Such is the desire of Salvadoran textile businessmen, who hope to transform the country into a more attractive destination for foreign investment.
CAMTEX, the Textile and Apparel Chamber, explained they are having talks with the government to draft a new law which complies with WTO requisites (World Trade Organization).
The objective “is to have a law that makes the country more competitive, not like the one we have now”, stated Patricia Figueroa, head of Camtex.
Businessmen from both countries met to explore joint investment opportunities.
The event saw the participation of presidents Lula da Silva and Mauricio Funes, as well as several business chambers. The chambers remarked Brazil’s willingness of providing credit for productive projects.
“Brazil’s proposals are encouraging: 1) Increasing the credit line offered by Brazilian BNDS bank for productive projects, 2) promoting new investment in the country, and 3) Lula’s intention of balancing the trade deficit between both countries”, reported Laprensagrafica.com.
By 2015, the country must eliminate those benefits granted to companies operating under the Free Zone regime.
The country committed to do so at the World Trade Organization, and could face lawsuits by other countries if it does not comply.
The privileges granted to these companies include paying neither income tax nor municipal obligations.
“Mario Róger Hernández, Economy vice minister, said last week that the government will hold talks with businessmen to land an agreement before the 2015 deadline”.
Orders are increasing as the United States, main destination for Salvadoran textile exports, begins to recover.
Patricia Figueroa, executive director of CAMTEX (Textile and Free Zone Chamber of El Salvador), commented that an increase in U.S. orders has allowed company Fruit of the Loom to reactivate its Montecristo facility.
Figueroa told Laprensagrafica.com: "We expect to see this recovery translate into larger export volumes for the first quarter of 2010 ... we are confident that once the market fully recovers, orders will increase even more".
ANEP of El Salvador calculates the trade embargo with Honduras produced $36 million in losses each day for Central America, as calculated globally.
For the Salvadorian textile industry in particular, the border closing meant estimated losses of $1 million in exports and 4,000 workers sat idle, according to calculations from the Salvadorian Chamber of Textile, Confection, and Free Trade Zones Industries (CAMTEX, acronym in Spanish) published in Elsalvador.com. At the same time, the organization estimates that Honduran factories lost $700,000 in exports to El Salvador.
Faced with limited access to credit, the textile industry is looking to find financing abroad.
Jose Escobar, leader of the Salvadoran Chamber of the Textile Industry (CAMTEX), noted that the problem continues to be the risk analysis that is being used to evaluate them.
Lourdes Quintanilla reported the leader's statements in her article in Laprensagrafica.com: "This topic is the most difficult one for us because our industry has been misinterpreted regarding its value. The textile and clothing industry continues in the category labeled maquila, i.e. only assembling parts. This industry has made progress in the verticalization of the industry, and in offering complete packages (making garments from the first thread to packaging for sales)."
With the increase in the electricity bill, businesses are looking to cut costs to avoid raising prices.
The president of the Textile Industry, Clothing and Free Trade Zones Chamber in El Salvado (Camtex), José Tobar, explained in an Elmundo.com.sv article that adding the energy increase to prices would mean a loss of competitiveness for the Salvadoran sector when compared to other countries.
The survey conducted by the Textile Chamber (CAMTEX) among its members reflects the need for $25 million for the sector.
José Antonio Escobar, CAMTEX president, noted that the textile industry will seek a meeting with President-elect Mauricio Funes to inform him about the situation.
In statements reported by Laprensagrafica.com, the director noted: "We believe the new government has understood the priority that our sector needs.
The Fruit of the Loom textile company halted operations at one of its 7 plants, temporarily suspending 25% of its personnel.
The chairman of the Salvadoran Chamber of Textiles and Apparel reported to La Prensa Grafica that the decline in operations is due to "Fruit of the Loom clients being overstocked with product and adjusting inventories.”
The official added that the company intends to continue in the country: "It's a suspension, not a closing. Fruit continues to be interested in remaining in El Salvador until there is an economic upturn in the US."
The sector exported $103 million in January of this year, $31 million less than in January, 2008.
An article in laprensagrafica.com reported that Jose Escobar, president of the Salvadoran Chamber of Textiles and Apparel, said, "There is a drop in exports because some US companies had to stop production since late last year due to adjustments of accumulated inventories which caused demand in the country to come to a standstill."
The textile sector foresees a 7% increase in exports for 2009, despite the economic crisis.
La Prensa Grafica published on its website: "However, according to businessmen in the sector, this prospect for growth might not be met due to local bank credit restrictions, not necessarily because of the fall in demand in the North American country.
Jose Escobar, president of the Salvadoran Chamber of Textiles and Apparel (CAMTEX), says that the crisis has not affected orders for manufacturers in the country; rather, they have maintained themselves."
The sector hopes that banks will inject part of the $400 million loan from the Inter-American Development Bank into the industry.
According to laprensagrafica.com "Since the middle of last year, the sector has experienced problems in accessing credit from the banking sector, since the combination of the economic crisis and the entrance of new banks in the country - which are closely screening clients looking for loans - has made it difficult for the sector to meet the needs of its clients.
Ricardo Esmahan, minister of Economy, estimates a 25% drop in the last two months of 2008.
According to reports from elsalvador.com "Ricardo Esmahan, minister of Economy, said yesterday that exports from the sector have been affected by the drop in textile consumption, not some much in value but in volume.
Regarding the number of orders, he explained that some business owners have experienced a decrease while others say they have remained constant.