Haitian Garment Industry Uplifted by Investment

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garmentsStanding in the middle of the dirt-poor rural village on a cool afternoon, the neatly dressed Korean garment tycoon surveyed the rugged mountaintops and surrounding bean fields as he tried to envision the future a year from now.

But it wasn’t until Kim Woong Ki stared into the curious faces surrounding him that the chairman of Korea’s leading manufacturer and exporter of textiles and clothing realized the real value of his $78 million business investment decision.

“I didn’t really set out to bring people hope,” Kim said, as he rode away from the village on Haiti’s northern coast halfway between the cities of Cap-Haitien and Ouanaminthe. “Coming here, seeing the site and walking among the people, I realized that what I’m going to do here in creating the factory and the jobs is give people hope.”

A major supplier to U.S. retailers Target, Wal-Mart, Kohl’s and Gap, Sae-A is expanding its garment-making operations to Haiti as the anchor tenant in a new 617-acre industrial park being created in the country’s underdeveloped northern region. For the first time, Haiti’s 2 million-a-week T-shirt-stitching industry will also include the country’s only knit and dyeing mill with Sae-A pumping 6,000 tons of ground water a day for its export operations.

“For the first time ever, apparel sewn in Haiti will be using fabric made in Haiti,” said Kim, whose company already has operations in Guatemala and Nicaragua.

With the company gearing up to recruit Haitian managers as early as this month for a planned March 2012 opening, the deal is already having a multiplier effect. Local hotel and restaurant owners are optimistic, as are potential workers like 23-year-old Luckner Peter, about the possibility of 20,000 new jobs in the area. Luckner was among dozens of young men hired by the government at 50 cents a hole to help install a fence around the property.

“This is going to change our community,” said Louicot Alexandre, president of the chamber of commerce for Northeast Haiti, a region of about 300,000 residents. “This shows that Haiti is prepared to do business with the world, and it’s OK to do business with Haiti.”

Valued at about $300 million, the job-creation package is one of Haiti’s biggest foreign investments. U.S. officials call it an “unprecedented collaboration” between the Haitian and U.S. governments, and the Inter-American Development Bank. So much is at stake that some Haiti observers mused that it was perhaps one of the reasons for the United States’ heavy involvement in the Nov. 28 presidential election debacle.

Twice before, Kim had tried to invest in Haiti. Each time, his decision was thwarted. There was political turmoil in 1994 after he signed a memorandum of understanding, and then the Jan. 12, 2010, earthquake shortly after another trip.

“We have in our business proposal a huge chapter called hurdles and obstacles,” said Lon Garwood, advisor to Kim. “Our initial business proposal didn’t look like a business proposal. It looked like why we can’t do business in Haiti.”

But that was before the U.S. government stepped in, and before U.S. Secretary of State Hillary Clinton’s personal plea on behalf of Haiti during a Korea visit.

With the Haitian government donating the land and compensating farmers, the U.S. plans to build 5,000 houses, a 25-megawatt electricity grid for the park and surrounding area, and a waste and water treatment plant as part of its $124 million contribution. The Inter-American Development Bank is contributing more than $100 million for construction of buildings and roads.

“These kinds of investment deals are incredibly hard,” said Cheryl Mills, Clinton’s chief of staff, who has been credited with leading the effort for more than a year to bring together all sides including Haiti’s private sector. “They take prolonged coordination and consultation, and accommodation and negotiation. But ultimately what they really take is an audacious amount of faith.”

It is this faith that the U.S. and others are banking on as they seek to revive Haiti’s post-earthquake shattered economy by helping the nation’s garment industry take better advantage of U.S.-Congress approved duty-free trade legislation benefiting the industry. Once boasting 100,000 jobs, the industry has just 28,000. About 9,000 of those were created because of the removal of tariffs.

Last May, a sympathetic Congress extended the trade benefits to 2020. Now Haiti’s private sector is hoping to attract 60,000 new jobs with the industrial park in the north. They are also eyeing another park in the south, just outside of the quake-ravaged capital of Port-au-Prince.

“We are no longer talking just about garment assembly. We are talking about a true textile industry short of planting cotton. That is what is being developed,” said Georges Sassine, who is also responsible for implementing the U duty-free legislation.

Sae-A’s revenues are more than double Haiti’s garment industry’s $512 million exports for 2009. In addition to Haitian managers, the company has committed to pay line workers at least four times Haiti’s average $640 GDP per capita. The facility itself will boast a cooling system, recreational facilities and a football field. With the construction bid package currently being prepared to go out this month, the first phase has already been laid out. Sae-A’s operations will occupy 126 of 185 acres, said Mark D’Sa, a Miami-based executive with Gap who has been on loan with the State Department to help Haiti better take advantage of trade legislation.

D’Sa said other potential clients include a furniture maker and two other apparel companies. Not far from the site, and separate from the industrial park, the Dominican government is planning to build a university.

Still, the deal has detractors with some protesting using farmland for what some are calling “sweatshops.” Government officials say the land belongs to the state and compensation packages are being worked out for farmers who have been illegally living off it.

“We have sought investments outside of Port-au-Prince for years,” said Haitian Prime Minister Jean-Max Bellerive. “In Haiti, the real tough infrastructure investments in energy, ports and industrial zones have largely been avoided. It’s these investments that will generate the productive base of which Haiti can grow and prosper economically.”

Source: McClatchy-Tribune Information Services.