Cotlook A Index - Cents/lb (Change from previous day)

08-10-2018 86.85 (+1.45)

10-10-2017 78.80

10-10-2016 76.55

New York Cotton Futures (Cents/lb) As on 11.10.2018 (Change from

previous day)

October 2018 77.40 (-0.54)

December 2018 76.99 (+0.19)

March 2019 78.16 (+0.12)

11th October

2018

Exporters complain about lack of credit

Rupee fall has a surprising new reason—RBI

Plugging into Indian supply chains could raise Sri

Lankan exports: World Bank

Pakistan, China negotiating on phase-II of FTA:

Chinese diplomat

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Oct 2018 22350 (+50)

Cotton 15195 (+5) Nov 2018 22350 (+10)

Yarn 24440 (+710) Dec 2018 22440 (0)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- Exporters complain about lack of credit

DIPP nod for four leather projects worth ₹107 cr in TN

Iran sanctions: India ups imports from Saudi

Maharashtra looking for more warehouses

Powerloom sector SMEs from Ichalkaranji to promote textiles and

garments during IITExpo

Govt to soon come out with cargo policy for sustainable growth of

aviation

India meets Australia at LMIFW

AEPC held a fashion exhibition Made in India last week in Madrid

IGST exemption: Centre clears bizmen’s doubts

Rupee fall has a surprising new reason—RBI

Fiberweb India Ltd receives export orders of $1.76 mn

------------------------------------------------------------------------------------------------- Plugging into Indian supply chains could raise Sri Lankan exports:

World Bank

Govt is working on National Tariff Policy for coming five years

Pakistan, China negotiating on phase-II of FTA: Chinese diplomat

Deputy PM attends Vietnam-UK business forum

Hanoi's dependence on imported textiles will cause trade woes

Bangla parliament passes bill to boost garment sector

European firms upbeat about free trade pact with Vietnam

Remodelling the Belt and Road: Pakistan picks up the torch

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

Exporters complain about lack of credit

(Source: Times of India, October 11, 2018)

NEW DELHI: Exporters have petitioned the government about rise in costs due to

higher oil prices, lack of adequate credit since the Nirav Modi fraud came to light and

repeated delays in GST refunds, while maintaining that they have gained little from the

rupee slide.

"For small exporters, credit is a problem ever since the fraud at PNB. It is taking much

longer to get credit as proposals are sent to zonal office and regional office. For large

exporters too, the cost has increased by 5-6%," said Federation of Indian Export

Organisations president Ganesh Kumar Gupta.

To top it up, the government is holding up GST refunds of around Rs 8,000-9,000

crore, while states have not given input tax credit to the tune of Rs 15,000 crore, which

all added to the cost of Indian exports that already lack competitiveness due to higher

logistics.

Export credit declined 26% during the last financial year, which was fallowed by a 21%

fall during the first quarter of the current financial year.

On the rupee's tantrum, Gupta said, the limited intervention by RBI has not been able to

contain the volatility. "Contrary to general perception, such depreciation has not

benefited exports to the extent anticipated."

On the rupee's tantrum, Gupta said, the limited intervention by RBI has not been able to

contain the volatility. "Contrary to general perception, such depreciation has not

benefited exports to the extent anticipated.

India's exports have been rising over the past few months, but exporters see the recent

developments are expected to push pressure. Further, he said Fieo has suggested a

barter system trade with Iran. Gupta said that liquidity is a major area of concern,

particularly for MSME exporters, who constitute the bulk of exports in employment-

intensive sectors.

Home

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4 CITI-NEWS LETTER

DIPP nod for four leather projects worth ₹107 cr in TN

(Source: PTI, The Hindu Businessline, October 10, 2018)

Four projects with a total outlay of ₹107.33 crore in Tamil Nadu have been approved

under the Indian Footwear Leather and Accessories Development Programme to

facilitate upgradation of infrastructure in the sector.

“Major boost to leather industry in Tamil Nadu under the IFLADP. Four projects with

total outlay of ₹107.33 crore now approved by the DIPP to facilitate upgradation of

infrastructure, job creation and environmental sustainability,” Commerce and Industry

Minister Suresh Prabhu said in a tweet.

While the Department of Industrial Policy and Promotion (DIPP) has approved ₹28.15

crore for Perundurai Leather Industries Eco Security at Erode, ₹33.68 crore was

allocated for upgradation of SIDCO Phase-1 Common Effluent Treatment Plant (CETP)

at Ranipet.

It has also approved ₹11.01 crore for upgradation of Talco, Tiruchi CETP. A sum

of ₹34.49 was given for upgradation of Pallavaram CETP at Nagalkeni Chrompet,

Tamil Nadu.

The Department has also given in-principle approval to a mega leather cluster at

Bantala, West Bengal.

“The proposal envisages investment of about ₹400-500 crore and expected to

employment generation of around 7,000,” the DIPP said in a tweet.

Home

Iran sanctions: India ups imports from Saudi

(Source: Financial Express, October 11, 2018)

India imports an average of 25 million barrels per month from Saudi Arabia.

Indian refiners have sought additional four million barrel of crude oil from Saudi Arabia

in November, a move that might partly compensate for any fall in their imports from

Iran consequent to the US sanctions on the Persian Gulf country to be effective

November 4.

India’s oil imports from Saudi Arabia have been to the tune of 25 million barrels per

month in recent past.

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5 CITI-NEWS LETTER

Saudi Arabia was India’s second largest source of oil imports in FY18, accounting for

15% of the country’s overall oil imports; Iraq is the top crude oil exporter to India with a

20% share in India’s overseas oil purchases.

While reports had said India might reduce oil imports from Iran to nearly zero due to

the US sanctions, the government had said earlier this week that two state-run refiners

— IOC and MRPL — have contracted 9 million barrel for crude from the country for

November.

Reliance Industries, Hindustan Petroleum, Bharat Petroleum and MRPL are the

companies which are looking to procure additional one million barrel each from Saudi

Arabia, according to agency reports.

The development comes close on the heels of Saudi Arabia claiming it can replace

Iranian oil which will be unavailable due to renewed US sanctions, a claim Iran has

termed ‘exaggerated’.

Iran, which has emerged as the third largest exporter of oil in recent quarters, exported

8.1 million tonnes of crude to India in Q1FY19, compared with 5.6 mt in the year-ago

quarter. Private refiners have been more aggressive in sourcing Iranian crude than the

state-run firms.

US President Donald Trump had withdrawn JCPOA, also called the Iran Nuclear

Agreement, which was agreed upon in 2015 with the UK, France, Germany, Russia,

China wherein Iran was to curb its nuclear programmes in return of lifting financial

sanctions. This also means that oil imports from the Persian Gulf country will be

affected starting November 4. However, two Indian refiners have already placed orders

of 9 million barrel of crude from Iran for November.

