Economy

Big western fashion brands are not paying “ethical” prices for Bangladesh-made clothes, the country’s exporters’ association said, as protests over wages sparked factory closures in the world’s second-largest garment exporter.The government last week announced a new monthly minimum wage of Tk12,500 ($113) for garment industry workers, up from Tk8,000 fixed in 2018.Some workers’ unions rejected the sum, arguing that it was not enough to compensate for surging inflation. More than 100 factories have been closed due to protests in garment manufacturing hubs near Dhaka, the capital, over the past week, and four workers were killed in clashes between police and protesters.Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, blamed western brands for the impasse, arguing that higher wages were not possible unless they paid Bangladeshi factories more.“They are not doing ethical sourcing in Bangladesh,” said Hassan. “The cost of [financing] has gone up, the cost of production has gone up, the cost of gas has gone up. Now the wages have gone up.”“We have to keep the factory running and that’s why we take orders even at a break-even price,” he added. “The buyers take advantage of that.”The unrest has highlighted how elevated global inflation is straining a crucial supply chain, in which consumers have come to expect low prices thanks to reliably cheap labour in source countries such as Bangladesh.H&M, Zara’s parent company Inditex and Walmart are among the largest buyers of Bangladesh-made clothing and the sector accounts for 85 per cent of the country’s exports, totalling an estimated $47bn in the last fiscal year, according to industry data. The country’s garment sector, the world’s second-largest by value after China, has grown rapidly in recent years, but rising costs for staples from imported fuel to cotton have pushed Bangladesh into crisis. Foreign reserves have fallen about 20 per cent this year while inflation has nearly hit double digits, forcing authorities to take a multibillion-dollar IMF loan.Living standards have fallen for many of the roughly 4mn Bangladeshi garment sector workers. While the minimum wage has risen 5 per cent annually since the 2018 revision, union representatives said that inflation meant workers were making less money than previously in real terms.“Workers cannot survive in this current reality of inflation and price hikes,” said Taslima Akhter, president of the Bangladesh Garment Workers Solidarity movement. Her group is seeking a minimum wage of Tk25,000 and has continued protesting as it calls on the government to re-evaluate the new rate.Akhter said blaming the western brands for workers’ hardship was only a “half-truth”.“We cannot ignore the responsibility of brands,” she said. “But the main responsibility is the Bangladeshi [factory] owner and government.”Miran Ali, a factory owner and vice-president of BGMEA, called the new minimum salary, which was unveiled following consultations with the industry and unions, “a realistic wage”.“It’s simply impossible to call for a higher wage at this time, given all the other factors remaining as they are,” he said.The BGMEA has asked members of the American Apparel & Footwear Association, an industry body that represents companies including Adidas and Gap, to raise purchase prices from December in line with the new wage to maintain factory owners’ margins.In separate statements, the AAFA, H&M and Inditex said they were “committed” to improving wages but did not comment on whether they would increase prices. Inditex has previously said it would incorporate wage data into purchasing prices. Walmart did not respond to a request for comment.The protests have taken on a fraught turn ahead of elections in January, when long-serving Prime Minister Sheikh Hasina will seek a record fifth term in office. The workers’ demonstrations have also become a rallying cry for the opposition, who are also holding street protests amid concerns that Sheikh Hasina will rig the vote in her favour.Ruhul Kabir Rizvi, a leader of the rival Bangladesh Nationalist party, accused Sheikh Hasina of “destroying” the industry.Police have cracked down, filing cases against thousands of demonstrators, and Sheikh Hasina last week warned those who disrupted production lines to accept the new wage or “return to their villages” without a job. Ahsan Mansur, executive-director at the Policy Research Institute of Bangladesh think-tank, said the combination of an economic crisis, the opposition’s momentum and industrial action had created a “perfect storm” for Sheikh Hasina’s government. He added that the extended factory shutdowns could hurt the economy by depriving it of much-needed foreign currency earnings.“The people buying the product will always like to buy it at a lower price. They’ll exploit the situation,” he said. “The sellers are in a bind . . . If they don’t get a sales order they won’t be able to run their factories, so they’ll try to get whatever costs they can and still produce.” More

