Before the process of reopening the economy, the garment and textile export sector operated with 15 thousand workers, but with the elimination of some restrictions, the activity of the companies increased and now employs 45 thousand people.
Between 2010 and 2019 exports of textile companies in Guatemala reported an average annual growth of 2%, a rise that is attributed to demand from companies in the United States.
According to figures from the Bank of Guatemala (Banguat), the manufacture of clothing items was the sector that generated more foreign exchange during the past year, as revenues amounted to $ 1,397 million.
In Guatemala, authorities in the municipality of Mixco threaten to close down textile companies, claiming that some companies are damaging the drainage system by emitting highly contaminated wastewater.
After representatives of the commune of Mixco made inspections in the collector located in Pablo VI Avenue, it was reported that the circulating water was dyed red and they accused the textile companies of being guilty of damaging the drains because of the emission of chemical waste in their wastewater.
In recent years, the sector in Guatemala has lost nearly 30,000 jobs, because the high costs resulting from having one of the highest minimum wages in the region, makes it more profitable only to export raw materials, rather than making them in the country.
Vestex figures show that in recent years several jobs have been lost in the sector, given that between 2006 and 2018 the industry lost a considerable number of jobs, going from 82,109 to 53,636 places, equivalent to a 35% decrease.
Because there is still no regulation for part-time employment in Guatemala, textile businessmen estimate that the country loses between 40 and 70 thousand jobs.
For representatives of the Costume and Textile Commission (Vestex), the high operating and labor costs in Guatemala cause businessmen to send cut pieces to Honduras, El Salvador and Nicaragua to be assembled.
From May 14 to 16 in Guatemala, textile exporters from the region will meet with international buyers at Apparel Sourcing Show, to explore business opportunities.
The objective of the event is to allow all members of the Central American industry value chain to expose their capabilities to buyers and promote the integration of the supply chain.
During the first two months of the year, exports of the Guatemalan textile sector registered a 4% year-on-year increase, which is explained by demand from U.S. companies.
According to the most recent figures from the Bank of Guatemala, between the first two months of 2018 and the same period in 2019, overall exports fell from $1.808 million to $1.751 million.
The Korean company Sae-A Trading Co. Ltd., would build in Guatemala a high-tech industrial complex of chemical fiber, weaving and dyeing for the production of polyester yarns.
The Guatemalan Ministry of Economy (Mineco) reported that the project will be fully operational in three years and would be the only national supplier to sew, weave and dye within a single operation.
After a 7% increase in exports during 2018, Guatemala's apparel and textile sector expects to reach $2 billion in sales this year.
Factors such as the crisis in Nicaragua and an increase in customer demand in the United States partly explain the growth reported last year by textile companies in Guatemala.
The political situation in neighboring Nicaragua led to an increase in the number of work orders, and the 8% increase in U.S.
Businessmen consider that 2018 will be a year with record sales for the country, as they projected exports of $1.724 million, a figure that would exceed 12% of what was reported in 2017.
Representatives of the Apparel and Textile Industry Association (Vestex) reported that they have recently reviewed the figures, and they estimate that this year the sector will have double-digit growth compared to 2017.
Companies in the Asian country are looking to provide Guatemalan textile workers with accessories, threads and synthetic fabrics with finishes.
Textile companies in Guatemala envisage the possibility of generating more value in their supply chain with products that can be provided by Chinese companies that specialize in accessories and other necessary inputs for the textile production chain.
Within the framework of the Apparel Sourcing Show, a delegation of Chinese textile entrepreneurs will be visiting the country in May, to explore business opportunities in the sector.
The Apparel Sourcing Show event will be held from May 23 to 25 at the Grand Tikal Futura Hotel, and will bring together textile companies from the Central American region and from other countries.
With the hope of getting exemptions reinstated, maquila sector union representatives are calling on a thousand companies to avoid the payment of the income tax until the exemptions are reactivated.
The Superintendency of Tax Administration (SAT) confirmed in early January that both administrators and users of free zones and maquilas (by decree 65-89 and 29-89 respectively) must pay income tax (ISR) for the fiscal year 2016.
The transfer of three Korean operations operating in the country and an uncertainty in fiscal terms for the new period, have kept the sector in suspense.
Historically Guatemala has been one of the most competitive countries in the textile industry, but the legislative backlog in extending incentives to maquila companies and free zones regimes, and the departure of three Korean companies in the country in the last year, have placed the sector in a state of uncertainty.
In the first quarter of the year textile exports generated revenues of $192 million, 7% more than in the same period in 2014.
A report by the Bank of Guatemala indicates that as of February articles of clothing were the second most exported product. During 2014 this sector generated approximately $1.5 billion in exports, representing a growth of 12.6% in export volume.