and Pakistan.Two similar framework arrangements have bee

308、n signed in 2015 and 2019 respectively,with each providing US$500 million to help Pakistan develop projects in the agriculture,hydropower,road infrastructure,power distribution system,communications,information technology,and health sectors.On 4 February 2022,Pakistan and China signed a Framework Ag

309、reement on Industrial Cooperation under the CPEC,during Prime Minister Imran Khans visit to Beijing.Under the Framework Agreement,the two parties reaffirm prioritized development and operations of the nine CPEC Special Economic Zones(SEZs)in Pakistan and agree to facilitate relocation of industries

310、and investments from China and other parts of the world to the SEZs.The agreement also emphasizes the development of a business-to-business matchmaking mechanism that will enhance the people-to-people and institution-to-institution linkages between the two countries.The signing of this Framework Agr

311、eement is considered a milestone of the second phase of the CPEC,which is an all-round economic cooperation plan between China and Pakistan.Unlike the first phase of the CPEC,which focused on infrastructure and energy projects,the second phase is much broader in scope and focuses on industrial reloc

312、ation,agricultural modernization,science and technology cooperation,job creation and socio-economic well-being of people.On 8 March,Pakistan and the US announced that they have relaunched the process of the Trade and Investment Framework Agreement(TIFA)during a two-day intersessional meeting at Isla

313、mabad between Muhammad Sualeh Ahmad Faruqui,Federal Secretary Commerce,and Christopher Wilson,Assistant United States Trade Representative(AUSTR)for South and Central Asia.The TIFA between Pakistan and the US was signed in 2003 and aimed at providing a platform to discuss bilateral trade issues.The

314、goal of the framework is to expand bilateral trade and investments in both goods and services.The last TIFA intersessional meeting was held in Islamabad in May 2019.By relaunching meetings under TIFA,the US hopes to reinforce trade and economic relationships with Pakistan.Issues discussed at the mee

315、ting included cooperation in the agriculture,textile and healthcare sectors,the protection of intellectual property,the promotion of digital trade,e-commerce and labour rights,as well as the economic empowerment of women.PAKISTAN Country&sourcing updates 32 COUNTRY SOURCING REPORT ISSUE 20 During th

316、e meeting,the Pakistani representatives also suggested to revive the talks on the Bilateral Investment Treaty(BIT)between the two countries but got few echoes from the US delegation.Pakistan and the US began negotiating the BIT in 2004 and closed the text in 2012,but the agreement has not been signe

317、d due to reservations from Pakistani stakeholders.Infrastructure&environmental sustainability Shortage in gas and power supply has long been a bottleneck to Pakistans economic growth.The Pakistani government has made a great effort to tackle this problem.FY2022 also saw a large number of power gener

318、ation projects planned,implemented,and completed.By the end of FY2022,about 3,275 MW installed capacity has been added to the national grid,with nuclear power plants topping the list with a contribution of 1,145 MW and increasing the cumulative capacity to 37,951 MW.However,the energy generation mix

319、 in the country is currently dominated by fossil fuels-including oil,RLNG,gas,local and imported coal-with a gross share of 66%.Pakistans first ever Matiari-Lahore HVDC Transmission Line project developed by the private sector with a capacity of 660 kV became operational on a commercial basis during

320、 FY2022.Karachi Nuclear Power Plant Unit-3(K-3)with installed capacity of 1,145 MW has also been connected to the National Grid in the fiscal year.The Government of Pakistan also tried to improve its transport and logistics systems.Besides the investments from the Pakistani government,transport and

321、logistics projects were also supported through foreign funding or investments,including the CPEC program,the Central Asia Regional Economic Cooperation program and other foreign-assisted initiatives.Alternative or innovative modes of investments such as PPP and BOT have also been initiated to meet t

322、he funding gap especially for road infrastructure and urban mass transit projects.Major ongoing projects in FY2022 include the construction of Eastbay Expressway,procurement of Port Allied equipment,jetties in Gwadar,and development projects undertaken by the Korangi Fisheries Harbour Authority.PAKI

323、STAN Country&sourcing updates 33 COUNTRY SOURCING REPORT ISSUE 20 PAKISTAN Macroeconomic data Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Quantum index of large-scale manufacturing(yoy growth%)15.4 21.4 11.5-1.4 0.6 Consumer price index(yoy growth%)13.4 13.8 21.3 24.9 27.3 23.2 Exports(yoy growth%)30.