BANGKOK (Reuters) – Thailand’s new government will use its controversial digital handout plan to spend its way out of what it calls an economic “crisis” without making any major cutbacks or hitting its credit ratings, a senior government advisor said. Prime Minister Srettha Thavisin’s signature 500 billion baht ($13.87 billion) stimulus policy has faced criticism over fears it could stoke inflation and adversely impact the fiscal position of Southeast Asia’s second-largest economy.But Prommin Lertsuridej, Srettha’s chief of staff, said the package was essential to fire up a sluggish economy that has lagged regional peers since the pandemic, and reach average growth of 5% annually.”We are not just imagining this. I can give you the numbers,” Prommin told Reuters, pointing to lacklustre economic data and repeatedly describing the economy as being in a state of “crisis”.Thailand’s economy grew just 1.8% year-on-year in the second quarter, sharply slowing from the previous quarter, hit by weak exports that undercut a recovery in its crucial tourism sector. “If you look at this as a crisis then you have to propose the law,” he said, referring to the government’s plan to submit a bill to parliament to borrow money to finance the scheme.The populist programme will provide digital payments of 10,000 baht ($279) to about 50 million of Thailand’s more than 70 million people to spend in their localities within six months, starting in May 2024. Those who earn more than 70,000 baht ($1,941) per month or have net saving of less than 500,000 baht are excluded. Srettha’s administration expects about 40% of recipients to combine the handout with other family members to start a new businesses or build a house, according to a government presentation seen by Reuters. The government will not make any major cutbacks to its budgetary spending plans to accommodate the handout, and look to pay back about 100 billion baht every year aided by an increase in state revenue as the economy expands, said Prommin. The scheme had also been discussed with the central bank, which suggested some tweaks, and would not have an impact on the country’s fiscal position or credit ratings, he said.But some analysts are sceptical, as are some opposition lawmakers who have attacked the ruling Pheu Thai party for risking breaching Thailand’s fiscal regulations.”We expect Thailand’s fiscal outlook to remain uncertain for the rest of this year,” said Tim Leelahaphan, an economist at Standard Chartered (OTC:SCBFF) Bank in Thailand. “Also, the Pheu Thai-led government’s ability to implement its pledged economic policies including the handout scheme has yet to be assessed, adding to fiscal uncertainty.”($1 = 36.0700 baht) More

