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El Salvador Eyeing 25 Percent Apparel Export Growth Following Sharp Decline

El Salvador is aiming to increase apparel-sector exports 25 percent annually once the U.S. economy recovers from the Covid-19 pandemic, bolstering orders for its synthetic fabric and performance apparel.

“We have the aspiration to grow exports 25 percent by value,” said Patricia Figueroa, executive director of the main apparel trade lobby Camtex. “We exported 91 million kilograms from January to July this year, of which 60 percent was basic and 40 percent was value-added. We want to grow that latter 40 percent.”

By value-added, Figueroa refers to the synthetic fabric and performance sportswear product suite the Central American nation is increasingly becoming known for. Investments from major textile players such as Pettenati, among others, were seeing a steady rise before Covid-19 hit production this spring. According to Figueroa, those investments will likely continue with a 2021 recovery and will go to niche synthetic fabrics and blends, as well as leisurewear such as high-end yoga tops and bottoms.

Simultaneously, the country will continue to supply basic T-shirts, boxers and lingerie to the likes of Kohl’s, Target, Adidas, Puma and Costco.

On the yoga front, leading producer Texops is boosting output of its own private labels, in tandem with Varsity Pro, a U.S.-Salvadoran firm that also makes leisurewear, according to Figueroa.

Exports are set to decline 15 percent to 20 percent overall from $2.1 billion shipped in 2019, Figueroa projected. But that’s much brighter than the 43 percent plunge from January to July of this year.

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As U.S. orders recover, the bulk of the nation’s textile plants are back at work, she added. Industry job losses will range from 10,000 to 15,000 in 2020. At the pandemic’s height in April and May, observers predicted the sector would lose 25,000 jobs that would never be recovered.

Some dark clouds are on the horizon, however.

El Salvador’s President Nayib Bukele has launched a tax war against large businesses including full-package apparel maker Intratex, where a recent government raid (and financial comptroller’s arrest) on tax evasion charges sent shockwaves across the region.

Intratex executives denied wrongdoing and blamed Bukele for launching a politically motivated campaign against its wealthy ownership family, Siman, which supports the opposition on the run up to next year’s elections.

Around 43 textile and clothing makers are said to be on the government’s radar.

Figueroa said Salvadoran maquilas comply with local and international tax law, “and none of them have told us they won’t continue in El Salvador” because of the tax probe, she noted.