India has been hit by both rising crude oil prices and a weakening rupee which have also

resulted in sharp spike in domestic retail auto fuel prices. While the retail fuel prices are

determined taking into account international product prices, these prices move in

tandem with crude oil prices.

To keep the Iranian oil flowing to India, a payment mechanism in rupee terms is also

being explored as was done during the last sanction regime on Iran which ended in

2015. Last week, an inter-ministerial panel under commerce and industry minister

Suresh Prabhu asked the ministry of petroleum and natural gas to explore payment

mechanism to Venezuela, Russia and Iran in rupee terms in order to curb the currency’s

volatility.

India imported 220 mt of crude oil in FY18, roughly 80% of its total

consumption.Petroleum minister Dharmendra Pradhan on Monday said he spoke with

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6 CITI-NEWS LETTER

Saudi energy minister Khalid al-Falih last week and reminded him that OPEC and other

major oil producers had promised to raise their output at a meeting in June.

India imports an average of 25 million barrels per month from Saudi Arabia.

Reuters last week reported that Russia and Saudi Arabia, the world’s two biggest oil

producers, struck a private deal in September to raise output to cool rising prices and

had informed the US about the decision.

Home Maharashtra looking for more warehouses

(Source: Rahul Wadke, The Hindu BusinessLine, October 10, 2018)

In order to prevent large-scale wastage of government procured tur dal and other

agricultural commodities, the Maharashtra government has started the process of

identifying warehouses spread across various departments and institutions, which

would be taken over and managed by a nodal agency.

It will leverage the existing State government and cooperative societies facilities for the

storage and create a pan-Maharashtra warehouse grid. The Maharashtra State

Warehousing Corporation (MSWC), which is jointly controlled by the Maharashtra

government and Central Warehousing Corporation, has been identified as the nodal

body for the creating the additional warehousing capacity.

Chairman and Managing Director of MSWC Suhas Diwase told BusinessLine that the

process of identifying warehouses, which are held by bodies and departments such as

Maharashtra State Agriculture Marketing Board, Maharashtra State Cotton Growers

Marketing Federation, PWD and Transport Department, cooperative sugar mills and

other institutions, is under way. The warehouse facilities will be checked for scientific

storage of grains and other commodities. All such facilities will be geotagged on the GIS

platform of MSWC, he said.

MSWC already has its own 1,200 warehouses with a combined capacity of holding 17

lakh tonnes of goods. By the end the current year, another 70,000 tonnes capacity will

be added.

A government resolution issued by the Cooperative, Marketing and Textile Department

said that the capacity creation is being made under Atal Mahapanan Vikas Abhiyan,

which is the flagship programme of the department. In the last two years it has been

observed that the agriculture goods procured by the Centre and State government in

Maharashtra did not have adequate storage space, therefore a warehouse grid needs to

be created.

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7 CITI-NEWS LETTER

The departments, which have spare capacity have been asked to share the details about

their warehouse to the MSWC by October 31. The warehouses would be checked for

scientific storage by MSWC and after that, a MoU would be inked. The designated

departments will get rent or revenue share form MSWC for their warehouse space.

Home

Powerloom sector SMEs from Ichalkaranji to promote textiles and

garments during IITExpo

(Source: Knn India, October 10, 2018)

Powerloom Development & Export Promotion Council (PDEXCIL) has again come up

with a grand Reverse Buyer Seller Meet (RBSM) to promote export of textiles and

garments, connecting the international market with Indian textile exporters and traders.

IITExpo Ichalkaranji 2018 will be a one stop source for all textiles requirements of

worldwide buyers and a unique platform for Indian participants where they can gather

information on all latest developments and trends in order to gear the development and

manufacture of their products in future.

The main objective of conducting this RBSM is to provide a direct platform to Indian

textiles exporters to interact with buyers from all over the world in their home country

at a very low participation charge.

The SME sector is highly motivated to participate in it and increase their export activity.

Also it will showcase India as a reliable source of supply with such varied product range.

Under one roof About 100 Indian textile exporters will be displaying a wide range of

products with latest trends and qualities.

The exhibition is happening in Ichalkaranji, a city in Kolhapur district of Maharashtra

and one of the India’s important textile/fabric manufacturing clusters with over

1,50,000 powerlooms. It is having 35 spinning mills many of which are 100% Export

Oriented Units producing a wide range of counts, ply yarns, ring and open end

yarns and fancy yarns, more than 20 power processes and about 50 hand processing

units.

The Cluster will be now set-up by a Mega Processing Cluster to address the

environmental norms.

With the vision to provide a reliable international network platform and practical know-

how on all key sourcing markets, latest trends and standards in export, buyers from

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8 CITI-NEWS LETTER

various countries are invited such as Sri Lanka, Bangladesh, U.A.E, Vietnam, Korea,

Senegal, Zimbabwe, Mali, Malaysia, Australia etc.

Home

Govt to soon come out with cargo policy for sustainable growth of aviation

(Source: Business Standard, October 10, 2018)

India is one of the fastest growing aviation markets in the world and has been

registering double-digit growth for nearly four years

The government will soon come out with an air cargo policy, and a vision document is

being proposed to ensure "sustainable growth" of the domestic aviation sector for all

times to come, Union Minister Suresh Prabhu said Wednesday.

India is one of the fastest growing aviation markets in the world and has been

registering double-digit growth for nearly four years.

Emphasising that security, safety, convenience and affordability are the key aspects, the

Civil Aviation Minister said the aviation vision for 2035 would address all the issues so

that "we will have a sustainable growth in air travel in India for all times".

The ministry is preparing 'Vision 2035' document for the civil aviation sector.

"We are very soon bringing an air cargo policy...," Prabhu said at a seminar on

international aviation security organised by the CISF.

The minister also mentioned about using new technologies to protect a person and his

privacy.

"I think we should think about new technologies on how we should protect privacy and

the person... How we are going to do that will be another interesting challenge in the

future. I am sure we will be able to address it," he added.

Noting that technology itself is not a solution, Prabhu pitched for bringing in best of

technology use with best of human mind.

While there has been good growth in passenger numbers, Prabhu said growth itself is a

cause for concern because "more the number of people travelling... it becomes

challenging to ensure safety of each of them".

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9 CITI-NEWS LETTER

Minister of State for Civil Aviation Jayant Sinha stressed on the importance of having a

unified command, use of technology and cost effectiveness of security solutions.

"Probably, we are going to fly drones of all types, including passenger drones, in 15

years," he noted.

Home India meets Australia at LMIFW

(Source: Business Standard, October 10, 2018)

As a part of on going Australia Fest 2018, five Australian designers' collections were

showcased at Lotus Make-Up India Fashion Week on Wednesday.

The Australian designers collaborated with the highly skilled textile artisans

across India and promoted cultural exchange at the gala through their collection.

