FCS RE Hansae Haiti

completed

The proposed project will be developed by Hansae Co. Ltd. (“Hansae” or “the sponsor”) and operations will be established in new factory buildings pending construction in the existing SONAPI industrial park in Port-au-Prince, Haiti. The sponsor is a Korean-based publicly traded apparel manufacturing company focused on the production of shirts, knits, women’s suits and casual apparel. Established in 1982 and headquartered in Seoul, Hansae started its global expansion in 1988 when it established its first operations in Vietnam. Hansae currently exports approximately 300 million pieces of clothing per year from 11 production facilities in 5 countries: Nicaragua, Guatemala, Indonesia, Myanmar and Vietnam. Hansae employs approximately 35,000 workers of which approximately 34,500 are employed by the global manufacturing operations. The proposed project entails an A Loan from IFC of up to US$ 3 million to partially support Phase 1 of Hansae’s investment plan in Haiti, which will be carried out by Hansae Haiti S.A. (“Hansae Haiti” or the “company”). Phase 1 (IFC project) entails the establishment of a garment manufacturing facility (cutting and sewing) in Port-au-Prince, consisting of 2 new factory buildings of approximately 7,000 square meters with a total capacity of up to 44 production lines. Hansae plans to use these 2 buildings for the sewing of knit garments. Phase 2 of Hansae’s investment plan comprises the establishment of 2 additional buildings, one for the sewing of knits and the other for the sewing of woven garments. During Phase 2, the company is considering providing space inside one of its building in 2-3 years’ time to a third-party to provide washing/dying/embroidery services to both Hansae Haiti and other textile manufacturers in Haiti but this has yet to be further defined. Additional infrastructure for Phase 1 will also include 2 canteens of 1,500 square meters each to provide combined seating for up to 2,600 people, an office and a dormitory to house up to 40 expat management-level staff. SONAPI is undertaking the construction of the buildings, which has been delayed and is pending to start construction in May 2017 with targeted completion of one factory building, the office and the dormitory by October 2017, and the delivery of the remaining facilities by October 2018. In the meantime, SONAPI has provided 2 temporary buildings (buildings #21 and 50), which the company has started to use as a training center and in which it will begin production in March 2017. The temporary buildings have a capacity of up to 7 production lines and will train approximately 500 workers. Once fully operational, Phase 1 is expected to create up to 2,600 full-time jobs in Haiti and by Phase 2, it is expected that there will be a total of approximately 5,500-6,500 full-time jobs.  This expansion in Haiti will help support Hansae to balance global Country of Origin Production targets such that Central America and Haiti combined will represent approximately 25 percent of its global production (currently 18 percent), whereby it is expected that Haiti would provide the additional 7 percent. The sponsor does not foresee the need for reducing the size of the current operations in Guatemala and Nicaragua. Furthermore, by establishing operations in Haiti, both the sponsor and Haitian workers will benefit from the opportunity presented by the HELP Act, which grants Haitian apparel duty-free entry to the United States and allows apparel factories relatively flexible use of third-country materials in production (expiring 2020).