Haiti’s apparel exports and investment are expected to rise sharply despite Hurricane Matthew’s destruction because most of the country’s garment factories are located outside the storm’s impact zone, industry executives said.
Clothing exports, mainly to the key U.S. market, could rise 10 percent to roughly $550 million in 2016, matching similar increases in recent years, predicted Fernando Capellán, president and owner of apparel manufacturing major Grupo M.
“Most garment factories are located in Port-au-Prince and in the north, which were not affected at all,” he said. “Exports won’t be affected and in fact continue to rise strongly.”
Matthew hit the island’s western tip more strongly, mainly the Jérémie and Les Cayes areas, home to agricultural production including vetiver, an ingredient in essential oil used to make high-end perfumes for which Haiti is billed as the world’s largest producer.
For this reason, the key apparel industry, which accounts for 90 percent of exports, appears unscathed, said the Caribbean Export Development Agency’s deputy director Escipion Oliveira.
Nevertheless, the storm came at a bad time for the Caribbean textiles and apparel sector, which has shrunk in recent years due to increased Asian competition and the U.S.’s removal of duty-free benefits for some countries, he added. Haiti is the region’s second-largest producer after the Dominican Republic and before Jamaica.
The death toll from Matthew in Haiti has risen to more than 1,000, with close to 200,000 more people displaced and prompted a cholera outbreak. The storm’s destruction follows the 2010 earthquake that killed 300,000 people and halted textiles production for several months.
Despite the U.S.’s HOPE and HELP programs expanding Haiti’s duty-free trade benefits, exports have trailed behind a $1 billion a year suggested target.
However, Capellán claimed they have climbed 10 to 12 percent annually over the past five years, while 2015 was “a good year.”
Investment is also rising, with Sri Lankan, South Korean, Bangladeshi and Taiwanese producers arriving recently, said Norma Powell, general director of Haiti’s Center for Investment.
“We have a lot of foreign investors, especially Asian, coming in so the apparel sector is looking good,” she said. Some of the firms include Sri Lanka’s Brandix (which has set up a Grupo M joint venture), Bangladesh’s Hamlin Group and South Korea’s Hansae, all of which will pour in undisclosed sums to set up manufacturing facilities. An undisclosed Taiwanese firm has also committed funds to Haiti, the Americas’ poorest nation.
Powell said Haiti’s investment incentives and tax breaks “are extremely generous” while the nation liberalized the power sector last spring to drive down prices.
The 50-50 Brandix venture will help Grupo M sharply increase synthetic textile and activewear production for U.S. customers including Under Armour, Levi’s, Gap and Polo.
The joint venture began producing Oct. 1 and will help bolster Grupo M’s sales by up to 20 percent to $180 million next year, Capellán said. The new company will also help Grupo M transform its production chain to make 70 to 80 percent synthetic garments from about 30 percent to 35 percent now by 2020 and increase speed to market to improve its competitiveness, Capellán said.
Grupo M will invest to transform its cotton knit mill to make the technical textiles. As part of the partnership, Brandix will import synthetic yarn from its facilities in Bangladesh, Sri Lanka or Southern India.
Capellán said Grupo M also has plans to significantly expand its Codevi industrial park to rent to new manufacturers, doubling the number of tenants to 20 in three years and employing 18,000 people from 11,000 currently.
Asked if investors will shun Haiti because of its growing flood, storm and other climate-change vulnerabilities, Powell said new factory buildings are quake and hurricane-proof.
“The buildings are anticyclonic and antiseismic but there are some damages you can’t build for,” she said, conceding flooding is harder to manage.