The Indo-Australian Project have been created with stunning handloomed textiles and

artisan embellishments through Artisans of Fashion's artisan partners.

The main aim of the project was to promote cultural sustainability, authenticity and

social change for village artisans in India; with a specific focus on empowering women

and marginalised communities who have little access to alternative sources of income.

"We are kindred", "Cassandra Harper", "Romance was born", "Brothers Earth" and

"Roopa" were five Australian fashion labels which displayed their collection at the gala.

The collection was the amalgamation of Indian and Australian fashion, imparting cross-

culture vibes through the outfits.

Australia's High Commissioner to India Harinder Sidhu attended the event.

Models walked down the ramp in a gamut of fabulous Indo-western ensembles ranging

from Banarasi skirts, western tops, denim shirts with Indian stone work and gowns with

heavy use of embellishments, glitter and sparkle.

Home

AEPC held a fashion exhibition Made in India last week in Madrid

(Source: Pinker Moda, October 10, 2018)

The meeting of AEPC -named Buyer / Seller Meet and held in Chamartín- had 38

exhibitors and a good number of Spanish visitors

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10 CITI-NEWS LETTER

10.10.2018.- The AEPC (Apparel Export Promotion Council), a body under the

Ministry of Textiles, held a new exhibition in Madrid with 38 exhibitors who want to

start or increase their sales in Spain. All of them thought especially in the big chains and

Spanish brands, which can make important orders. Many already have Spanish

clients; others want to start this adventure, supported by their exporting experience to

Japan, the United States and other countries of the European Union.

The views of the AEPC

During the exhibition itself we were able to chat with Sudhir Sekhri , director of the

AEPC responsible for the foreign promotion of the Indian garment manufacturers.

What are the main advantages of Indian clothing?

The quality of the articles, which has been improving in recent years as a result of the

growth of exports; the speed of delivery, thanks to the abundance of labor and

machinery; and the reactivity of companies, which - unlike what happens in China,

where most companies are considerably older than in India - can accept medium and

even small orders.

And its main difficulties?

On the one hand some production costs are higher than in other nearby countries such

as Cambodia or Bangladesh. On the other hand, logistics costs are also higher than in

them. Our companies, which are almost always exclusively Indian capital, are efficient

in medium and small dimensions and should be able to scale their efficiency in larger

dimensions.

How is the garment sector structured and what support does it receive from the Indian

Government?

In a sector formed by:

Some very large companies, often verticalized from the raw material to the final

product, working mainly for export.

A large number of companies of medium size, who also work mainly for export.

And for an even greater number of small, local businesses that work only for the

domestic market, which the government wants to protect because they employ

millions of workers.

The Government has a Ministry of Textiles, on which 11 sectors related to the textile /

clothing industry depend: the most important is the clothing manufacturer, coordinated

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11 CITI-NEWS LETTER

by the AEPC, which offers information and promotional services to its members. It is

followed by Texprocil, the council that promotes the export of cotton raw materials.

What volume currently reach the Indian exports of clothing?

In manufacturing, last year Indian exports amounted to 17.5 billion dollars. The

Ministry wants to reach 20 by 2020. This goal, however, will be difficult to achieve for a

number of reasons, despite government support. Among his actions, he highlights his

annual exhibition in Tokyo, which this year has counted with 85 exhibitors from various

textile subsectors; another annual exhibition in London; is in Madrid; etc.

Another important government program for textile / clothing support is the Market

Access Initiative , which reports to the Ministry of Commerce. Support Indian

exhibitors at events outside the country with a subsidy that covers between 50 and 60%

of the costs incurred.

What is the IBEF that we have seen announced here in this exhibition?

The IBEF (India Brand Equity Formation) is a program created by the

Government, to promote a good global image of India, which should also affect the

image of its companies in all sectors.

India, in search of unilateral trade agreements

What can you tell us about India's free trade agreements with other countries?

In general, we have considerably fewer free trade agreements with the West than our

other competitors, such as Bangladesh, which is a comparative grievance and a difficulty

to export more. The problem lies in the Indian resistance to open its market to defend

domestic manufacturers. This happens in several sectors, such as automotive,

winemaking and textile / fashion. Progress is being made, but very slowly.

With Japan, on the other hand, we do have a free trade agreement. When the Brexit is

already a fact it is possible that it is easier to reach an FTA between India and Great

Britain, and perhaps longer term with the United States. Right now is not the time to try

big global and multilateral agreements. Therefore, we will continue working on bilateral

agreements, which are easier. In any case, I believe that India should try to reach an

agreement with its possible business partners on the easiest issues and then leave the

most difficult ones.

Professional training, with assured work

On the occasion of the exhibition, Rakesh Vaid was also in Madrid , vice president of

the Apparel Training & Design Center , a public institution created in 1996 for the

training of workers in the clothing sector. It currently has 251 offices spread throughout

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12 CITI-NEWS LETTER

India and 50,000 students per year. His teachings range from basic technical aspects,

such as sewing or pattern making, to more ambitious ones, such as business

management or marketing. Rakesh Vaid also clarified that all students who finish their

studies at that institution have secured a job because she deals with placing them among

the companies that come in search of personnel.

The lessons of fashion design, meanwhile, is in the hands of many private centers

and NIFT (National Institute of Fashion Technology ), a public center that

depends on the Ministry of Textiles. Founded in 1986, it currently has 16 campuses

distributed throughout the country.

Some exhibitors tell their experiences and their objectives

The vast majority of exhibitors produce knitwear; enough, also in fabric to the

flat. Virtually all have their own designs (in general, quite loaded with accessories, or

embellishment), but also work with designs provided by their customers. In general,

they are excited about their prospects in the Spanish market. A part of them already

exports to our country. They consider that the Indian garment sector has enough cotton,

although it is too expensive. This year the price of cotton can rise because the rains have

spoiled part of the harvest. Most of the wholesale prices we saw ranged between 10 and

30 euros, although some special items went up considerably more.

Linear Design , from Mumbai, is one of the exhibitors that produces only

knitwear. Your team travels a lot to know global trends. Use Chinese rectilinear

machines, which have a good quality / service ratio, which are quite cheaper than Stoll

and Shima Seiki, whose programming is quite difficult and they can do practically the

same. They have technicians trained to handle them.

Venture Clothing , from Noida, industrial city next to Delhi. It is a clothing company

born in 2008, which makes knitted and woven garments. It already sells in the EU but

not in Spain. He already has WARP Gold certification , which he considers

demonstrates his CSR (Corporate Social Responsibility ). Does not use, for

example, azo components. Our designs have enough embellishment because they like

European customers and sell them well .

