Hong Kong fashion giant to leave Bahir Dar industrial park | The journalist

Ethiopia makes efforts to reverse AGOA ruling

Hop Lun Ltd., a Hong Kong company that leased eight manufacturing sheds in the Bahir Dar industrial park, is set to leave Ethiopia after halting operations since war broke out in northern Ethiopia. Ethiopia. The company lost its export market mainly after the United States removed Ethiopia from the African Growth Opportunity Act (AGOA).

The company signed a Memorandum of Understanding (MoU) in 2019 with the Ethiopian Investments Commission (EIC) to lease the eight factory sheds the government has developed in the park. Hope began manufacturing garments in four of the eight hangars, exporting 100% of its products to the US market.

“The conflict in northern Ethiopia began shortly after the company’s first export to the US market. It therefore could not continue to operate,” EIC Deputy Commissioner Daniel Teresa told the House of Peoples’ Representatives (HPR) on November 11, 2022, during the presentation of the first quarter performance report of the Commission.

Daniel believes the company has shut down completely because AGOA benefits have ended and its machines are now idle.

“The company is considering leaving Ethiopia. If we manage to retain this huge international company, its contribution to job creation, technology transfer and Ethiopia’s exports will be huge,” said Daniel.

A number of international brands that joined industrial parks in Ethiopia targeting the US market under AGOA’s duty-free program have shut down operations and laid off employees in line with President Joe Biden’s executive order.

Of the exporting companies operating in industrial parks across Ethiopia, 90% of their destination market is the United States.

“Currently, there are no orders as we could not secure the US market. Some companies that came to Ethiopia to target AGOA have closed down,” said Lelise Neme, Commissioner of the EIC, in Parliament.

In order to compensate for the loss of market caused by the radiation, the government allowed manufacturers to turn to import substitutes for the domestic market, in particular by producing clothing for defense and police personnel.

The commission also explored the European market under the Everything But Arms (EBA) and African Continental Free Trade Area (AfCFTA) programs. However, Lelise says a return to AGOA market privilege is the only hope now to save investors from disinterest.

“We are trying to overturn the AGOA decision and restore Ethiopia’s privilege under the program.”

The commissioner said he was working with the Ministry of Foreign Affairs (MoFA) and the Ministry of Trade and Regional Integration (MoTRI) to rescind Ethiopia’s delisting from AGOA.

In January, the US President makes the final decision on AGOA beneficiaries. Some officials believe Ethiopia could retain AGOA privilege by January as the Ethiopian federal government and the TPLF signed a peace accord to end the war last week.

“A number of international investors are already asking us to join our industrial parks after the conclusion of the peace agreement,” said Daniel, who pointed to Hop Lun as one of the ideal investors for Ethiopia.

Hop Lun had a plan to make Bahir Dar Industrial Park an exemplary and leading industrial park like Hawasa Industrial Park.

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