By Chibuike OguhNEW YORK (Reuters) – Shares of financial services firm B. Riley plummeted nearly 35% on Monday, extending losses for the fourth consecutive session, after it disclosed unrealized investment losses and S&P Global Ratings downgraded a key asset. The boutique Los Angeles-based investment bank said last week it was forced to mark down the value of its equities portfolio resulting in a net loss of $75.8 million in the third quarter, compared with a profit of $45.8 million a year earlier. S&P Global Ratings also downgraded the credit rating of Vitamin Shoppe owner Franchise Group Inc on Friday, following a $2.6 billion take-private deal involving a consortium of investors including B. Riley. The ratings agency slashed Franchise Group’s debt rating, dropping it further down in junk status to ‘B-‘ from ‘B’ with a negative outlook, after the company reported a decline in revenue and a net loss in the third quarter.B. Riley’s stock plunged to as low as $16.65 on Monday, shedding nearly 50% of its value since the announcement. Its shares have pared some of those losses and were last down nearly 14% to $21.90.”We do not believe that the recent movement in our share price is warranted based on the fundamental strength and performance of our diversified platform,” a B. Riley spokesperson said in a statement.S&P also said it was monitoring legal developments relating to Franchise Group’s Chief Executive Brian Kahn, who led the August take-private deal. Bloomberg reported this month that Kahn is one of two co-conspirators named by co-founder of hedge fund Prophecy Asset Management John Hughes, who this month pleaded guilty to securities fraud. It’s unclear if Kahn is also facing charges, Bloomberg reported. “At no time during my former business relationship with Prophecy did I know that Prophecy or its principals were allegedly defrauding their investors, nor did I conspire in any fraud,” Kahn said in a statement to Reuters.Bryant Riley, B.Riley’s eponymous CEO, said during an analyst earnings call last week that it had invested in Franchise Group based on the fundamentals of the business and that Kahn had no “direct experience with what has been alleged.”B. Riley has also been targeted by a short seller. In February, Wolfpack Research accused the company of not cutting losses on “failing” investments and continuing to extend capital to distressed clients. “Although B Riley attempted to address short seller concerns on their recent earnings call, the information they provided was limited,” said Rick Meckler, partner at Cherry Lane Investments. “It remains to be seen whether this is a real problem for RILY, but investors and clients sometimes don’t wait around for greater clarity,” Meckler added. More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Labour will on Wednesday attack the government’s “worrying” decision to water down screening rules for foreign investments, warning that it would put the UK at odds with key allies.Jonathan Reynolds, shadow business and trade secretary, will argue that Britain must keep up its guard against countries like China, as he sets out the main opposition party’s new trade policy.Reynolds will tell an audience at London’s Canary Wharf that Labour’s trade policy will reflect the party’s “securonomics” approach, linking trade to a beefed-up domestic industrial policy.He also will commit Labour to boosting exports by small businesses and argue that Britain should pursue fewer, but higher quality, trade deals, some stopping short of full-blown free trade agreements.Earlier this week, Oliver Dowden, deputy prime minister, told the Financial Times that the government would pare back the UK’s investment screening powers to make them “more business friendly”.Dowden’s comments came as he launched a review he said was aimed at “narrowing and refining” the National Security and Investment Act, which allows the government to scrutinise and ultimately block takeovers.Reynolds will argue that Britain must trade with China in the mutual interest of both sides, but warn that Chinese investments “simply cannot be treated in the same way” as those from other countries.“I feel the measures as they are now are sufficient and to dilute them would be a worrying signal to send,” he will say. “It would be inconsistent with the position of our allies.”Labour’s trade policy would reflect a changing global environment and a belief across the west in the need to build resilient supply chains and recognise “that western industrial capacity is still important”.Reynolds will claim that Rishi Sunak’s government had tried to do too many trade deals simply to prove the point that Britain was no longer in the EU customs union.“As a consequence I believe there is too great a focus on quantity, over quality,” he will say, arguing that the country needs a clearer strategy.He will promise a future Labour government would ensure continuity in any continuing trade talks, such as those with India. Rishi Sunak has repeatedly expressed optimism about sealing a free trade agreement with New Delhi but Labour remains sceptical the prime minister will get it over the line ahead of the general election, which is expected next year.“Clearly stability matters,” he will say. “I want to give explicit assurances to those negotiating with the UK government at the moment: they will also find a willing partner in Labour.” The opposition party is well ahead of the ruling Conservatives in the polls.Reynolds will announce a task force, working alongside the Federation of Small Businesses, to try to remove barriers to exports by SMEs.He will repeat Labour’s call for improved trade relations with the EU, focusing on specific issues such as a veterinary agreement, mutual recognition of professional qualifications and intra-company transfers.But he will add: “Brexit is a settled matter. Labour will not be seeking to rejoin the single market or customs union or seek to reopen the wounds of the past.” More

The government cited two figures for the investment: $205 million and $250 million. A spokesperson did not immediately respond to a request for clarification about the size of the funds set to go toward the expansion.Lego did not immediately respond to a request for comment.Operations in the new areas will begin in May 2025, Nuevo Leon said in a statement. More

Top U.S. banks have flagged even more potential layoffs to save costs, especially if the economy remains under pressure from high interest rates and geopolitical tensions, threatening to derail a budding rebound in investment banking.”Like all well-managed organizations, we regularly review and evaluate the needs of our clients and the markets we serve in order to ensure we align our resources accordingly,” Wells Fargo said in a statement to Reuters. “These departures represent a small number, and we remain fully committed to our Corporate & Investment Banking business.” Bloomberg News had reported the development earlier. More

(Reuters) – Biogen cut its annual profit forecast below Wall Street expectations on Wednesday, on higher expenses related to the recent acquisition of rare disease drugmaker Reata Pharmaceuticals (NASDAQ:RETA).The company had said in July it would cut about 1,000 jobs, or 11% of its workforce, to lower elevated costs compared to rivals and focus on higher-growth products such as Alzheimer’s treatment Leqembi, which it sells with Japanese partner Eisai.Since he was hired a year ago, CEO Christopher Viehbacher has led efforts to cut expenses and help Biogen recover from its missteps around the controversial Alzheimer’s drug Aduhelm that never gained traction. Biogen is banking on the success of Leqembi and tuck-in deals like its recent $6.5 billion buyout of Reata Pharmaceuticals to grow its revenue. It has incurred integration costs of about $30 million related to the acquisition.The drugmaker expects full-year adjusted profit per share in the range of $14.50 to $15.00 compared with $15 to $16 forecast previously. Analysts were expecting $15.26.On an adjusted basis, Biogen earned $4.36 per share, beating analysts’ average estimate of $3.97, according to LSEG data. More