by Nitish Varshney
17-January-2019 | 11 mins read
The textile and clothing industry plays a critical role in the economy of Caribbean country Haiti whose 85 to 90 per cent of export earnings are generated from the textile sector. However, the country is still not openly talked about and given due importance on the global forums as much as other emerging hubs like Ethiopia. In 2010, Haiti employed somewhere around 27,000 workers and its T&C shipments represented 80 per cent of the country’s exports, according to a report by the Congressional Research Service of USA. These promising statistics were supposed to grow over the years but Haiti could not capitalise on the same due to the devastating earthquake in January 2010 that rocked the country and put a stop on the country’s growth in T&C sector for a certain period of time.
USA’s aid to Haiti was a turning point…
The fact cannot be denied that, in 2011 and 2012, Haiti saw significant foreign direct investment (FDI), and garment sourcing in the country was joined by a group of foreign investors mainly from South Korea which upscaled the pace of developments, prompting the government and the textile and garment sector in Haiti to set very ambitious targets to continue expanding rapidly. But, the foundation of this FDI was led by USA which helped Haiti with US $ 10 billion to support life-saving post-disaster relief as well as longer-term recovery, reconstruction; and development programmes can’t be ignored which has always been the massive turning point for the Caribbean nation.
With US assistance, almost 13,000 jobs have been created over the years, largely in the apparel industry at the Caracol Industrial Park (PIC) in partnership with the Inter-American Development Bank, the Haitian government, and the private sector. Currently, Haiti employs more than 52,000 employees in its apparel industry and the country accounted for US $ 875 million worth of garment exports to USA in 2017.
Investors in Haiti…
The USA is the world’s largest apparel importer with over US $ 80 billion worth of imports in 2017, hence giving a massive opportunity to the apparel manufacturing destinations worldwide. Cut-throat competition over labour wages among the Asian apparel manufacturing giants is pushing the buyers move towards the Least Developing Countries (LDC) outside Asia where apparel sector seems to be emerging now and Haiti is one of them. Below are a few of big investors who have landed in Haiti and are doing well:
Since 2001, Willbes & Co. Ltd, a subsidiary of a leading South Korean producer of ready-made garments, has been operating in Haiti’s SONAPI Metropolitan Industrial Park, producing and exporting knit products to major US retailers such as Gap Inc., Walmart, Sears Holdings, Children’s Place and JC Penny. In a major expansion spree, the company has added 1,500 local workers in recent years to make a total of around 3,500 workforce. Oscar Yim, Vice President, Willbes, commented, “By virtue of duty-free treatment, we can offer attractive prices for synthetic and stripe apparels. We feel confident of our future through Haitian government support and increasing demand from US retailers.”
The Haitian apparel sector is continually diversifying and evolving. One illustration of this is the 2013 establishment of the Industrial Revolution II (IRII) factory, which focuses on producing high-value products to demonstrate clearly that Haiti can shift into top-range apparel markets and participate successfully in the “race-to-the-top.”
The Korean company SAE-A, one of the world’s largest manufacturers of knit fabrics and knitted apparels, with factories across the world in the Americas, Vietnam and Indonesia, became the first tenant in Haiti’s new Caracol Industrial Park in 2012. Today Sae-A’s facilities employ over 10,000 Haitians and the company exported more than 65 million garments in 2017. It’s worth noting that Sae-A is the largest investor in Haiti.
Sri Lankan intimate apparel manufacturing giant MAS Holdings announced in 2016 the opening of its sewing facility in Haiti by the name MAS Akansyel. The facility became operational in June 2017 in Caracol Industrial Park, Haiti and currently employs around 1,200 workers. It’s worth noting here that MAS Holdings is the second largest investor in Haiti after Korean SAE-A group.
Factors working in favour of Haiti…
The USA has enacted four laws that provide Haiti with an immense advantage over its competitors in the apparel industry. These are the Caribbean Basin Trade Preference Act (CBTPA), the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act of 2006, the HOPE Act of 2008 (HOPE II Act) and the Haiti Economic Lift Program of 2010 (HELP). Most preferences provided under these laws are currently set to run through September 30, 2020. Under these programmes, Haitian apparel exports to USA have been growing steadily, and will likely continue to expand to take advantage of duty-free access to the US market.
Furthermore, as an LDC, Haiti enjoys preferential trade access to 17 developed countries as well as access to the European Union through the Everything But Arms (EBA) scheme which definitely provides the country an edge over other LDCs in the world.
It does not take as much time to manufacture a garment order as it takes to ship it to the buying country. This is one of the biggest challenges garment manufacturers face today. But, as Haiti is in close proximity to USA, shipping time is up to 3 days to the US and Latin America, whereas it takes up to 10 days to Western European ports.
Competitive and committed workforce
One of Haiti’s greatest assets is its people and approximately 65 per cent of the population is under the age of 30. The workforce is energetic, flexible, hard-working and trainable which can be rapidly mobilised to meet the demands of apparel manufacturing sector. There is a stable labour force, with factory managers reporting low levels of absenteeism (2 per cent) and turnover (between 4 and 6 per cent per year). Low absenteeism is a factor helping to realise output targets and low turnover rates are an incentive to invest in workers’ training programmes. Markedly, Haiti offers competitive salaries and the minimum wage in the country is approximately US $ 5 per day.
There are a number of programmes underway in Haiti to upgrade labour skills and employment relations. To get benefits from the HOPE and HOPE II Acts, Haiti has established the CTMO-HOPE Commission, a tripartite commission with representatives from the government, factory owners and unions. The commission’s role is to improve public-private dialogue on issues for the development of the textile and apparel industries. An independent labour ombudsman under CTMO-HOPE helps to resolve conflicts between workers and management.
Similarly, Better Work Haiti, which is funded by the IFC and the International Labour Organisation (ILO), oversees factory compliance with core labour standards, working conditions, occupational health and safety issues and training, including financial literacy, maternity protection and supervisory skills. Better Work Haiti covers all factories exporting to the US market under HOPE. It publishes biannual reports and regular bulletin updates on its training and other activities. The Better Work Haiti initiative represents a fundamentally important development, as it brings tangible benefits to all stakeholders in the apparel sector.
A significant infrastructure investment programme, financed by both domestic and overseas investors, is being run to improve Haiti’s connectivity, both internally and externally. This programme seeks not only to replace infrastructure destroyed as a result of the 2010 earthquake and other recent natural disasters, but also to create new infrastructure that will meet the needs of the largest contributor in the country’s economy: apparel sector.
Haiti’s main international airport, Toussaint Louverture International Airport (TLIA) in Port-au-Prince, has direct international flights to four US cities (Miami, Fort Lauderdale, New York and Atlanta), Canada, Panama City and Paris via the Dominican Republic and Guadeloupe. There is also an extensive network of flights to other cities in Latin America and the Caribbean. Approximately 20 airlines operate out of TLIA with over 230 international flights to 16 cities per month. With its Class II classification, TLIA is able to accommodate large transport aircraft.
Haiti’s main international seaports are located in Port-au-Prince and Cap-Haïtien. The port of Port-au-Prince is currently the main port for container traffic and general fractioned freight, with specialised docks and warehouses. The Port-au-Prince seaport moves nearly one million tons of freight annually. Currently, US $ 69 million is being invested to renovate one of its main docks, including a new 410m wharf. Recently, Haiti has upgraded its Cap-Haïtien port too on the northern coast to serve the apparel manufacturing facilities located at the Caracol Industrial Park.