Southeast Asian textile industry encounters a wave of closures

Since 2015, news about the closure of textile mills in Southeast Asian countries has been heard and the scope is continuously expanding. This ** this order, for everyone to provide reference.

Pakistan - Closing of 30% Spinners Closing at 110 Textile Mills

At present, there are 15 million industrial workers in Pakistan's textile industry. Due to the high operating costs, especially the high electricity and gas prices, 30% of the spinning mills have closed down and about 110 factories have been forced to close. On October 14, 2015, all Pakistani textile companies shut down factories to hold increasing business costs.

Data show that in November 2015, Pakistan exported 936 million US dollars of textiles and clothing, a year-on-year decrease of 14.77%, a decrease of 8.54% compared to the previous period; exports of 37,800 tons of cotton yarn, a year-on-year decrease of 45.82% and a month-on-month decrease of 31.97%; exports of 115 million square meters of cotton cloth, an increase from a year earlier 1.45%, a decrease of 20.04% from the previous quarter. In 2015/16 (2015.7-2015.11), Pakistan exported a total of US$5.242 billion worth of textiles and clothing, which was a year-on-year decrease of 9.29%; exports of cotton yarns were 255,300 tons, a year-on-year decrease of 12.87%; and exports of cotton cloth were 664 million meters, an increase of 10.27% over the same period last year.

It is understood that the addition of Pakistan’s electricity tariff and the government-imposed gas infrastructure development tax (GIDC) will increase the operating costs of textile companies by Rs 170 billion per year. At present, Pakistan's textile mills have an electricity price of 15 US cents per Southeast Asia, which is nearly 2 times the 8-9 cents per cent of the surrounding competitor countries. Under the condition of accessing the EU's ultra-GSP system, Pakistan’s textile exports have continued to decline, while the main competitor Indian textile industry has received US$66 billion in investment and a 10% subsidy. Exports of garments accounted for half of Pakistan’s textile exports, which could have been at least 20% due to GSP. However, due to domestic factors, growth has been weak.

The entire Pakistan Textile Industry Association believes that the decline in Pakistan’s textile share is mainly due to the lack of government support. At present, all countries have supportive policies for the textile industry. Developed countries levy high import tariffs on textiles to protect domestic workers. Textile tariffs are on average three times that of other commodities; in addition to higher import tariffs imposed by developing countries, There are also various incentive policies and facilitation measures. After the abolition of textile import quotas in 2005, Pakistan was once considered by many academic institutions in the United Kingdom and the United States to occupy an advantageous position in exports, but it was constantly surpassed by other competitors. Since 2001, Pakistan’s share of the textile market has fallen from 2.2% to 1.66%. In comparison, India’s market share rose from 3.2% to 7.5%, and Bangladesh also grew from 4% of the Palestinian share to 2.5 times the current share of Brazil. Pakistan has gradually declined at a relatively low level in the textile industry.

Cambodia - Nearly 150 garment factories and shoe factories are closed

According to the report of the Cambodian Ministry of Commerce, the Cambodian garment industry recently experienced a workers’ movement and demanded that companies raise the minimum wage. Since 2015, close to 150 garment factories and shoe factories have closed in Cambodia, including more than 50 new factories. According to the report, there are 982 garment factories registered in the Ministry of Commerce and 90 shoe factories. Among them, a total of 130 garment factories and 14 footwear factories were closed in 2015. There are 53 and 5 new garment factories and shoe factories respectively.

The Import and Export Department of the Ministry of Commerce of Cambodia stated that despite the large number of factory closures in 2015, the market situation in 2016 will improve as some of the world’s leading brands are increasing their purchases from Cambodia. From the trade data, in 2015, the export value of Cambodia's clothing and footwear still achieved rapid growth compared with last year.

However, the ** incident has affected Cambodia’s foreign investment enthusiasm. Some foreign-funded enterprises are preparing to close production capacity and shift production bases to Burma or Africa where wages are lower. Some companies are preparing to transfer to Vietnam because Vietnam has signed the TPP agreement. Once the agreement is in force, it will be exported to other TPP countries duty-free. Cambodia is not a member of the TPP and cannot enjoy tax exemption. Therefore, garment manufacturers are worried that their export competitiveness will be greatly weakened.

According to the Cambodian Apparel Manufacturers Association, some clothing and footwear companies have stopped work. As workers continue to demonstrate, they have lost confidence in investing in Cambodia. Textiles and clothing are the country’s main export products. The official believes that frequent riots have seriously affected Cambodia's investment environment and export market.

Indonesia - Currency Devaluation Leads to Closing of Over 100 Textile Mills

According to Indonesian media reports, over 100 textile mills in Indonesia have been closed down due to continuous losses. At present, 36,000 employees are facing unemployment. Most of the factories that have closed down are companies that supply domestic markets.

Indonesia's raw materials are dependent on imports. The value of imports in the textile industry is as high as US$8.5 billion. The Indonesian rupee’s sharp depreciation against the U.S. dollar has led to a significant increase in import costs, and the fabric industry has been the first to suffer. Since the beginning of 2015, Indonesia's domestic textile and garment industry has suffered severe setbacks, domestic textile sales have been hindered, and products in warehouses have piled up. The Indonesian Textile Industry Association stated that the collapse of the Indonesian rupee’s currency resulted in the closure of 18 domestic textile mills in Indonesia, and there were countless losses in semi-closed or large losses. Industry organizations called on the government to cut industrial electricity tariffs by 40% and limit imports.