From OFF THE CUFF June 22, 2012
By Matt Boyce, Online Marketing Specialist, TigerTrade
Note: This article is adapted from an article that originally appeared on the TigerTrade website.
On June 19th, USA-ITA and the Source ASEAN Full-Service Alliance (SAFSA), an Associate Member of USA-ITA, hosted a breakfast seminar in New York titled, “Sourcing in Southeast Asia 2012 & Beyond.” In addition to USA-ITA and SAFSA leadership, the seminar also featured speakers from TigerTrade, another Associate Member of USA-ITA, as well as the U.S.-ASEAN Business Council. With an increased focus on Southeast Asia, the seminar came at a key moment as many American companies are becoming increasingly interested in the region because of the impending Trans-Pacific Partnership (TPP), SAVE Act, and the coming trade liberalization in Myanmar/Burma.
Michael Blakely, Director of SAFSA, opened the event and introduced the speakers: Tanjila Islam, CEO of TigerTrade; Julia K. Hughes, President of USA-ITA; and Frances Zwenig, Counselor at the U.S.-ASEAN Business Council.
L to R: Tanjila Islam of TigerTrade, Julia K. Hughes of USA-ITA, Michael Blakeley of SAFSA, Frances Zwenig of the U.S.-ASEAN Business Council, and USA-ITA Washington Counsel David Spooner of Squire Sanders (Photo by TigerTrade)
First, Islam discussed benefits of sourcing in specific ASEAN member-nations. Some notable developments in the region, according to Islam, include a “heavy investment in machinery upgrading” in Indonesia’s apparel sector, and efforts by Vietnam’s government to “invest significantly in infrastructure to support the country’s export industries.” She also noted that although the Philippines is not as cost-competitive in the apparel industry as other countries in the region, the SAVE Act could make the Philippines attractive for sourcing high-skill apparel products by removing duties.
TigerTrade's Tanjila Islam speaks about sourcing in the ASEAN region. (Photo by TigerTrade)
Next, Hughes highlighted the growing importance of Southeast Asia in apparel sourcing as the Trans-Pacific Partnership (TPP) negotiations move forward. Despite the promise of the TPP, Hughes said that the United States has not budged on their strict yarn-forward rule of origin proposal. USA-ITA believes the TPP needs to be a “21st century, living agreement,” an agreement that can change and an agreement with a simple and flexible rule of origin. Although the TPP will remove trade barriers, Hughes stressed that “trade may ramp up immediately after a free trade agreement, but if it’s not easy to do business in the country then you won’t continue sourcing there.” This is a reality that ASEAN member nations will need to address, and many are already doing so. With continued infrastructural improvement and government subsidies for business growth, Southeast Asian suppliers will likely be able to meet the demand that comes with more liberalized trade agreements.
USA-ITA's Julia K. Hughes talks about sourcing in Southeast Asia. (Photo by TigerTrade)
Myanmar/Burma has been the talk of sourcing professionals in recent months, and Frances Zwenig of the US-ASEAN Business Council updated the audience on the situation in the country. According to Zwenig, open trade between Myanmar and the United States is not likely to happen in 2012, but certainly will happen eventually. Myanmar is also aware of its deficiencies in infrastructure and the government is working to improve the business environment in the country. Even though trade with Myanmar is not imminent, Blakely added that “investors in the region are making their moves” to begin work in the region once it is possible.
Blakely also highlighted the limited areas in the apparel sourcing process where companies can save money. “Eighty-seven percent of cost in garment sourcing is before cut, make, trim,” Blakely noted. This is why apparel companies need to find cost-competitive sourcing options in Southeast Asia. Now is the time to invest in the region as trade becomes more open and the countries become more internally developed. A synergy between trade policy, infrastructural investment and cost-competitiveness is developing in Southeast Asia, an excellent opportunity for apparel sourcing professionals to explore their options in the region.
TigerTrade is an active and proud member of USA-ITA. TigerTrade is an online trusted partner network for global trade helping to support sourcing professionals connect to qualified manufacturers in Southeast Asia. TigerTrade works in the apparel, textiles, footwear, furniture, and home decor industries and is headquartered in New York City with regional offices in Vietnam, Thailand and Indonesia.