1. International Business Meeting Port-au-Prince, Oct 1-2, 2009 keynote speakers: René Préval, President of Haiti Michèle Duvivier Pierre-Louis, Prime Minister of Haiti President William J. Clinton, UN Special Envoy for Haiti Luis Alberto Moreno, President of the IDB

2. GARMENT SECTOR IN HAITI

3. Agenda  State of the Garment Sector in Haiti –Georges Sassine: CTMO-HOPE, Executive Director  Improvements in the Access to Capital –Maxime D. Charles: Haiti’s Bankers Association, President  Opportunities in the Value Chain –Ros Harvey: Better Work, Global Program Manager –Margaret Bishop: CHF, Deputy Chief of Party for KATA –Will Duncan: (TC)2, Vice President of Business Development  Success stories –Richard Coles –Mercedes Capellan & Joseph Blumberg

4. State of the Garment Sector in Haiti  History of garment in Haiti  Current state –Number of firms and sectors represented –Employment figures and trend

5. State of the Garment Sector in Haiti  How will HOPE II help the Garment Sector? –Tariff Preference Levels –Single Transformation Rules –Value-Added Content Rule –Earned Import Allowance Program (3:1) –Co-Production through DR –Labor Standards: TAICNAR

6. State of the Garment Sector in Haiti  What do we expect from HOPE II? –Jobs created (direct and indirect) –GDP increase –Other measures…

7. IMPROVEMENTS IN THE ACCESS TO CAPITAL Maxime D. Charles

8. History of access to capital in garment  Context of a birth in the 70s  Political Liberalization: Change in Duvalier regime  Economic opening: Expansion of electronic and textile industry; wave of foreign banks (1 French; 2 Canadians; 3 US; 5 Haitians)

9. Culmination & challenges in the 80s  200 plants employing 60M  Value added up 23 times @ 37% @ annum  Companies 40% Haitian-owned; 30% Foreign owned; 30% joint- Ventures  1980 turning point: 2 nd. Oil crisis; hurricane Allen; unwise spending & invest

10. First serious wave of boat-people  Changes in Financial Sector: –3 foreign banks purchased by local interests 1 by another foreign; 2 new ‘Societes Financieres’  Financing the Manufacturing Sector –Machinery & Equipment supplied/financed by US parent/principals: wholly-owned companies, or lointly-owned

11. Access to Finance  Machinery & Equipment invested by entrepreneur (approx. US740M)  Bank financing –Limited: weak capitalization –lack of, or limited collateral –Weak management at times –Unaudited financials  Societes financieres: Special products; in tandem with banks.

12. New steps and improvements  Legal framework being improved: –New law re lien over movable assets –New banking law in front of parliament –Improved AML monitoring & regulations –Special funding under consideration (IDB; SFI,USAID, etc)  Multilateral Agencies Guarantees available (MIGA), or under consideration (OPIC)

13. Access to Finance  What bankers look for in ventures –Quality/competence/expertise of Management –Cashflow quality (adequacy/stability)  How they assess risks (ie Performance Variance) –Country risk Vs Industry risk The risk alone is not the problem; how to deal with the risk, is.

14. Risk assessment  Any risk specific to a given country –Misery (poor welfare & social indicators) –Weak macro economic data –Weak governance  Mitigating factors: –Trend –Insurance Agencies –Opportunities –Low effectivity of risks

15. Closing comments… Don’t let challenges cause you to miss real opportunities. You must invest when there is blood in the streets. J. P. Morgan Thank You!

16. OPPORTUNITIES IN THE VALUE CHAIN Ros Harvey Margaret Bishop Will Duncan

17. Labour admin & inspection Sustainability and engagement Enterprise assessments Training and capacity building employer & union capacity building Enforcement Social Dialogue Industry-based scheme labour standards

18. Better Work: in action Compliance Needs Assessment Improvement Plan Self Assessment Improvement Activities Follow-up Assessment BW Factory (mgt & workers) Buyer Engagement and accessing reports Advisory Services and Training

19. Value Chain: Needs & Opportunities Identified by Sector & Investors –Full-Package suppliers vs. CMT –Training: operators, technical, managerial –Infrastructure/ Industrial Park/s –Ancillary businesses –Access to capital

20. Addressing the Value Chain Full Package & Training Needs: The Haiti Apparel Center Building #48 SONAPI Industrial Park (donated by Government of Haiti; renovation by CHF, funded by USAID) --- Operator, mechanic, technical, & management training; Classes already underway --- Full Package Center (contract service); Lean Manufacturing demo line --- Endorsement by [TC]² US Textile & Apparel Organization; Partner in HAC design & operation

