Mon, Mar 13, 2006 page10

• Textile makers beating the odds

  NEVER SAY DIE The garment sectors in countries like Cambodia, Bangladesh and Vietnam have proved the doomsayers wrong by thriving despite Chinese competition

  • AFP
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  Asia's most vulnerable garment sectors have survived -- even flourished -- and proved the nay-sayers wrong during their first year without the protection of the global quota system.

  But industry officials say they have only done so with the help of additional safeguards imposed by the US and EU against textile giant China.

  The end in December 2004 of the decades-old international quota system known as the Multi-Fiber Arrangement (MFA), which gave developing countries guaranteed access to developed countries' markets, was expected to doom the garment sector in countries like Cambodia, Bangladesh and Vietnam.

  But all three recorded post-MFA export gains of between 9 and 11 percent last year, keeping hundreds of thousands in work in an industry that is a key economic driver.

  "We've proved all the doomsayers wrong," said Fazlul Haq, president of the Bangladesh Knitwear Manufacturers and Exporters Association.

  In it's first post-MFA foray, Bangladesh, one of the region's poorest countries, posted 11 percent export growth led by knitwear -- T-shirts, sweaters and polo-shirts.

  Bangladesh -- where over 4,000 garments factories account for three-quarters of export earnings and some two million jobs -- was singled out for its poor infrastructure, unstable political situation and lack of integration in the textile industry.

  But the latest figures have dispelled the dire predictions.

  Swamped

  "Last year, we easily beat our main competitor China in these segments. In addition, many of our big factories are so swamped with export orders some had to refuse orders because of supply side constraints," said Haq.

  The association's figures showed that more than 150 new knitwear garment factories began production last year while a large number of existing companies ramped up their production capacities.

  But Haq acknowledged the country struggled at first against China's massive assault on the sector, only continuing its surge after the US and EU imposed more quotas on the east Asian giant.

  In May last year, the US invoked safeguards contained in China's WTO accession agreement, which allowed it to impose quotas on seven types of textiles from China.

  The EU took similar action in June following a sharp spiral immediately following the end of the MFA -- sector employment plunged about 10 percent to less than 250,000 in Cambodia which also saw a boom following the additional safeguards.

  The US$1.9billion sector provides the kingdom with more than 80 percent of its export earnings and employed 279,000 workers in 236 factories as of November last year.

  Exports

  Exports rose 9 percent last year, according to Van Sou Ieng, chairman of Cambodia's Garment Manufacturers' Association, but he warned that the expiration of the new safeguards at the end of next year will force a sector re-think.

  "There will be a strong effect on Cambodia ... we have to be more productive, more competitive in price. Everybody has to reduce their prices," he said.

  Vietnam, where exports rose 9.6 percent last year, hopes to counter China's onslaught by producing more raw materials and lowering production costs, said Le Van Dao, the general secretary of Vitas, an umbrella group for Vietnamese textile producers.

  "We need more investment in facilities, production of materials," he said.

  Textiles are Vietnam's second biggest foreign exchange earners after crude oil.

  But Vietnam's successes have perhaps gone too far, putting the country at the center of a textile row with the EU, which slapped anti-dumping duties on Vietnamese-made shoes last month following a huge jump in imports.
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