TEXTILES AND APPAREL SECTOR: UPDATED

1. SUMMARY: The textile and apparel sector in Guyana has
approximately one large manufacturer and five small manufacturers. A
steep decline in prices has offset a slight increase in production.
While not an engine of growth, the textiles and apparel sector makes
a small but valuable contribution to GDP, foreign exchange earnings
and employment in Guyana. The sector is a particularly important
generator of employment for unskilled female workers, who comprise
95% of the labor force in the sector. END SUMMARY.



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PRODUCTION STATISTICS


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2. Requested data on the Garments and Textiles Sector for 2005 and
mid-year 2006 is as follows:



2005 Mid-year 2006
Total manufacturing production
(estimated USD million) 154 N/A
Total garments and textiles
production (USD value) N/A N/A
Garments and textiles
share of Guyana's imports (%) 1.02 0.94
Garments and textiles share
of Guyana's exports (%) 1.35 2.04
Total garments and textiles
imports (USD 000's) 7,899.7 3,957.5
Total garments and textiles
exports (USD 000's) 7,429.8 5,409.1
Total garments and textiles
exports to the U.S (USD 000's) 6,879.4 5,256.7
Total manufacturing sector
employment (estimated) 32,300 32,800
Total garments and textiles
employment(estimated) 2,500 2,580
Total garments and textiles
production (dozens) 127,312.3 72,037.9
Sources: Guyana Bureau of Statistics, Bank of Guyana, Guyana Census
2002, post estimates



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STATE OF THE INDUSTRY


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3. Guyana's manufacturing industry as a whole grew by 1.9% in 2005,
while textile production increased by 3.7%. Nevertheless, Guyana's
producers have faced declining prices. The U.S. dollar value of
Guyana's textile exports fell from $11.3 million in 2004 to $7.4
million in 2005, a decrease of 34.6%. Guyana's largest manufacturer,
Denmor Garments Manufacturers, has reported an increase in the
number of orders as compared to years past, resulting from an
increase in demand from current customers (which include Wal-Mart,
Russell Athletic, and Victoria's Secret) and also due to new
companies seeking to source their product in Guyana.



4. G&C Sanata Company Inc. of China is the only textile factory in
Guyana that is operated by foreign investor. The company ceased
operation in June 2003, citing heightened international competition
locally, regionally and internationally. The company also blamed
high production costs (particularly electricity), lack of market
access, high transportation costs and increased imports from China
and India as other factors that lead to the closure of the factory.



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IMPACT OF GLOBAL COMPETITION


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5. According to GOG and industry sources, U.S. and EU restrictions
on certain imports of textiles and apparel from China, effective
through 2006, have not affected prospects for Guyana's
manufacturers. According to officials in the Ministry of Foreign
trade, the GOG does not have any plans to implement safeguards or
other measures to reduce the growth of imports of Chinese textiles
and apparel into Guyana.



6. The increase in global competition has not affected local labor
conditions by causing employers to trim employment, reduce wages,
seek flexibility from government required minimum wages or restrain
union activity. On the contrary, Denmor Garment Manufacturers, the
nation's largest textile manufacturer and a supplier of apparel to
the U.S. under the Caribbean Basin Trade Preferences Act (CBTPA), is
in the process of increasing the company's labor force due to the
increase in orders from existing customers and the receipt of orders

from new customers. The firm's owner intends to open a second
factory in the Berbice region that will cater primarily to the
domestic market. The sector is not unionized, and employees have not
undertaken efforts toward union representation.



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EFFORTS AT COMPETITIVENESS


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7. Private industry has taken action to increase the country's
competitiveness, such as improving infrastructure, lobbying for a
ease in bureaucratic requirements, moving to higher value added
goods and also identifying niche markets, such as uniforms and
sports apparel. Industry is also in the process of introducing
Quality Management Systems (Denmor boasts a 0.6% Acceptable Quality
Level, for which it has been praised by its suppliers), seeking new
markets and exploring new avenues for the sourcing of fabric.



8. The GOG has also taken actions to increase the country's
competitiveness, such as ensuring duty free status on imports of
machinery for the sector, introducing a 75% tax rebate on profits
from non-traditional exporters and scrapping the consumption tax on
the sale of local garments. However, at least one producer expressed
concern about apparent inconsistencies between the Value Added Tax,
set to be implemented in January 2007, and the current duty-free
import scheme for manufacturing equipment in current customs
legislation. Producers also continue to cite high transport and
electricity costs as major obstacles to competitiveness. In
addition, the high cost of finance capital (Guyana's average lending
rate is 15%) reduces the ability for manufacturers to upgrade
equipment.



9. COMMENT: The GOG's competitiveness strategy has primarily focused
on modernization of the sugar sector, development of the services
sector, and promotion of non-traditional agriculture. Accordingly,
the GOG has done little to develop the textile and apparel sector.
Aided by the CBTPA, around 95% of Guyana's textile exports are
destined for the U.S., making it extremely vulnerable to demand
swings and increased competition for access to the U.S. market. An
analysis of the sector prepared by the Ministry of Foreign Trade
identified low labor costs and a low time-to-market relative to
China and India as comparative advantages for the sector's
competitiveness. However, without improvements to the investment
climate that would attract investment in more large-scale
production, Guyana's textile industry will not remain competitive in
the face of heightened international competition. END COMMENT.

ROBINSON