Exports should rise 1% to 3% this year to just over $800m

Exports should rise 1% to 3% this year to just over $800m

Colombia's textile and apparel industry is expected to grow 13% to over $11bn this year – more than double last year's rate – driven by strong local demand and a small gain in exports.

"Technical contraband has fallen 50% so we need to meet the local demand gap," Enrique Giraldo, president of Camara Colombiana de la Confeccion y Afines (CCCyA), the Colombian chamber of clothing and allied industries, told just-style on the fringes of the recent Colombiamoda fashion and sourcing fair. 

His comments came as Bogota renewed until November a mixed duty package introduced in 2012 to help stem local producers' losses from a flood of sub-valued Asian garment imports hurting local sales.

The measure charges a 10% ad valorem duty as well as a specific duty of $5 per gross kilogram on imports of apparel, footwear and textile made-ups, and new measures are expected after November to avoid cheap Asian garments from reaching Colombia's shores. 

Giraldo said the package worked, helping the sector shift from "a 30% idle capacity to a 20% deficit in [factory] operations." 

To meet rising local demand, the government plans to train 100,000 new textile workers this year, President Juan Manuel Santos announced during the opening of the fair, which drew $399m in expected sourcing contracts, up 17% from last year.

Over 12,000 buyers attended the event of which 13% came from abroad, mainly Mexico, Costa Rica, the US and Ecuador. Adidas, Amazon Mexico and Mexican department store network Liverpool were said to be eyeing sportswear, underwear, lingerie and control garments in which Colombia specialises. 

Santos added the state has toughened up on smugglers bringing illegal clothing into the country, mainly via Panama, with roughly $60m of goods seized in the past 12 months.

Meanwhile, Giraldo said production would likely increase 13% this year. He added the industry's improving fortunes have generated thousands of new jobs in textiles and the supply chain, which now has 450,000 formal workers though still employs 1.3m informally.

Exports should rise 1% to 3% this year to just over $800m, he forecast, contradicting more sanguine views that they could leap 10% as the plunging peso bolsters foreign interest in 'Made in Colombia' apparel. The government wants to lift exports to $1bn by 2018.

Giraldo said producers are focusing on meeting local demand, especially in the mass-apparel market where clothiers have recovered ground and cut prices to appeal to penny-pinching shoppers. Clothing demand should grow 3.5% in 2016, from 1% in 2015, he forecast.

Despite warming political relations, Colombian garment sales to the US, hovering at $300m, will be hard to increase because of the yarn-forward rule of origin in the US-Colombia Trade Promotion Agreement (TPA) between the two countries. The fastest-growing export markets will be Chile and Costa Rica, with which Colombia recently signed FTAs. 

"We need to shift to fabric-forward but that will be very difficult to do," Giraldo noted, adding that the 2012 accord's yarn-forward rule has killed brands that can no longer import cheap yarn to make garments. 

"Colombia doesn't produce yarn and it's very expensive in the US," Giraldo mused. "There used to be seven mills and now there are only two."

Giraldo said the industry continues to invest to streamline manufacturing and modernise machinery to make more fashionable garments, thanks largely to $250m in "soft" loans issued by development bank Bancoldex since 2014. 

Executives have said, however, that much more financing is needed to help Colombia boost production quality and tap new export markets. 

The new 100,000 trainees are also insufficient. "We need 200,000 new workers and thousands of new machines to meet local and export demand," he concluded.

Earlier this year Colombian industry executives said the country needed a free-trade deal with Brazil, to fix a US cumulation dispute, and boost financing for export-hungry enterprises, in order to bolster textile and apparel companies' efforts to expand abroad.

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