ANALYSIS: Asian suppliers thrown textile lifelines

19 April 2010 | Source: John Zarocostas

Asian nations are assisting struggling textile and apparel sectors as their wider economies rebound, says a recent report.

Asia's economic growth is expected to rebound 7.5% in 2010, up from last year's 5.2%.

However, in light of lagging global demand some Asian textiles and apparel exporting nations are assisting their industries to cope, according to the Asian Development Bank's (ADB) Outlook 2010 report.

In India, the region's second largest emerging economy, where export growth turned positive in November after 13 months of year-on-year declines, the government, says the report: "Will continue with the 2% interest subsidy on bank loans to certain sectors that are labour intensive such as textiles, leather, handicrafts, cotton yarn, .which are particularly hard hit by the fall in global demand."

In neighbouring Pakistan, the report says that while manufacturing has picked up in other industrial segments, textiles production "has continued to contract on account of lower cotton availability, electricity and gas shortages, and poorer relative product competitiveness in international markets."

The ADB says electricity subsidies, which remained high in fiscal year 2009, and a burden on Pakistan's budget, will continue in FY 2010.

Similarly, it says Cambodia has ushered in support measures to shore up its apparel sector, which in 2009 witnessed the value of its exports to the US contract by 20.9% because of lower demand and an erosion in market share to competitors such as Bangladesh .

The ADB says preliminary data show a 17% fall in Cambodia's merchandise exports in 2009, mostly stemming from the fall in apparel exports to the US.

Measures introduced to boost industrial output, which fell 13% last year, have included temporary tax relief for apparel industries, and $10m for re-training laid-off Cambodian apparel workers.

Overall, the ADB forecasts the value of exports from the region to expand on average by 14.4%, up on after last year's 16.2% decline, with Indian shipments edging upwards by 16%, China's by 13.3%, and those of heavily apparel dependent exporters Bangladesh by 5%, a deceleration from last year's 10.1% expansion, and Cambodia by 5%.