21. Opportunities u nder $500,000 US Project Estimated Cost (US Dollars) Months to Become Operational (est.) Payback Period (est.) Label-making (printed, sew-in) $25,0003 months1 year Packing services (bag-tag-box- ship-logistics-staging) $25,000 - $35,0001 - 2 months3 – 6 months Scanning equipment (leasing & maintenance) $25,000 - $35,0003 – 6 months1 year Garment dyeing* $50,000 - $75,0003 – 6 months2 years Printing services (hang tags, etc.) $75,000 - $125,0003 - 6 months2 years Laser cutting equipment $100,000-$150,0004 months2 years Trucking firms $200,000 - $350,0006 months1 - 2 years 3 rd Party QC Testing Lab $250,000-$750,0003-6 months2 – 3 years Garment washing /steam press* $200,000 - $500,0004 - 6 months2 years * Must meet international environmental standards for treatment of waste water / effluents

22. Opportunities above $500,000 US Project Estimated Cost (US Dollars) Months to Become Operational (est.) Payback Period (est.) High end CMT$500,000-$1,000,000 6 – 12 months 1 - 2 years Full Package manufacturing $5-$7,000,000 (includes inventory carrying costs) 6 – 18 months 2 - 5 years Industrial Park*$50-$75,000,000 12 - 36 months 7 years Textile mill (fabric through dye/finish)* $30-$100,000,00024 months4 – 7 years Bamboo or soy production + processing / fabric / dyeing / finishing plant* $40-$150,000,000 18 – 24 months 4 – 7 years * Must meet international environmental standards for treatment of wastewater / effluents

23.  Who is [TC]²? –Member-driven organization specializing in Technology Development, Training & Consulting for the US apparel industry for 29 years –Members include the largest textile/apparel manufacturers & brands/retailers in the US  [TC]²’s Perspective –Relationships in Haiti since 2002 –Partnering with CHF International in design and operation of the Haiti Apparel Center –Why Haiti? –Why Now?  A positive opportunity for investors A Global Perspective of Garment Manufacturing in Haiti: Should You Invest?

24. SUCCESS STORIES Mercedes Capellan & Joseph Blumberg - CODEVI Mark D’Sa - GAP

25. SUCCESS STORY: CODEVI Mercedes Capellan & Joseph Blumberg

26. Four state of the art sewing facilities and 2.0 million sq ft of land to expand

27. PAST CODEVI was founded in 2003. Currently it supplies 6.8 million pants, 2.9 million Dozen shirts and 2.4 million ladies intimates each year to U.S. leading brands – from concept to retail. CODEVI is a division of Grupo M, a Vertical Textile Corporation in the Dominican Republic founded in 1986 “Creators of Value”

28. Vertical integration in Knits enables CODEVI to control quality from Design to Retail Knitting Garment Manufacturing Trims Design Product Development Laundry /screen print & Packaging Transport Logistics

29. PRESENT CODEVI Core Values are the base of our business valued added continuous growth social responsibility continuous training

30. Controlling the Supply Chain enables our customer to maximize their focus and research of the retail customer needs……We do the rest. Consumer needs Product Development Product Design Fabrics and Components Sourcing assembly Cutting Quality control Custom Sell to store Final Consumer Packing Warehousing and Distribution Finishing VALUE ADDED CODEVI’s 3,848 employees are LINKED to the 6,200 Dominican employees in order to achieve the necessary synergies required for an excellent product.

31. Our value added services help to maximize product impact

32. SOCIAL RESPONSABILITY

33. ECONOMIC IMPACT Yearly Payroll HG$288,205,335 3,848 Employees 23% Fringe Benefits Supplier & Services Cluster

34. CERTIFICATIONS INTERNATIONALLOCAL Business Alliance for Secure Commerce (BASC) Forming Standardized Security Laborer Competences. World Responsible Apparel Production (WRAP) Environmental, Ethics, Legal and Human rules accomplishments. Guides for Auto Forming in Product Quality and operational efficiencies. CTPAT Lean Manufacturing

35. FUTURE  Promoting apparel production in Haiti thought innovative programs, including certified Labor standards  Provide smart solutions to American Companies that invest in Haiti  Taking full advantages of trade Preferences program  Approach Financial Funding Sources available to help on building new infrastructure and migrate to “full Package”  Fast Track Custom Modality from the Ports.  Woven and knit Mill Installations.  Duty Free access of Row material and machinery to Local textile Industries.  Update and revise provisions of the Labor Code, specifically art. 112 4x4 system. Double shift  Textile educational programs  10,000 new jobs in the next 5 years

