R 311321Z MAR 09
FM AMEMBASSY ANTANANARIVO
TO SECSTATE WASHDC 2270
USDOC WASHDC

UNCLAS ANTANANARIVO 000229 
 
 
DEPARTMENT FOR AF/EPS AND AF/E - MBEYZEROV 
DOC FOR DESK OFFICER - BECKY ERKUL 
STATE PLEASE PASS TO AUSTR FLORIE LISER AND TO PATRICK COLEMAN 
 
E.O. 12958: N/A 
TAGS: ETRD AGOA EINV ECON MA
SUBJECT: AGOA SHIPMENTS IN SECOND HALF 2008 - MADAGASCAR 
 
REF: 2008 ANTANANARIVO 0608 
 
¶1. Summary: Madagascar's AGOA apparel exports in the second half of 
2008 were similar to those of the second half of 2007. However, the 
total amount for 2008 decreased by 3.5 percent compared to 2007. 
This decreasing trend will likely be stronger in 2009 due to the 
current political turmoil and to the world financial crisis. END 
SUMMARY. 
 
¶2.  Madagascar still among the main suppliers in 2008 
--------------------------------------------- ------- 
 
Madagascar's AGOA apparel exports in the second half of 2008 were 
close to those of the second half of 2007 (USD 137,774,524 in 2008 
versus USD 135,629,349 in 2007). However, the total amount for 2008 
decreased by 3.5 percent compared to 2007 (USD 233.8 million in 2008 
versus USD 242.1 million in 2007). Despite double digit appreciation 
of the Ariary against the Euro and Dollar, Madagascar AGOA apparel 
exports showed a good performance in 2008 in comparison with 
countries like Lesotho, Kenya, and Mauritius.  Traditional U.S. 
buyers such as the GAP, Gloria Vanderbilt, and Jordache still 
continue to purchase from Madagascar. The 2008 USITC data showed 
again that Madagascar ranked second in AGOA apparel shipments by 
value after Lesotho (USD 279 million against USD 339 million for 
Lesotho). 
 
¶3. Return of political unrest 
------------------------------ 
 
Since January 2009, the status of the Government of Madagascar (GOM) 
has been called into question with daily street demonstrations. This 
political conflict led to the burning and looting of several private 
assets belonging to locals and foreigners in January, and the 
resignation of the president in March 2009. 
 
¶4. Several lay-offs since January 2009 
-------------------------------------- 
 
Many firms have informed the Malagasy Customs and the Ministry of 
Industry that due to the current political turmoil, they have been 
forced to lay-off some of their workers. 
 
GROVE, the third largest exporter of apparel under AGOA - USD 26 
million of exports in 2008 and employing 3,500 workers - began 
laying off workers in February because its buyers cancelled orders. 
Grove has retained only 25 percent of its workers until the 
manufacture of the last order scheduled for the end of April 2009. 
 
POLO Group, the only textile company based in the West of the 
country and employing at least 1000 workers was totally looted and 
burnt on January 27, 2009. 
 
As most of the apparel firms have their mother companies in China, 
many firms have decided to return the fabrics and accessories back 
to China, India or Pakistan. 
 
There are no official data on companies that have closed, but local 
papers report that there has been a loss of at least 10,000 jobs 
since January 2009. 
 
¶5.  Gloomy prospects for 2009 
----------------------------- 
 
Given the world financial crisis and the political unrest, the 
future of Madagascar's textile sector is gloomy.  Furthermore, tax 
incentives granted to Export Processing Zone (EPZ) companies will be 
offered only through December 2010. Therefore, the arrival of new 
foreign investors in the apparel sector is unlikely. 
 
MARQUARDT