Array Clothing , by Haryana and Amritansh. Manufactures masculine, feminine and

infantile clothes, also in denim. Exports mainly to Japan, Spain, Great Britain and

Dubai. It has articles with artisan accessories handmade by older and expert women. It

is audited by TÜV and by the Japanese company Furushima. He complains about the

difficulties to export, because the Indian government does not want to open the internal

market.

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13 CITI-NEWS LETTER

Spirit of India , by Noida. Uses authentic silk, organic fabrics, vegetable dyes, modal,

lyocell, etc. It has CSR and BSCI certifications. It carries out its own inspections and also

requires its suppliers to have them.

Home

IGST exemption: Centre clears bizmen’s doubts

(Source: Times of India, October 11, 2018)

Tirupur: Knitwear industrialists were relieved after the central board of indirect tax and

customs (CSIC) clarified that they could claim refund of Integrated Goods and Service

Tax (IGST) for exported goods even if they had imported capital goods under the Export

Promotion Capital Goods (EPCG) scheme.

“The central government had amended 96 (10) rule of CGST on September 4. It said the

exporters who import their requirements without payment of IGST are not eligible for

refund of IGST paid on exports of goods. But the CSIC clarified that the exporters can

claim refund of IGST for the exported goods if they import capital goods under the

EPCG scheme. However, the relief was not extended in case of import of goods like

fabrics. The central government should come forward to extend the relief to import of

other goods too,” Raja M Shanmugham, president of Tirupur exporters' association, said

in a press release.

Home

Rupee fall has a surprising new reason—RBI

(Source: Live Mint, October 10, 2018)

Mumbai: The worst run of rupee losses in 16 years is set to extend. Only this time, the

declines might not be triggered by oil but by the surprise move by India’s central bank

to hold rates despite the currency’s free fall. The rupee, which has fallen for six

straight months in the longest stretch since 2002, is seen sliding to 75 per dollar by

year-end, according to median of 10 analysts surveyed by Bloomberg. The December-

end estimate has inched up from 69 at the start of September.

Reserve Bank of India Governor Urjit Patel’s comments Friday that the rupee’s

drop is moderate in comparison to emerging market peers and that the central bank

doesn’t have any target in mind unnerved investors who were expecting the authority to

boost its defense of Asia’s worst-performing major currency.

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14 CITI-NEWS LETTER

“Governor Patel has effectively left the rupee out in the cold and insinuated that it is not

his job to determine the appropriate level for the currency,” said Charlie Lay, an analyst

at Commerzbank AG in Singapore. “RBI has seemingly opened the floodgates for further

rupee weakness.”

The rupee fell past the 74 to a dollar mark

for the first time soon after the RBI’s

decision, and analysts, whose year-end

estimates have been obliterated by the

meltdown, cut their targets further.

Skandinaviska Enskilda Banken AB said

the rupee could test 75 in the near term

while ING Bank NV said the bank’s recent

downgrade to 75 wasn’t enough.

The currency rose 0.2 percent to 74.2275 at 10:22 a.m. in Mumbai, rebounding from a

record low of 74.3950 touched on Tuesday.

To be sure, the RBI has for long maintained that it steps in only to curb undue volatility

and doesn’t target any currency level. That stance places the authority behind

counterparts in Indonesia and the Philippines, which have been actively supporting

their currencies, Madhavi Arora, an economist at Edelweiss Securities Ltd., wrote in a

note Tuesday.

“We expect the weakness to persist, with the rupee heading toward 75-plus levels

against the dollar, unless some additional assertive policy steps come through,” she said.

Home

Fiberweb India Ltd receives export orders of $1.76 mn

(Source: Equity Bulls, October 10, 2018)

Fiberweb India Ltd has received another export orders worth INRs 127 Million (US$

1.76 Million). It is a matter of pride for young team from U.S.A. that their efforts have

successfully resulted these orders. In USA and other countries the season has started

early this year and this is the only second order of the Season. The order covers both

products in the field of PPSpun Bond and Melt Blown Fabrics.

Due to research and development work done by the Company on its product and also

preparing innovative converted products, the Company has been able to break through

in the competitive market of U.S.A. with the orders of good profitability. The company

produces Spun Bond Non Woven Fabric (Technical Textile) and its various converted

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15 CITI-NEWS LETTER

products. There is continuous research and development and also improvement by

which Company is able to get the value added products.

The company is pioneer in this field and being 100% EOU, largest exporter and a Star

Export House. It has established its name as a quality supplier in the international

market as it is ISO 9001: 2008, ISO 14001:2004, OHSAS18001:2007 and Oeko Tex

Standard 100 Company.

The Melt Blown line is in operation since January 2018 and in short time it is very well

accepted in the market. Due to demand far exceeding the supplies, the products are

much in demand by the Customers at a much better price.

Mr. Pravin Sheth congratulated the team of Technicians and our US marketing team, for

their continuous efforts. Though there is steep increase in crude oil prices, our raw

material, Poly Propylene prices are also increasing but same is absorbed in the selling

price and due to devaluation of Rupee the export is very attractive and profitable.

Shares of FIBERWEB (INDIA) LTD. was last trading in BSE at Rs.46.3 as compared to

the previous close of Rs. 43.7. The total number of shares traded during the day was

34762 in over 259 trades.

The stock hit an intraday high of Rs. 47.7 and intraday low of 41.7. The net turnover

during the day was Rs. 1590199.

Home --------------------------

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16 CITI-NEWS LETTER

GLOBAL:

Plugging into Indian supply chains could raise Sri Lankan exports: World

Bank

(Source: Economy Next, October 10, 2018)

There is untapped export potential for Sri Lanka if it plugs into India’s local and regional

value chains, a new World Bank report has said.

However, South Asia has been unable to reach full potential in creating regional value

chains because of low intra-regional foreign direct investment (FDI), the report said.

Inter-regional FDI outflows from South Asia only made up 0.3 percent of total South

Asian outflows in 2015, and inter-regional FDI inflows made up 1.1 percent.

FDI inflows from South Asia to Sri Lanka came up to 4.7 percent of its total inflows and

outflows made up 14.4 percent.

Out of total interregional FDI flows in South Asia, 48.2 percent flowed into Sri Lanka,

mainly due to large inflows from India.

India was the source of 91.7 percent of South Asian FDI inflows to Sri Lanka, while 56.4

percent of Sri Lanka’s South Asian FDI outflows went in the Maldives, and 32.0 percent

to India.

The private sector in South Asia usually makes outward investment decisions beyond

the immediate neighbourhood, said the report.

This has resulted in small regional value chains existing in only some sectors, such as

textiles and clothing.

“There is a fantastic market right here (in South Asia), which we’re not exploiting,”

Sanjay Kathuria, Lead Economist and Coordinator, South Asia Regional Integration,

The World Bank Group said.

The South Asian market would allow companies to take part in larger global value

chains, and then gain access to a larger Asian market, he said.

