HQTS Latest Supply Chain & Trade Updates Across Asia – Report #10

With a wide range of service locations across Asia, we’ve collected the latest important supply chain and trade-related information to help you fully understand the current situation affecting your business.

 

China 

Beijing is recovering after the possibility of a second wave of coronavirus, but new cases are under control and remain stable. On July 7, no new cases were reported for the first time in around four weeks after the detection of a virus cluster in early June at the city’s biggest wholesale market.

Local authorities are restricting the movement of people in the capital and stepping up other measures to prevent the virus from spreading further. More than 360,000 tests for the virus have been carried out in recent days, according to Beijing health authorities. The majority of businesses and factories in China mainland have been functioning as normal and it’s estimated that worker return rate will go above 90% by early April.

 

Bangladesh

Restriction policies on travel, logistics and business operations:

Bangladesh authorities have placed a COVID-19 hotspot in Dhaka under a three-week lockdown period from July 4-21 after 46 cases were detected in the area up to the end of June. Most of the local garment factories are operating as normal, however 29 are facing order cancellations or holding back stock worth more than US$1.96bn. Most international flights have been cancelled but those from four countries/regions – China, Hong Kong, Thailand, and UK – are operating as usual.

Restrictions will remain in place until August 3 and curfew hours have been shortened to between the hours of 22.00-05.00 (local time). However, all non-essential travel remains prohibited, face masks must be worn, and social distancing measures remain compulsory in public places. There is still a ban on mass gatherings but public transport is allowed to operate in some regions at a reduced capacity and most international flights have been cancelled.

Financial and trading policies:

The finance minister rolled out the budget with an outlay of Tk568,000 crore for the financial year 2020-21. Excluding foreign grants, the budget deficit stands at TK190,000 crore accounting for 6% of GDP. The budget had been growing close to 7% each year on average, but is now at 2%, a drop of six percentage points from 2019. It is expected to pick up towards the end of 2020 and into 2021, with growth predicted to climb to around 6%.

 

India

Restriction policies on travel, logistics and business operations:

As COVID-19 cases continue to mount in India, the government has re-imposed lockdown in several parts of the country. Maharashtra government decided to allow markets and shops to remain open for an additional two hours from July 9. Markets and shops can now remain open from 9.00-19.00, an extension of two hours from the existing closing deadline of 17.00 in non-containment zones. However, West Bengal government has decided to expand the areas under lockdown and impose tougher restrictions.

Financial and trading policies:

India will struggle to launch an economic recovery unless New Delhi can flatten the coronavirus infection curve, it has been reported. Agriculture could help the Indian economy, especially rural areas which may recover faster than urban regions. With the forecast of a normal monsoon, its timely onset coupled with prospects of a bumper crop output and minimum support price could bode well for the rural economy.

 

Vietnam

Restriction policies on travel, logistics and business operations:

Coronavirus cases across Vietnam continue to decrease as it has recorded no local transmissions for 80 straight days and zero deaths. Vietnamese carriers have resumed all domestic operations with national carrier Vietnam Airlines launching six new domestic routes. However, the country plans to freeze approval for new entrants to the airline industry until 2022 due to the effects of the pandemic on the its airline industry.

Financial and trading policies:

Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) was 51.1 in June, up (from 42.7 in May) for the first time in five months. The country is planning a US$679m cut in corporate income tax for small and medium-sized businesses to combat COVID-19. The prime minister has stated that he wants the fiscal stimulus package to revive the country’s economy to be increased from $1.27bn to $6.36bn.

 

Malaysia

Financial and trading policies:

On July 1, Malaysia reported no new COVID-19 local transmissions and was reported to have be in discussions with six green zone countries – Singapore, Brunei, Australia, New Zealand, Japan and South Korea – for cross-border travel without restrictions. Malaysia’s central bank also slashed its key interest rate to a record low, attempting to cushion the negative impact of the coronavirus pandemic. Bank Negara Malaysia eased its overnight policy rate by 25 basis points to 1.75%.

 

The Philippines

Restriction policies on travel, logistics and business operations:

COVID-19 cases continue to rise in the Philippines, however, the country is lifting its ban on non-essential travel. A terminal has been reopened at Manila Airport allowing eight airlines to operate. But between July 7-11, the government shut down its busiest elevated railway which connects the north and south of Metro Manila after nearly 200 of its staff tested positive for the virus.

Financial and trading policies:

The Philippines has been under intense pressure to slowly restart its economy, as rhe Philippine government expects the country’s debt-to-GDP ratio to rise to 50% from 39% last year.

 

Singapore

Restriction policies on travel, logistics and business operations:

Although coronavirus cases continue to rise, Singapore is easing more of its restrictions on companies and residents and the general election is still taking place on Friday July 10.

Financial and trading policies:

Singapore’s leaders are struggling with what’s turning out to be its worst decline in the economy since gaining independence in 1965. Officials project gross domestic product (GDP) will contract as much as 7% in 2020, making Singapore among the worst hit nations in Asia. This is despite the government earmarking around SG$93bn in special budget support.

 

Indonesia

Restriction policies on travel, logistics and business operations:

Indonesia is slowly reopening as people return to work. Government discussions on how to restart regular travel to and from China, South Korea, Japan and Australia are ongoing.

Financial and trading policies:

Indonesia’s economy has been hit hard by movement restrictions and second quarter GDP is expected to be -3.1%. The fiscal stimulus estimated that the budget deficit will rise to 5.1% GDP in 2020, up from 2.2% in 2019. The government has permanently reduced corporate tax rates to 22% this year, down from 25% previously, and will further reduce it to 20% in 2022, which will naturally have a long-term impact on revenue.

A further drop in Indonesia’s foreign currency reserves could occur if international sentiment stays weak for a sustained period. Reserves fell sharply by US$11bn over the past two months to $121 billion.

 

Thailand

Restriction policies on travel, logistics and business operations:

The government was planning to completely lift lockdown rules on all businesses and activities on July 1. However, the state of emergency has been extended until July 31, despite there being no new local cases reported in over a month.

Financial and trading policies:

The Thai government will roll out a US$722m domestic tourism stimulus to boost revenue this month. Tourism is crucial to Thailand’s economy with a record 39.8 million foreign tourists visiting the country last year spending 1.93 trillion baht, accounting for 11% of the country’s gross domestic product.

 

Pakistan

Restriction policies on travel, logistics, and business operations:

Pakistan has recorded 213,470 cases of coronavirus. The government is following a partial lockdown strategy across the country to reduce the spread of COVID-19, however has allowed air services at major international airports to operate.

Financial and trading policies

Despite a US$500m emergency loan issued by Asian Development Bank, Pakistan is seeking more financial aid. As per estimates, gross domestic product will be -38% during 2020 due to the impact of the pandemic.

 

Cambodia

Restriction policies on travel, logistics, and business operations:

Most companies and factories in Cambodia are still allowed to operate normally but staff are being encouraged to work from home where possible.

Financial and trading policies

The Cambodian government has allocated US$1.16bn to address the economic and social impacts of the COVID-19 pandemic, so far releasing $364m of that support aid. Demand for garments has dropped and 50 garment, footwear, and travel goods factories in the country have suspended operations, highlighting the effect the virus has had.

 

About HQTS

With over 25 years of experience in quality assurance, HQTS is ready to help your business build meaningful and robust supplier relationships across Asia. Our many service locations are prepared to be your one-stop-shop for all your inspection needs, including factory audits, production monitoring, pre-shipment and sorting inspections, and everything in between. This will allow you to know exactly what’s happening on the ground and keep close tabs on your suppliers. Contact us today to find out how we can help you navigate your current quality control challenges.

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