36. SUCCESS STORY: GAP Mark D’SA

37. Haiti Sourcing: Opportunity for Growth Prepared August 2009 “It is my opinion that this is by far the best chance that Haiti has had, in the 35 years that I’ve been acquainted with it, to slip the bonds of the past” - Former US President Bill Clinton, UN Special Envoy to Haiti - August 9, 2009

38. Executive Summary Retailers Can Be Major Apparel Importers from Haiti within 3 Years WHAT’S NEW Political stability and increased investment in infrastructure HOPE II trade legislation effective through 2018 - most liberal rules of origin of any US preference program Significant foreign aid’s investment to spur economic development and job creation Improved industrial capabilities and increased capacity Haiti has vast untapped potential for low cost and speed-to-market sourcing Top retailers/wholesalers have already begun to grow their sourcing in Haiti (+10% Y/Y) to leverage unparalleled free trade advantages, extend AUC savings, fast replenishment, and chase Retailers have an opportunity to “lock up” significant capacity in Haiti and become a major apparel importer within 3 years At Gap Inc. we also saw an opportunity to extend our social responsibility leadership and make a tremendous impact in the Western Hemisphere’s most impoverished country Low costs: comparable to Cambodia and Bangladesh – duty free regardless of fabric origin (huge cost advantage) Speed: 3-day sailing to Miami with 3 sailings each week Prominent Players: Gildan, Hanes, Cintas, Levi’s, Sears, VF, and Wal-Mart all have a significant presence in Haiti Bill Clinton, Charlie Rangel, George Soros, and other prominent world figures have brought increased international attention and hundreds of millions in pledged aid Gap Inc.: currently sourcing under $20M FC - there is opportunity to grow to $100-150M in the next 3 years through Gap, ON, BR, and Outlet US Imports from Haiti Total = $455 Million Other retailers or wholesalers $436 M $19 M 38

39. Haiti Could Represent a larger portion of Gap Inc. Sourcing Mix Haiti is our best opportunity to extend AUC savings US proximity enables us to excel at VMI, Rapid Response, Chase, and other initiatives Gap Inc. could target 20-30% market share of US Apparel Imports from Haiti 39 HAITI 0.7% ($455M) US Apparel Imports Total = $68.3 Billion Other US Importers 95.8% ($436M) Soruces: Otexa / Prompt 12-Month period ending May ‘09 *Assumes 10% ‘09/10 growth in total US apparel imports from Haiti (i.e. $500M in 2010)

40. One of the Lowest Cost Countries in the World 40 Gross Annual Minimum Wages Currency: International Dollars* The minimum wages given refer to a gross amount, i.e. before deduction of taxes and social security contributions, which vary from one country to another. *For country to country comparison, annual wages are provided in International dollars, a hypothetical unit of currency that has the same purchasing power that the U.S. dollar had in the United States in 2008. For calculating the annual wage, the lowest general minimum wage was used. Source: Wikipedia; International Monetary Fund; World Economic Outlook Database (April 2009). From 10/2009, the minimum wage in Haiti may increase to HGourde 125 per day (US$ 3.10 per day) which could move it a place or two to the right in the study above Country Exports to US ($M) Exports Growth ‘08-’09 Bangladesh 3,57012.2% Haiti45510.9% Vietnam 5,25110.1% Egypt7689.7% China23,1573.9% Indonesia 4,0000.6% Countries that Increased Apparel Exports to the US Source: Otexa - All other sourcing countries experienced negative growth from ‘08-’09. 12-month period ending May ’09. Exports growth calculated based on $FC US brands turned to Haiti for AUC savings increasingly in 2009 (10% Y/Y growth) Haiti was one of 5 countries with increase in apparel exports to the US despite volume reductions It has one of the lowest labor costs and ELC in the world HOPE II duty free legislation has the most liberal rules of origin of any US preference program

41. Haiti Has Turned the Corner, Readied Itself for Significant Growth Migration of capacity and local development of full package capabilities presents a unique opportunity for retailers to grow in Haiti Extremely favorable conditions for the apparel industry to flourish Established Cut/Make/Trim vendor base with long track record WHAT’S NEW HOPE II trade legislation effective October ‘08 addresses HOPE deficiencies and extends it to 10 years The US, Canada, and other nations eased their travel warnings for Haiti in recognition of improving security The Haitian government has streamlined the approval process for business ventures Haiti public/private sector facilitates creation of a TC2 training center, a full package center, a new 1.2M sq/ft industrial park, and a port development project in Port Au Prince. The AGA Group, with over a decade producing for Hanes and Gildan, acquires a fully operating facility, as a first step to become Gap Inc.’s newest full package sourcing partner in Haiti. The Astralis Consortium, focused on enabling full package, amends its bylaws to increase funds directed to vendor financing, sampling, development and customer service activities. 41