Sri Lanka sources 20.4 percent of its imported intermediate goods from South Asia, and

exports 18.4 percent.

Over 45 percent of Sri Lanka’s capital good imports come from South Asia, and it

exports 17.9 percent.

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17 CITI-NEWS LETTER

The report, ‘A Glass Half Full: The Promise of Regional Trade in South Asia’, points out

that both interregional FDIs and value chains could be doing better. (COLOMBO, 10

October 2018)

Home

Govt is working on National Tariff Policy for coming five years

(Source: Associated Press of Pakistan, October 10, 2018)

ISLAMABAD: The government is working on the National Tariff Policy for the coming

five years as part of the Strategic Trade Policy Framework (STPF) 2018-23 for reviewing

tariff lines to enhance country’s trade.

The tariff policy draft recommends a gradual reduction in the duty on raw material and

machinery imports for export-oriented industries and further tariff slabs are proposed

to be fixed at 5 percent, 10 percent,15 percent and 20 percent, senior official of Ministry

of Commerce told APP here on Wednesday.

He said the commerce division is formulating the STPF 2018-23, which will give

strategic direction to the export sector for the coming five years and the new tariff policy

will be an integral part of the upcoming STPF.

Replying to a question, he said the government would implement its trade policy after a

thorough appraisal according to modern trends and Strategic policy framework 2018-23

with an aim to substantially boost the country’s exports.

The official said Pakistan is committed to diversify its exports and reach new trade

destinations in different regions of the world including, South American, Africa and

South East Asia.

He further said that Free Trade Agreement (FTA) with different countries including

Turkey, China and Thailand were under negotiation phase.

While talking on second phase of Pak-China FTA, he said China had agreed to provide

market access to 70 items, shared by Pakistan besides providing concession on all items

included in the offer list.

He added that coming round of negotiation with China under 2nd phase of FTA would

held in October, 2018 in Islamabad.

Replying to another question, he said that Pakistan would get benefits of $ 200 million

after signing the FTA with Thailand and also enhancing the trade volume between both

nations.

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18 CITI-NEWS LETTER

The official said that Pakistan and Thailand would present their complete final list of

FTA)in coming round of negotiation at the end of October, 2018 for increasing trade

liberalization between both the countries.

Both sides had exchanged the final offer lists of items for free trade, including

automobile and textile sectors in order to remove the reservations of both sectors,

Pakistan wants concession on 110 products on textiles, agro-products, plastic and

Pharmaceuticals as same Thailand granted to other FTA partners in these products, he

said.

Replying to another question, he said that Pakistan and Indonesia have finalized the

review process for the bilateral preferential trade agreement that is likely to enhance

local exports to the South East Asian country by $210 million a year.

Currently, Pakistan and Indonesia have annual bilateral trade volume of $180 million,

which was expected to increase to $370 million after renegotiation on the preferential

trade agreement between the two countries, he said.

Home

Pakistan, China negotiating on phase-II of FTA: Chinese diplomat

(Source: Business Standard, October 10, 2018)

China and Pakistan are negotiating the terms of the second phase of their free trade

agreement to increase trade and provide free trade opportunity for their businesses, a

senior Chinese diplomat has said.

Beijing and Islamabad have held around 10 rounds of talks to iron out differences over

the terms of the phase-II of the China-Pakistan Free Trade Agreement.Both the country

had signed a major free trade agreement in 2006, which came into effect in July 2007.

"Pakistan has huge potential market for international investors and its strategic location

gives more comparative advantages to other trading partners. Pakistan and China are

negotiating on phase-II of the Free Trade Agreement (FTA) to increase trade and

provide free trade opportunity in their markets," Economic and Commercial

Counselor of Chinese Embassy, Wang Zhihua said.

Meawhile, Pakistan and China have signed eight memorandum of understanding (MoU)

worth USD 100 million for mutual investment in steel, seafood, agriculture and

pharmaceutical sectors, media reports said on Wednesday.

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19 CITI-NEWS LETTER

The MoUs, for mutual investment and joint ventures to expedite the trade and business

between both the nations, were signed by 14 private companies from both the countries

at the Pakistan-China Trade Cooperation Projects event, organised by the Trade

Development Authority of Pakistan (TDAP) and the Ministry of Commerce China, the

state-run Radio Pakistan reported.

Wang said Pakistan is a friendly country and China believes in peaceful co-existence and

cooperation for shared property.

"Since the diplomatic relations started between Pakistan and China, the cooperation

between both the sides has increased in defence, technology, agriculture, leather and

chemicals sectors," Wang was quoted as saying by The Nation newspaper.

The diplomat said in the recent years, the China-Pakistan Economic Corridor (CPEC),

under the 'One Belt One Road (OBOR)' initiative, has given a new height to the mutual

relation and cooperation between two friendly nations.

Pakistan's Additional Secretary, Ministry of Commerce and Textile, Syed Tariq Huda,

said that Chinese investment in Pakistan has given positive impact to the country's local

market.

"We have USD 60 billion Chinese investment in CPEC which includes development

projects in Gwadar," he added.

Huda said that the OBOR initiatives also give vision for inclusions and welfare of all

region.

Home

Deputy PM attends Vietnam-UK business forum

(Source: VNS, October 10, 2018)

LONDON — Deputy Prime Minister and Foreign Minister Phạm Bình Minh has said

that Việt Nam was committed to supporting trade liberalisation and open co-operation

with all partners, including the UK.

Addressing a Việt Nam-UK business forum in London on Tuesday that drew hundreds

of businesses, the official said that since Việt Nam and the UK set up their strategic

partnership in 2010, bilateral trade had risen to US$6.1 billion per year.

In the first six months of 2018, two-way trade hit $3.12 billion, up 14.2 per cent year on

year, he noted.

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20 CITI-NEWS LETTER

Việt Nam had 344 UK-invested projects with total investment of $3.48 billion in various

fields such as finance-banking, production, services, garments and textiles, mining, oil

and gas and real estate, making it the 15th biggest out of the 129 foreign countries and

territories investing in Việt Nam.

At the same time, Vietnamese firms had 13 projects worth $12.47 million in the UK,

focusing on tourism, restaurants, sports and fine art.

With more than 12,000 students studying in the UK, the Vietnamese community had

increased to 100,000, helping foster connectivity between the two nations.

Việt Nam considered the UK an important partner, and the bolstering of economic,

trade and investment collaboration with the UK was the major motivation for their

bilateral strategic partnership, stated Minh.

At the forum, he also witnessed the signing of a Memorandum of Understanding (MoU)

on co-operation between the Việt Nam Chamber of Commerce and Industry and the

UK-ASEAN Business Council.

The UK Prime Minister’s Trade Envoy to Việt Nam Ed Vazey said that his country

supported the free trade agreement between Việt Nam and the EU, and added that the

Brexit issue would not affect the UK’s investment and business activities in Việt Nam.