324、6 57.2 7.0-3.6 10.4 1.5 Exports(US$mn)2,897.4 2,626.5 2,918.4 2,254.5 2,482.4 2,446.0 Of which:-Garments(US$mn)838.8 749.9 843.6 739.5 779.9 713.3 -Bed linen(US$mn)278.6 281.4 284.0 254.0 258.3 267.4 -Sporting goods(US$mn)35.9 32.8 36.3 29.2 34.5 38.4 Imports(yoy growth%)27.1 28.0 21.6-10.4-7.7-18.5

325、 Imports(US$mn)6,660.9 6,777.5 7,722.0 4,993.4 6,071.1 5,347.0 Balance of trade(US$mn)-3,763.5-4,151.0-4,803.6-2,738.9-3,588.7-2,901.0 Source:Pakistan Bureau of Statistics EXCHANGE RATES Source:State Bank of Pakistan 140.0160.0180.0200.0220.0240.0260.0USD:PKR weighted average customer buy rate(April

326、 September 2022)34 COUNTRY SOURCING REPORT ISSUE 20 PHILIPPINES Country&sourcing updates Macroeconomic trends The countrys gross domestic product(GDP)slowed to 7.4%in the second quarter of 2022 from the previous quarters 8.2%,bringing the first half average to 7.8%.The growth rate is still at the hi

327、gher end of the government growth target for the year.The continued reopening of the economy,spending related to the May national polls,as well as the accommodative monetary policy that buoyed consumption and investment were ascribed as major contributors to the good growth performance in the first

328、half of the year.While government officials are still confident of achieving their growth target of between 6.5%to 7.5%for this year,they acknowledged that headwinds like a slowdown in the world economy and tightening global monetary conditions will weigh on the countrys economy in the second half o

329、f the year.The Philippines exports in the first eight months of 2022 increased by 4.4%yoy to US$51.2 billion.During this period,electronic products continued to be the countrys top exports,with an export value of US$28.2 billion,accounting for 55.2%of the countrys total exports.This was followed by

330、other mineral goods(US$2.7 billion,accounting for 5.3%of the total export value);other manufactured goods(US$2.6 billion,5.1%);coconut oil(US$1.7 billion,3.2%);ignition wiring set and other wiring sets used in vehicles,aircrafts and ships(US$1.5 billion,3.0%);and machinery and transport equipment(US

331、$1.48 billion,2.9%).The US was the Philippines largest export market,accounting for 15.7%of the total export value of the Philippines in the first eight months of 2022(US$8.0 billion),followed by Japan(US$7.4 billion,14.4%),China(US$7.2 billion,14.1%),Hong Kong SAR,China(US$6.4 billion,12.5%),and Si

332、ngapore(US$3.4 billion,6.6%).The Philippines net inflow of foreign direct investment(FDI)in the first seven months of 2022 decreased by 12.0%yoy to US$5.1 billion.Japan was the largest foreign investor of the Philippines during this period,with a net FDI inflow of US$297.3 million;followed by Singap

333、ore(US$162.1 million),the US(US$149.1 million),Malaysia(US$104.5 million),and Kuwait(US$38.4 million).The net FDI inflows were directed mainly to manufacturing(US$301.5 million),construction(US$151.1 million),real estate activities(US$116.0 million),financial and insurance activities(US$111.5 million),and information and communications(US$76.4 million).The Philippine peso closed at 58.910 against