42. Opportunity to Extend Leadership in Social Responsibility THIS YEAR $324M in aid raised by international donors’ conference in Washington DC The World Bank, IDB, IFC and IMF granted Haiti $1.2 billion of debt relief US Secretary of State Hillary Clinton visited Haiti - the US has committed to provide over $300M in assistance this year Bill Clinton, former US president named UN special envoy this year has brought increased international attention and has committed to promote economic development Charlie Rangel, chairman of the US House Committee on Ways and Means has directly requested Gap to help Haiti through job creation via the apparel industry George Soros, is involved in new industrial park and port developments, and launched the Haiti Invest Project, with commitment of up to $25M and opportunity to extend funds to $150M through partners for manufacturing, agriculture, logistics, energy and tourism ventures 42

43. 43 APPENDIX: Haiti Profile Appendix

44. 44 Haiti Apparel Industry Haiti’s apparel industry has gone though cycles of growth and contraction in the past decade. Improved conditions and the pass of HOPE II renewed confidence in the overall value Haiti can offer. Some vendors are now able to offer full package production and deliver more complex garments such as men’s suits Garment types: Haitian vendors produced mainly knit garments, such as t-shirts, leggings, and sweatshirts, with a lesser amount of woven apparel, such as jeans and corporate clothing. Low cost and tariff advantages have triggered changes in the production mix. Now woven pants, shirts, and suits account for about 20% of total apparel output. Vendor pool: Approximately 29 firms, most locally owned, employing 24,000 workers.* CMT Production: Most vendors operate as assembly only factories (CMT) for North American producers and retailers such as Hanesbrands, Gildan, Russell, Target, Cintas, Trimark, Landau, and G&K. Full Package Production: Growing steadily over the past five years through: A Dominican firm setting up operations along the Haiti-DR border (Grupo M) A Korean conglomerate with knitting operations in DR that set up 4 factories in Haiti’s capital, Port Au Prince, and subcontracts with 2 other Haitian factories (Willbes) Local prominent families that own and operate a number of factories (Apaid Group) A consortium of local and international investors and industry groups called Astralis, that provides financing, management, coordination activities, and customer service. Labor force: One of Haiti’s major assets is an abundant low-cost labor force; Haitian apparel workers earn an average of $0.49 to $0.54 per hour, including fringe benefits. This is about half of what workers earn in the region’s next lowest cost country, Nicaragua.** *Inter-American Development Bank (IDB); **US International Trade Commission Investigation Report

45. 45 HOPE II: Duty Free Advantages HOPE Act (Hemispheric Opportunity Through Partnership Encouragement)  Expands trade benefits beyond what the Caribbean Basin Trade Partnership Act (CBTPA) provided  Has further increased interest in Haiti as a sourcing destination and enhanced the Haiti/DR co-production relationship  Duty-free treatment regardless of the source of the fabric or other inputs  Required origin inputs and processes, value-added requirements, and quantitative limits can be summarized as follows: Source: HOPE legislation text; US International Trade Commission Investigation Report In March 2007, the Haitian HOPE Act became effective to expand preferential trade treatment for Haiti. Additional benefits were added through the pass by Congress of HOPE II in May 2008. ArticleYarnFabricCuttingAssemblyValue-added Quantitative Limit* ApparelAny country Haiti 50% or more beneficiary country content 300 M SME Woven ApparelAny country HaitiNo70 M SME BrassieresAny country Haiti/US No * knit apparel cap is subject to exclusions for certain mens/boys t-shirts and sweatshirts; no cap for certain articles (brassieres, luggage, headwear, and certain sleepwear) for wholly assembled or knit-to-shape in Haiti without regard to the source of the fabric; no cap for apparel wholly assembled or knit-to-shape in Haiti that meets a “3 for 1” earned import allowance (i.e., for every 3 SMEs of qualifying fabric purchased for apparel production by producers in Haiti, a 1 SME credit is received that can be used in the manufacture of apparel using non-qualifying fabric; the latter may enter the United States duty-free and not subject to quantitative limitations); no cap for apparel made from non-U.S. fabrics deemed to be in “short supply”; direct shipment from and co-production in the Dominican Republic is allowed

46. 46 Accessibility Port Airport West Port Au Prince Aerial View: Port, Airport, and Industrial Parks within 5-mile radius Sonapi Industrial Park Willbes, Astralis Group, DKDRSuits, AGA Corp, etc. Airport Shodecosa Industrial Park Island Apparel

47. International Business Meeting 2009 Thank you