Madagascar has quickly adopted a textile culture with the increasing arrival of foreign investors, attracted by investment incentives. In 2001, the manufacturing export oriented firms under the EPZ regime, were 220, all sectors included, but the garment industry is dominant. The search for an increasing vertical integrated textile industry remains a challenge for Madagascar. Production of cotton seeds, yarn and fabric are declining though many areas are available for such activities.
The development of raw material production is necessary for the success of the manufacturing sector and textiles in particular. Indeed, regarding the spinning and textiles manufacturing, the units equipped themselves with efficient tools and techniques to ensure a quality of competitive products on the international market.
The EPZ regime boosted the development of textile industry in Madagascar, production capacity was increased to supply the American market. Moreover the AGOA reinforcedthe competitiveness of the products coming from Madagascar. AGOA provides duty-free, and quota free access to the US market. Important US brand names are now transferring their orders to the country to get more benefit from its competitiveness. Among others GLORIA VANDERBILT, VICTORIAS SECRET, GAP, LIZ CLAIRBORNE, THE LIMITED are some brands produced here. Textiles have become the engine for development in Madagascar.
Sector potentialities and opportunities:
Existing of local or proximity supplier
In the region of the Indian Ocean, one of the main fabric producers (COTONA of the Group SOCOTA) is established in Madagascar, and possesses one international branch in Mauritius. This one has benefited of 8.5 million USD as a loan in 2001, to modernize and replace its equipments. This company plays an important role in supplying the Malagasy EPZ companies. The other supplying countries in terms of fabrics and accessories are: Mauritius, France, east Europe, Taiwan, Hong Kong, Pakistan.
In the framework of the AGOA, Madagascar benefits of a special regulation for garments items, at the intention of the Less Advanced Countries. This regulation offers access to the US market with exemption of duties on textile items, wherever the origin of fabrics and yards may be until September 30, 2004, and then from countries benefiting AGOA.
A skilled labour at a competitive cost
Thanks to structured development policy, the Malagasy textile sector benefits of a skilled labour, especially by the establishment of a specialized training centre, and as wage cost still competitive in the world.
A tax-free regime
The free tax regime offers many advantages:
- a fiscal regime with low rate including total exoneration on profit taxes during a period of 2 to 15 years, then a fixed rate of 10% for the following years.
- a custom regime insuring tax exemption when importing, free access to currencies, and transfer
- relaxing regulations on employment, visa and exchange matters.