Discussing the future of the Vietnamese economy, Deputy Minister of Industry and

Trade Hoàng Quốc Vượng highlighted the economic achievements Việt Nam had made

in recent years, along with the country’s potential and strengths and its commitments to

creating a favourable environment for foreign investors.

UK Minister of State for trade and export promotion at the UK Department for

International Trade Baroness Rona Alison Fairhead said that Việt Nam had become a

promising land for UK businesses. She advised UK firms to make full use of their

strengths in finance-banking, insurance and oil and gas, and focus on co-operation

opportunities in renewable energy, infrastructure, IT and education.

The same day, Deputy PM Minh had a meeting with Minister of the UK Cabinet Office

David Liddington during which the two sides expressed their delight at the growth of

their strategic partnership, while seeking measures to continue boosting ties in the

future when the UK leaves the EU.

Liddington said that the UK Government was keen to continue fostering its multifaceted

partnership with the Government of Việt Nam, including strengthening governance

capacity and high quality human resources training.

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21 CITI-NEWS LETTER

Deputy PM Minh asked the UK Government to encourage local firms to invest more in

Việt Nam and strengthen co-operation in promising areas such as education, science-

technology and tourism, while supporting Việt Nam’s bid to become a non-permanent

member of the UN Security Council for the 2020-21 tenure.

Regarding international issues, the two sides pledged to continue collaborating closely

at international forums, including the UN, while supporting peace, stability and

maritime and overflight security, safety and freedom, as well as the peaceful settlement

of disputes in line with international law, including the UN Convention on the Law of

the Sea 1982.

Deputy PM Minh asked Liddington to convey Prime Minister Nguyễn Xuân Phúc’s

invitation to PM Theresa May to visit Việt Nam

Home

Hanoi's dependence on imported textiles will cause trade woes

(Source: Vietnam News Association, October 10, 2018)

Why Vietnam must do more than cut and sew

Vietnam is on track to become the world's second-biggest exporter of textiles and

clothing this year, but it is too soon to celebrate.

Most Vietnamese clothing exports are processed from imported high-value textiles. As

the country's trade surplus with the US balloons, Vietnam will need to move up the

value chain by developing homegrown textile manufacturing if it is to diversify into new

markets and escape Washington's ire.

Textiles and clothing manufacturing have been key pillars of the Vietnamese economy

since the country's "doi moi" economic reforms of the early 1990s. The sector has lured

low-cost rural workers out of farms and into factories, helping generate a reliable stream

of foreign exchange revenue.

Vietnam last year surpassed Bangladesh, Germany and Italy to become the world's

third-largest exporter of textiles and clothing, shipping $36.9 billion worth, just below

China and India.

Exports of "Made in Vietnam" textiles and clothing expanded more than fourfold during

2007-17, and have increased at an average 15 percent annually over the past five years,

according to the United Nations Conference on Trade and Development (UNCTAD).

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22 CITI-NEWS LETTER

Vietnam is well on track to overtake India this year. Government statistics show exports

grew 16.9 percent in January-August, twice as fast as in the same period last year.

Textiles and clothing are Vietnam's second-biggest export and its leading industrial

employer. Despite rising labor costs, the sector remains highly labor-intensive,

employing 2.7 million workers nationwide. That means 5 percent of the country's total

labor force and 20 percent of its industrial workforce are engaged in producing textiles

and clothing, according to the Vietnam Textile and Apparel Association (Vitas), a

government-linked industry group.

The sector's remarkable export performance relative to other countries points to a

combination of demographic and geographic advantages, as well as an openness in trade

policy that gives Vietnam an edge over its competitors. The prospect of free trade

agreements with the EU -- expected to be ratified this year -- and the original Trans-

Pacific Partnership (TPP) led to a jump in foreign investment. About half of the $15.7

billion invested in Vietnam's clothing and textiles sector from overseas since 1998 was

invested in the past five years, according to Vitas.

Despite the sector's notable gains, Vietnam still lacks credible textile manufacturing

capacity. About 70 to 80 percent of the fabrics used to make clothing in the country are

imported, mainly from China, while clothing production is mostly stuck at the low end

of the value chain. This is the "cut, make and trim" phase where design and materials

inputs are turned into a finished, packaged product.

Vietnam's government statistics bureau estimates that only a third of the value of

finished goods from the textiles and clothing sector is generated domestically, with the

rest consisting of imported materials. Although this is better than barely 20 percent in

smartphones and electronics, it reflects the limited gains for local enterprises engaged in

clothing manufacturing.

While investors are keen to open higher value-added factories to do weaving, knitting

and dyeing, provincial governments are reluctant to approve them because of

environmental concerns. Despite the promise of economic gains, local authorities worry

about breaching national regulations.

Ultimately, Vietnam will need to localize production of input materials. Citing recent

historical examples such as Guangdong, economists highlight the positive effects that

textiles manufacturing can have in spurring industrialization. In any event, the margins

of clothing suppliers at the lower end of the value chain will come under pressure as

labor costs rise, forcing change.

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23 CITI-NEWS LETTER

But Vietnam also needs to move up the value chain if it is to diversify into overseas

markets. The country currently sends nearly half of all of its textiles and clothing exports

to the US.

Home

Bangla parliament passes bill to boost garment sector

(Source: Fibre2Fashion, October 10, 2018)

The Bangladesh parliament recently passed the Textile Bill that was introduced in June

2018 by state minister for jute and textiles Mirza Azam. The government wants to

achieve higher numbers by streamlining multiple processes for market leaders in the

textile industry as the country’s apparel sector grew from $28.2 billion in 2016 to

$29.33 billion in 2017.

Bangladesh total exports earned $36.67 billion for fiscal 2017-18. The textile industry

contributes approximately three-fourths of the country’s total exports with the

readymade garment (RMG) sector as the major contributor, according to a report by a

Bangladesh news wire.

The bill has a lot of amendments to earlier laws, including a one-stop service provision

for companies that want to set up industries. This may raise investment in the RMG

sector.

Home

European firms upbeat about free trade pact with Vietnam

(Source: Vietnam News Association, October 10, 2018)

Nine out of ten European companies want the European

Union-Vietnam Free Trade Agreement (EVFTA) to be

implemented next year, or as soon as possible thereafter,

according to a report released by the European Chamber

of Commerce in Vietnam (EuroCham).

EuroCham disclosed the information at an event in

Brussels, Belgium on Monday during the release of its

latest report, “The EVFTA: Perspectives from Vietnam,” together with amfori and

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24 CITI-NEWS LETTER

BusinessEurope. This launch event, with 70 participants, is part of a EuroCham mission

to the European Parliament and European Commission to push for a quick ratification

of the EVFTA.

