Stimulus Packages of Major Global Apparel Producing Countries To Face Corona Fallout
The pandemic corona virus has been taking toll on the economies of different countries as it has impacted the production, supply chain and jobs everywhere. Different governments have also already taken different fiscal measures to offset the fallout of the corona virus in their respective economy.
It is expected that the announced financial stimulus packages by the governments will create more financial mobilization so that the hit of corona is not felt.
Bangladesh
Bangladesh government has also announced its stimulus package of Tk5,000crore for all export-oriented sectors to face the fallout of the corona virus. The fund will be mainly used to pay the wages of workers of the export oriented companies and factories.
Since, the garment sector is the main player in export, this sector will mainly enjoy the benefits. Currently, garment sector’s contribution in the national export is more than 84 percent in a year. Other garment producing countries or competitors of Bangladesh in the global apparel markets have also announced financial stimulus packages for maintaining vibrancy in their economies.
For instance, the major textile and apparel exporting countries like India, Pakistan, China, Indonesia and Vietnam announced the stimulus packages for revival of their export. Similarly European Central Bank announced $700billion financial package for its members and the Trump Administration also announced $2 trillion financial package to offset the fallout of corona.
India
Indian government announced an economic stimulus package worth 1.7 trillion rupees or ($22.5 billion) in aid designed to help low-income families with direct cash transfers, food assistance, employment aid to farmers, and health insurance.
Shortly thereafter, the Reserve Bank of India slashed interest rates in an effort to counter the economic fallout.
In the organized sector, the government will pay Provident Fund contribution for both the employee and employer for the next three months for small companies that have up to 100 employees and 90 per cent of whom earn less than ₹15,000 per month.
Apparel exporters on 2 April sought Prime Minister Narendra Modi’s intervention in providing a specific financial stimulus package to protect the industry and its workers who are struggling to deal with the impact of COVID-19 pandemic.
In a letter to the Prime Minister, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said that unless the government immediately announces a fiscal stimulus package, the apparel export sector, which employs 12.9 million workers, will ‘die a slow death’
China
China has rolled out new measures to support its economy from the coronavirus pandemic, including an additional central bank credit line of 1 trillion yuan (US$140 billion) to small lenders, different media reported.
The initiative ranged from new bond quotas for local authorities to income support for poor Chinese.
Moreover, China’s State Council has authorized new bonds to fund infrastructure, additional subsidies and tax breaks for the car industry, and cheap loans for small businesses.
Vietnam
Vietnam plans to spend 27 trillion dong ($1.16 billion) to help businesses cope with the coronavirus epidemic and help the economy stick to its 6.8% growth target this year, according to Reuters.
The plan includes tax break, delayed tax payments and reduction in land lease fee. The government also aimed to speed up state spending on infrastructure, Reuters also reported.
To reduce the impact caused by COVID-19, Vietnam’s central bank is now offering interest rate cuts for firms.
According to a statement from the State Bank of Vietnam, the regulator will cut its refinance rate from 6% to 5% starting from March 17th. The regulator has also lowered its discount rate and repurchase rate from 4% percent to 3.5%.
The overnight lending rate in the inter-bank market is reduced to 6% vs 7%, according to the statement.
The regulator also cut its interest-rate cap for dong deposits with maturities of one month to less than 6 months to 4.75% from 5%, while ordering banks to lower the maximum dong lending interest rate for short-term loans to 5.5% from 6%.
Indonesia
On March 13, 2020, the Indonesian government issued its second emergency stimulus package worth US$8 billion.
The package provides a range of fiscal and non-fiscal incentives in addition to a special stimulus for small and medium-sized (SMEs) businesses. The fiscal incentives are primarily for the manufacturing sector and include a reduction in corporate and personal income tax
Non-fiscal incentives: On March 13, 2020, the Indonesian government issued its second emergency stimulus package worth US$8 billion as it seeks to protect the economy from the impact of the coronavirus (COVID-19) outbreak.
The latest package represents 0.8 percent of the GDP and provides a range of fiscal and non-fiscal incentives in addition to a special stimulus for small and medium-sized businesses.
Earlier, Indonesian government announced its first stimulus package worth $725 million in February 2020, which provided fiscal incentives to support the country’s tourism, aviation, and property industries. The package also allocated US$324 million for low-income households.
Pakistan
Pakistan also came up with the stimulus package to face the challenges of Corona fallout. Pakistan government gave the sector specific package. Such as:
Labor: The premier announced that a sum of Rs200 billion was being allotted for laborers across the country. He further said that his government was coordinating with provinces to convince businesses not to lay off laborer, The Dawn reported.
Industries and export: While saying that the export industry was the most affected industry in the country, the Prime Minister of Pakistan announced that the export sector would be given tax refunds of Rs100 billion immediately. Their interest payments would be deferred as well.
Small and medium industries and agriculture: A further Rs100 billion are to be earmarked for small and medium industries and the agriculture sector. Their interest payments will be deferred and they will also be able to enjoy concessional loans at low interest rates. Farmers across the country will also enjoy lower costs of input.
Low-income families: The premier announced that a package of Rs150 billion would be allocated for low-income families and would be distributed among them over a period of 4 months. The prime minister also promised that these families would be given cash payments of Rs3,000 each month.
Sanctuaries: The prime minister also announced an expansion of sanctuaries to accommodate more people. He pointed out that the existing sanctuaries were being overwhelmed in the wake of the outbreak and therefore a mechanism for medical screening for new entrants was also being constituted.
Utility stores: A sum of Rs50 billion is to be earmarked for utility stores to ensure the constant availability of food and other necessities. For wheat procurement, the prime minister announced that the government was budgeting Rs280 billion so that wheat farmers do not face cash flow issues during the outbreak.
Petrol prices: The prime minister also announced a reduction of Rs15 in the prices of petroleum, diesel, light diesel and kerosene. The premier pointed out that this was set to impact the government by up to Rs75 billion.
Electricity and gas: The prime minister announced that consumers who were utilizing 300 units of electricity would be allowed to pay their bills in installments over the next three months. This would mean that 81 per cent of consumers who incur a bill of around Rs2000 each month would also be able to pay the in installments over three months.
Medical workers: The prime minister announced that a sum of Rs50 billion was being set aside for the purchase of personal protective equipment for health workers. He also assured them of the government’s full support in their fight against the novel coronavirus.
Food items: The premier announced that taxes on food items such as sugar, wheat and pulses would either be reduced or eradicated completely.
Emergency: The premier also stated that a sum of Rs100 billion was budgeted in case of emergencies, The Dawn also said.
News: TextileToday
