Posted On 31 Jul 2017
Executive president of the Association of Textile Industries of Ecuador Javier Diaz makes an X-ray of the sector, and analyzes the last ten years and expresses the concerns regarding tax hikes.
Q: How was the textile industry in the past ten years?
A: Taking into account the official figures of the Central Bank, the Superintendency of Companies, and the INEC, regarding employment, three things can be seen; First, the last ten years the sector grew by 1% per year on average; But 2010, 2015 and 2016 were critical years. Second, the industry generates around 175,000 jobs. In these ten years, informal employment has thrived. It happened when the industry was forced to shrink, people without work opened informal businesses. It is expected that this group will be formal in the next five years. Third, regarding sales, these fell in the last years on average by 15% and for some companies by 50%. That is why is very important that the administration of President Lenin Moreno discloses transparent figures to plan ahead.
A: Measures must be taken to carry the country forward. Is the government considering an increase in import tariffs?
Q: We are concerned, we do not know the products that are being analyzed. In the meetings with the Minister of Commerce, we have been very clear that tariffs should not increase for imports of the textile sector. We are convinced that a tax increase at this time, with the critical situation in the country, will harm consumers, and therefore companies. This will give rise to smuggling or low-quality Asian fabrics.
Q: What are the affected inputs the sector uses to produce?
A: We are concerned that this list includes goods that serve to transform production, i.e., raw materials, supplies and even spare parts of machinery. The Government wants to raise the tariffs, threads and fabrics may be included. Both are products needed for production. The message is clear: do not touch the textile taxes structure. We must find ways to improve competitiveness. We have to export, attract investment. The price of electricity must be enhanced as well. (I)