EuroCham’s report includes the results of a new survey of the Chamber’s members, who

were asked how the EVFTA will affect their business operations. Over 130 responded –

more than 10% of EuroCham’s membership – and the results were striking.

Just under 80% of EuroCham members believe that the trade pact will have either a

‘significant’ or ‘moderate’ impact on their business in the medium and long-term.

Meanwhile, over 80% believe that the pact will result in Vietnam becoming more

competitive compared to other regional countries, and 72% said that it will help

Vietnam to become a hub for European business in the Association of Southeast Asian

Nations region.

On top of the positive economic benefits, EuroCham members believe that the EVFTA

will help improve a range of social and environmental issues in Vietnam, from welfare

and environmental protection to transfers of knowledge, the advancement of the local

workforce and workers’ rights.

Of note, 33% of EuroCham members believe that the pact will have a ‘significant’ impact

on improving sustainable development and environmental protection.

The report also includes the reflections of business leaders, non-governmental

organizations, economists, entrepreneurs and workers. In their own words, each

contributor shares their personal perspective on Vietnam’s progress since the Doi Moi

economic renovation reforms first opened up Vietnam to foreign investment, along with

how the EVFTA will help Vietnam to further integrate within the international

community and global economy.

Vietnam is now one of the fastest-growing economies in the world, with an annual gross

domestic product per capita growth of 5.3% since Doi Moi – the second-strongest

growth in the region, behind China. That strong economic growth has created new jobs

and raised standards of living for millions of people.

The EVFTA represents an historic change in EU-Vietnam relations. It will boost trade

and investment on both sides, EuroCham stated in the report.

The agreement is expected to eliminate almost all tariffs between the EU and Vietnam,

removing tariffs on 65% of the value of EU exports when the pact enters into force, with

the remaining tariffs being phased out over the next decade.

Meanwhile, 71% of EU imports from Vietnam will become tariff-free once the trade pact

enters into force, rising to more than 99% over the following seven years.

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25 CITI-NEWS LETTER

Also, customs duties will be largely eliminated over a transitional period of seven years

for Vietnamese goods, and ten years for EU goods. This will be a ‘win-win’ for business

and consumers, in the form of lower prices and greater competitiveness, according to

EuroCham.

“This report provides clear evidence that the EVFTA is a ‘win-win’ for Europe and

Vietnam. Our members paint a positive, optimistic picture of the agreement, with 85%

anticipating a significant or moderate impact on their business and investment plans in

the long-term,” said Nicolas Audier, Co-Chairman of EuroCham Vietnam.

In the EVFTA, Vietnam has gone further than the World Trade Organization in terms of

market access granted to EU service providers. Additional sub-sectors will be opened

up, giving the EU the best possible access to Vietnam’s market. The FTA also contains a

‘most favored nation’ clause.

The EU is the fifth-largest foreign investor in Vietnam. Data from the Vietnamese

Ministry of Planning and Investment shows that European firms had almost 2,500

foreign direct investment (FDI) projects, valued at some US$44 billion in Vietnam last

year, making up 10% of total FDI projects and 14% of FDI capital.

In 2017, trade in goods between the EU and Vietnam was worth over EUR47 billion

(US$53.8 billion). European imports from Vietnam accounted for EUR37 billion,

including products such as footwear, textiles and clothing, coffee, rice, seafood and

furniture. Meanwhile, European exports to Vietnam reached EUR10 billion, including

electrical equipment, aircraft, vehicles and pharmaceutical products.

Home

Remodelling the Belt and Road: Pakistan picks up the torch

(Source: Dr. James M. Dorsey, Modern Diplomacy, October 10, 2018)

Pakistan, following in the footsteps of Malaysia and

Myanmar, is the latest country to balk at the China and

infrastructure focus of Beijing’s Belt and Road-related

investments.

Preparing for his first visit to China as Pakistan’s prime

minister, Imran Khan is insisting that the focus of the China

Pakistan Economic Corridor (CPEC), a US$60 billion plus crown jewel of the Belt and

Road, shift from infrastructure to agriculture, job creation and foreign investment.

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26 CITI-NEWS LETTER

“Earlier, the CPEC was only aimed at construction of motorways and highways, but now

the prime minister decided that it will be used to support the agriculture sector, create

more jobs and attract other foreign countries like Saudi Arabia to invest in the

country,” said information minister Fawad Chaudhry.

Mr. Khan’s determination to ensure that more benefits accrue to Pakistan from Chinese

investment comes at a time that various Asian and African countries worry that Belt and

Road-related investments in infrastructure risk trapping them in debt and forcing them

to surrender control of critical national infrastructure, and in some cases media assets.

Preceding Mr. Khan’s move, protests against the forced resettlement of eight Nepali

villages persuaded CWE Investment Corporation, a subsidiary of China Three Gorges, to

consider pulling out of a 750MW hydropower project.

Malaysia has suspended or cancelled US$26 billion in Chinese-funded projects while

Myanmar is negotiating a significant scaling back of a Chinese-funded port project on

the Bay of Bengal from one that would cost US$ 7.3 billion to a more modest

development that would cost US$1.3 billion in a bid to avoid shouldering an

unsustainable debt.

Fears of a debt trap started late last year when unsustainable debt forced Sri Lanka to

hand China an 80% stake in Hambantota port.

Mr. Khan’s move takes on added significance given that Pakistan appears to have

decided to ask the International Monetary Fund (IMF) to help it avert a financial crisis

with a loan of up to US$12 billion and discussions with Saudi Arabia that could produce

up to US$10 billion in investments that would be separate but associated with CPEC.

Pakistani finance minister Asad Umar is expected later this week to initiate discussions

with the IMF during the fund’s annual meeting in Bali. The decision was taken

after Saudi Arabia refused to delay Pakistani payments for oil imports, opting instead to

build a refinery and strategic oil reserve in the CPEC port of Gwadar.

Pakistani officials see investment by Saudi Arabia as one possible way of facilitating a

Pakistani request to the IMF for help. They hope that even an informal association with

CPEC of Saudi Arabia, one of the United States’ closest allies in the greater Middle East,

may alleviate Washington’s concern that IMF money could be used to repay Chinese

debt.

Yet, even that is unlikely to prevent the IMF, backed by the United States, from

demanding that the veil of secrecy be lifted that shrouds the commercial and financial

terms of many CPEC-related, Chinese-funded projects, as a pre-condition for assistance

from the fund.

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27 CITI-NEWS LETTER

Apparently concerned about Pakistan’s intentions, China’s deputy chief of mission in

Islamabad, Lijian Zhao, insisted in an interview as well as a series of tweets that China

welcomed Saudi investment and “always supported& stood behind @ Pakistan,

helping #develop it’s #infrastructure& raise #living standards while creating #job.”

Mr. Lijian’s comments followed a statement last month by Chinese foreign minister

Wang Ji after talks with Mr. Khan in Islamabad that appeared to indicate that China,

while acknowledging Pakistani demands, would not address them immediately. Mr.

