Buenos Aires will raise new designer investment by 10 percent to more than $2.1 million this year to develop its fashion industry, creative economy undersecretary Enrique Avogrado said.

“Investment will increase 5 to 10 percent, which is better than 3 to 5 percent in the past few years,” Avogrado said, adding that 2016 and beyond could see similar increases. “Fashion has become a strategic sector.”

Buenos Aires is seeking to boost its image as a Latin American fashion hub, particularly as growing fashion weeks in São Paulo, Rio de Janeiro and Medellín, Colombia, have taken away some of its shine.

The project has gained traction in the past four years, mainly through the biannual Buenos Aires Fashion Week, which attracts 40,000 and is set to be further streamlined.

“We are going to invest to consolidate the event’s regional significance, improve its production quality and expand its runways, contests and other activities,” Avogrado said. His team will work to bring more sponsors and forge new alliances between retailers and designers.

Designer training will be a major focus, with the creative economy undersecretary hoping to increase the number of students eligible for its annual fashion management program to more than 30. The city is also working to launch a new textiles cluster to promote more ethical and competitive manufacturing strategies amid rising claims about a growing informal workforce and slave labor practices.

Buenos Aires will work to develop its Barracas design district by enabling brands and other value-added suppliers to set up shop tax-free. Under the plan, the city hopes to revitalize its southern wing by developing a new economic cluster. Barracas is home to the Metropolitan Design Center, which Avogrado also leads. Developing the area is essential to help Argentina’s struggling textiles and apparel industry lift its competitiveness against China and other Asian suppliers. To meet this goal, the city will work to boost industry and designer partnerships, which Avogrado said are limited, keeping the sector from moving into more fashionable segments.

“Manufacturers have to work with designers to access new fabrics or innovations to improve the final product,” Avogrado said, adding that Argentina wants to differentiate its industry with fashion, not mass apparel like Asian countries.

According to Avogrado, Argentina’s $8 billion textiles and apparel industry has been stalled for two years, hurt by falling commodity prices and soaring inflation.
Opposition candidate in the October presidential elections and recently re-elected Buenos Aires mayor Mauricio Macri has pledged to aid the sector by scrapping long-running, aggressive protectionist policies blocking crucial raw-material inputs. His proposals may not survive, however, as incumbent party candidate Daniel Scioli is leading the race.

“You cannot import,” Avogrado said. “No matter what the government says, there are many barriers such as non-automatic licenses that hinder the arrival of intermediate fabric and thread inputs.”

Executives at fashion brands Adib Simon and Juana de Arco said the restrictions are crippling exports. This is despite export promotion lobby ProArgentina’s efforts to take more designers to international fairs.

“We can’t import fabric to make our clothes,” said Luciano Adib, co-owner of Adib Simon, which makes women’s couture. “We have to use Argentine suppliers which have horrible fabrics and there aren’t enough of them.”

Before Argentina boosted its protectionist measures (even against Mercosur trading bloc partners Brazil, Uruguay and Paraguay), local brands were able to cheaply import key feedstocks from India and China, Adib said.

Juan Lanusse, chief executive officer and owner of the Juana de Arco casual clothing brand, said the peso’s depreciation, import restrictions and high export taxes have made exporting increasingly difficult. That said, he noted Juana de Arco has been gradually expanding its business to more than 15 points of sale in the U.S., Japan and increasingly Europe.

“We need a more intelligent trade policy,” Lanusse said, adding that the new government should also boost bilateral agreements with top regional economies such as Mexico and Colombia. “There are many good, local brands but they cannot export.”

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