Less than a month after the abolition of global textile quotas, the once-booming clothing industry in Mauritius is already feeling the pinch, according to officials and business leaders.
Textile firms that relocated here in the 1970s, sparking a local boom and becoming a backbone of the economy are leaving the Indian Ocean island in droves for Asian nations like China, threatening a serious crisis, they say.
”The golden age of textiles is behind us,” allowed Jayen Cuttaree, Mauritius’ minister of of foreign affairs and international trade.
Mauritius is one of the small, developing countries that experts predicted would suffer when the 40-year-old quota system was phased out on January 1, allowing nations like China and India to export unlimited amounts of clothing to the West.
Now, only weeks later, those predictions appear to be becoming a reality.
”Against giants like China and India, there isn’t a chance in 1 000 for us to compete,” said Francois Woo, director general of the Compagnie mauricienne de textile, a leading manufacturer.
”You have to expect upheaval in Mauritius, a social crisis and closing-down of factories,” he said.
While there are no official figures on the number of textile companies to have quit Mauritius, about 20& 000 jobs in the sector have been lost in the past four years as firms began to depart in anticipation of the quota elimination, according to the Chamber of Commerce and Industry.
”It is logical for companies start to leave,” said chamber chief Mahmood Cheeroo, adding: ”There is no magic formula to stop the bleeding.”
Some of the firms went bankrupt but others — many of them owned by Hong Kong investors who were responsible for the original boom — decided to shut down in Mauritius and re-open elsewhere, officials said.
They point to Esquel, a Hong Kong-based multinational, that recently closed its factory in Mauritius and relocated to Vietnam.
Today, the Chamber of Commerce says about 70 000 people work in the textile industry in Mauritius, the largest employer for the country’s 1,2-million inhabitants but some fear at least a third of those jobs will be lost.
”If in three years, we still have 30 000 to 40 000 working, it will be exceptional,” said Woo, who plans to open a company in China next January but has pledged not to cut back on operations in Mauritius.
Beginning in the 1970s, textile firms in Mauritius, as well as those in other least developed nations like Bangladesh, Madagascar, Tunisia and Latin American countries, emerged as the pillar of local economies.
Because of the quotas, they were able to import European, Chinese and Indian fabrics duty-free, turn them into garments in low-wage workshops and sell them to rich countries with a competetive advantage.
But with the end of the quota system and rising labour costs, times have changed, forcing officials to re-evaluate their economic priorities.
”We have to develop a better class of textile product rather than sticking with low-market items, we have to be a player in a market that is different from the Chinese,” foreign minister Cuttaree said.
”But, that will only slow down the process,” he said, stressing that the real solution to Mauritius’ problem will be diversifying its economy, in particular moving into information technology. – Sapa-AFP