Wang suggested that CPEC would only “gradually shift to industrial cooperation.”

Indications suggest further that China may be looking to Pakistan’s military to shave off

the rough ends of the government’s determination to effectively renegotiate CPEC.

Pakistan, following in the footsteps of Malaysia and Myanmar, is the latest country to

balk at the China and infrastructure focus of Beijing’s Belt and Road-related

investments.

Preparing for his first visit to China as Pakistan’s prime minister, Imran Khan is

insisting that the focus of the China Pakistan Economic Corridor (CPEC), a US$60

billion plus crown jewel of the Belt and Road, shift from infrastructure to agriculture,

job creation and foreign investment.

“Earlier, the CPEC was only aimed at construction of motorways and highways, but now

the prime minister decided that it will be used to support the agriculture sector, create

more jobs and attract other foreign countries like Saudi Arabia to invest in the

country,” said information minister Fawad Chaudhry.

Mr. Khan’s determination to ensure that more benefits accrue to Pakistan from Chinese

investment comes at a time that various Asian and African countries worry that Belt and

Road-related investments in infrastructure risk trapping them in debt and forcing them

to surrender control of critical national infrastructure, and in some cases media assets.

Preceding Mr. Khan’s move, protests against the forced resettlement of eight Nepali

villages persuaded CWE Investment Corporation, a subsidiary of China Three Gorges, to

consider pulling out of a 750MW hydropower project.

Malaysia has suspended or cancelled US$26 billion in Chinese-funded projects while

Myanmar is negotiating a significant scaling back of a Chinese-funded port project on

the Bay of Bengal from one that would cost US$ 7.3 billion to a more modest

development that would cost US$1.3 billion in a bid to avoid shouldering an

unsustainable debt.

Fears of a debt trap started late last year when unsustainable debt forced Sri Lanka to

hand China an 80% stake in Hambantota port.

www.citiindia.com

28 CITI-NEWS LETTER

Mr. Khan’s move takes on added significance given that Pakistan appears to have

decided to ask the International Monetary Fund (IMF) to help it avert a financial crisis

with a loan of up to US$12 billion and discussions with Saudi Arabia that could produce

up to US$10 billion in investments that would be separate but associated with CPEC.

Pakistani finance minister Asad Umar is expected later this week to initiate discussions

with the IMF during the fund’s annual meeting in Bali. The decision was taken

after Saudi Arabia refused to delay Pakistani payments for oil imports, opting instead to

build a refinery and strategic oil reserve in the CPEC port of Gwadar.

Pakistani officials see investment by Saudi Arabia as one possible way of facilitating a

Pakistani request to the IMF for help. They hope that even an informal association with

CPEC of Saudi Arabia, one of the United States’ closest allies in the greater Middle East,

may alleviate Washington’s concern that IMF money could be used to repay Chinese

debt.

Yet, even that is unlikely to prevent the IMF, backed by the United States, from

demanding that the veil of secrecy be lifted that shrouds the commercial and financial

terms of many CPEC-related, Chinese-funded projects, as a pre-condition for assistance

from the fund.

Apparently concerned about Pakistan’s intentions, China’s deputy chief of mission in

Islamabad, Lijian Zhao, insisted in an interview as well as a series of tweets that China

welcomed Saudi investment and “always supported& stood behind @ Pakistan,

helping #develop it’s #infrastructure& raise #living standards while creating #job.”

Mr. Lijian’s comments followed a statement last month by Chinese foreign minister

Wang Ji after talks with Mr. Khan in Islamabad that appeared to indicate that China,

while acknowledging Pakistani demands, would not address them immediately. Mr.

Wang suggested that CPEC would only “gradually shift to industrial cooperation.”

Indications suggest further that China may be looking to Pakistan’s military to shave off

the rough ends of the government’s determination to effectively renegotiate CPEC.

Pakistan’s army chief General Qamar Javed Bajwa visited Beijing in August days after

commerce minister Abdul Razak Dawood suggested that the government may suspend

CPEC projects for a year.

Making his comments shortly after Mr. Wang’s departure from Islamabad, Mr. Dawood

also asserted that the previous government had negotiated terms that were favourable to

China rather than Pakistan.

China this week, in a move likely designed as much to strengthen Pakistani counter-

terrorism capabilities as a gesture towards the country’s politically influential armed

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29 CITI-NEWS LETTER

forces, made Pakistan the second country after Saudi Arabia to receive killer drones and

the associated technology.

The US has refused to sell its more advanced killer drones to either Saudi Arabia or

Pakistan.

The Khan government’s desire to refocus CPEC tackles key issues raised by critics of the

project that potentially could impact China’s plan to pacify its troubled north-western

province of Xinjiang through a combination of economic development and brutal

repression and re-education of its Turkic Muslim population.

The initial plan for CPEC appeared to position Pakistan as a raw materials supplier for

China, an export market for Chinese products and labour, and an experimental ground

for the export of the surveillance state China is rolling out in Xinjiang.

The plan envisioned Chinese state-owned companies leasing thousands of hectares of

agricultural land to set up “demonstration projects” in areas ranging from seed varieties

to irrigation technology. Chinese agricultural companies would be offered “free capital

and loans” from various Chinese ministries as well as the China Development Bank.

The plan envisaged the Xinjiang Production and Construction Corps introducing

mechanization as well as new technologies in Pakistani livestock breeding, development

of hybrid varieties, and precision irrigation. Pakistan effectively would become a raw

materials supplier rather than an added-value producer, a prerequisite for a sustainable

textiles industry.

The plan saw the Pakistani textile sector as a supplier of materials such as yarn and

coarse cloth to textile manufacturers in Xinjiang. “China can make the most of the

Pakistani market in cheap raw materials to develop the textiles & garments industry and

help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said. Chinese

companies would be offered preferential treatment with regard to “land, tax, logistics

and services” as well as “enterprise income tax, tariff reduction and exemption and sales

tax rate” incentives.

For Mr. Khan to ensure that Pakistani agriculture benefits, the very concept of Chinese

investment in Pakistani agriculture would have to renegotiated.

Similarly, Mr. Khan has yet to express an opinion on the plan’s incorporation of a full

system of monitoring and surveillance that would be built in Pakistani cities to ensure

law and order. The system would involve deployment of explosive detectors and

scanners to “cover major roads, case-prone areas and crowded places…in urban areas to

conduct real-time monitoring and 24-hour video recording.”

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30 CITI-NEWS LETTER

The surveillance aspect of the plan that identifies Pakistani politics, such as competing

parties, religion, tribes, terrorists, and Western intervention” as well as security as the

greatest risk to CPEC could, if unaddressed, transform Pakistani society in ways that go

far beyond economic and infrastructure development.

Home

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