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The fashion industry is in trouble, due to the devaluation of the euro

2023-09-20 22:28:03, Sociale CNA

In Albania, the textile and footwear fashion industry, which works with customer material, mainly for the European market and where more than 70 thousand workers work, is facing the most difficult situation in the last 20 years due to the significant devaluation of the currency European against the Albanian Lek.

"It is one of the most difficult economic situations that our sector is going through. One of the main reasons is the devaluation of the euro. The fact is that we work 100 percent for export and, under these conditions, our sales are in euros and expenses are in Lek. The fall of the euro is about 15-20 percent", says Edi Teli, owner of the company "Moda Teli".

For the well-known economist Edi Teli, owner of the company "Moda Teli", the reasons for such a large devaluation of the euro against the lek are, among others, numerous constructions, tourism, the informal economy, but also illegal drug activity.

As for Gjergj Leqejza, administrator of the company "Shqipëria Trikot", one of the largest in the fashion sector in Albania, who works for the well-known Italian company "Cotonella", the losses of this company from the devaluation of the euro are huge.

"Taking this figure as a basis, with an economic turnover of 4 to 4.5 million euros per year, 15 percent corresponds to about 600 thousand euros per year, a pure loss only due to the effect of the euro compared to the lek."

Under these conditions, says administrator Leqejza, the Italian company "Cotonella" is considering a gradual transfer from Albania to Uzbekistan, where, he says, there are very favorable policies for this industry.

Therefore, he adds, it is necessary for the state to take quick measures to support the fashion industry through alleviating policies for the tax burden, restructuring of debts or loans, making the role of guarantee to banks or through initiatives for subsidies in order for the business how to overcome this difficult situation.

"I think that the state should evaluate this fashion sector, specifically textile-shoes, which, if I'm not mistaken, accounts for 28-30% of national exports and this is a significant and important figure for the state budget" .

According to the Institute of Statistics, exports of the textile-shoe group in the 7th month of this year fell by 1.8 percent, proving the difficult situation this sector is facing.

According to economist Edi Teli, the state has intervened in easing the procedures and deadlines for VAT refunds, paying off the profit installment and compensating social security contributions for minimum wages, but, he adds, this covers only 10 percent of the loss suffered by the fashion business.

In this situation, a more energetic intervention by the state and banks is required.

"Any prolongation of this crisis, as I call it, will be detrimental to the economy, but also to the absorption of foreign investments, because the interest of foreign investors will be lost, it will affect the creation of an unreliable business climate as well as the great diminution of the initiative of individuals to do business in Albania".

The association representing textile and footwear manufacturing businesses and the exporters' association have reacted to the situation, requesting that the institutions look into the possibility of creating easing policies to balance the situation in the fashion industry where, last year, according to the Bank of Albania, net income from custom work services reached the value of 625 million euros./ VOA