Assessing Competitiveness In Moldova's Economy - Economic Growth

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Development Alternatives, Inc. Moldova Competitiveness Assessment: The Textiles & Apparel Cluster the EU countries which are engaging firms in Eastern Europe and the CIS in tolling operations, especially as the EU expansion is pushing the reach of these operations eastward. Importantly, though, Moldova’s apparel producers have been gaining market shares in recently (2001-2003) growing EU markets, as illustrated in Table 2. These product categories account for US$73.2 million of apparel and textiles exports, or just about US$50 million without the bed linen (HS 6302) produced in Transnistria. For another US$32 million, Moldova’s apparel producers have been losing market in growing EU markets. Rising stars Table 2: Moldova apparel and textiles exports to the EU Growth rate of imports Growth rate of Moldova market share 2003 exports in USD million 6204 Womens’ or girls’ suits, ensembles, etc., not knit or crocheted 1.5% 28.4% 27.8 6302 Bed linen, table linen, toilet linen & kitchen linen 0.1% 66.5% 23.0 6109 T-shirts, singlets, tank tops, etc., knit or crocheted 5.2% 1.6% 6.9 6110 Sweaters, pullovers, vests, etc., knit or crocheted 0.3% 8.8% 6.4 6111 Babies’ garments & accessories, knit or crocheted 0.7% 99.4% 1.9 6209 Babies’ garments & accessories, not knit or crocheted 0.7% 10.2% 1.7 6108 Women’s or girls’ slips, pajamas, etc. knit or crocheted 0.1% 30.1% 1.1 6107 Men’s or boys’ underpants, pajamas, etc., knit or crocheted 8.6% 170.7% 0.3 Total 69.8 Declining stars 6203 Men’s or boys’ suits, ensembles, etc., not knit or crocheted -2.2% 43.0% 13.1 6206 Women’s or girls’ blouses & shirts, not knit or crocheted -4.9% 26.8% 5.7 6202 Women’s or girls’ overcoats, etc., not knit or crocheted -0.3% 0.2% 4.6 6211 Track suits, ski suits and swimwear -1.6% 31.0% 3.8 6105 Men’s or boys’ shirts, knit or crocheted -11.7% 22.4% 3.2 6104 Women’s or girls’ suits, ensembles, etc., knit or crocheted -4.6% 22.3% 1.7 6103 Men’s or boys’ suits, ensembles, etc., knit or crocheted -0.5% 39.1% 1.0 Total 33.2 Dark stars 6201 Men’s or boys’ overcoats, raincoats -6.4% -1.1% 5.1 5208 Woven cotton fabrics, nu 85% cotton, wt. Nov 200g/m2 -7.7% -32.4% 1.6 6205 Men’s or boys’ shirts, not knit or crocheted -5.5% -1.2% 1.1 Total 7.8 Figure 17 offers a visual summary of Table 2, again at the 4-digit HS level. It shows clearly that Moldova is strongly positioned in growing submarkets. Where it is losing market share is in the categories that account for a smaller portion of total apparel exports; one of these categories, track suits and other sports apparel, has actually been growing, but at a slower rate than the respective market expansion. July 2004 • DRAFT Page 8
Development Alternatives, Inc. Moldova Competitiveness Assessment: The Textiles & Apparel Cluster Figure 17: Apparel and textile exports to the EU Related and Supporting Industries (Complementors) The discussion has already touched on some of the issues regarding complementors for the textiles and apparel cluster. Moldovan apparel producers are in effect forced to bypass the CMT stage, where they become responsible for sourcing trim, because there are no domestic producers of such things as buttons, threads. Given the OPT arrangements with EU buyers, which favor that all materials needed are imported on a temporary basis, domestic producers would face considerable difficulties breaking into this market, in any case. Some of the carpet manufacturers are in fact sourcing wool from domestic producers, which makes them (an albeit small) part of the hides and skins (and meat) value chain. Weaknesses in the transport services sector, especially trucking, have led a number of apparel producers to acquire and operate their own trucks. This pattern is a symptom of critical bottlenecks in the value chain for a key export article. Normally, the skills required to operate a competitive apparel or textile operation are quite different from those for transport services providers. If apparel manufacturers find that they can operate the needed services at a lower cost or with higher quality or reliability, there is a clear issue of either incentives or capacity, or both. While this assessment did not study the road transport sector in any detail, one of the barriers to its modernization is the lack of appropriate financial instruments or services, such as leasing. July 2004 • DRAFT Page 9
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