Last Lap for July's Inaguration of Hawassa Industrial Park

From http://allafrica.com/stories/201606290119.html dos YosephLocal investors caught off-guard by accommodative measures - some can meet new criteria, some cannot

During the last lap meeting with local investors before the scheduled July 3, 2016 inauguration of Hawassa Industrial Park, Arkebe Oqubay, board chairman of the Industrial Parks Development Corporation, cut the size of modalities for entry of local investors.

At the meeting held on June 23, 2016, the Ethiopian Investment Commission (EIC) presented a model feasibility study to local investors, followed by a case by case question and answer period with those who bought and submitted the bid document.

The investors, who were caught by surprise in what took place at the meeting, called for a consultative meeting on the way forward.

"This is inconsiderate of the real price range of products, labour average salary, production area usage, investment and production cost," one of the bidders commented on the model feasibility study.

Following the case by case assessment, the Chairperson gave a green light to four while advising two to make minor adjustments. Two others could not meet the criteria and were not approved.

The companies that got the opportunity to make improvements before being awarded a place in the park the award were the eight that made offers at the bid for Hawassa Industrial Park released by the Commission for the final and third time last month.

"It sounds like a fast and hard rule, from the officials, giving not so much room for alternatives," said another participant, who managed to pass the evaluation.

Arkebe took command of every step, and was firm in issuing an ultimatum to those companies he had advised to make certain adjustments.

"If only you can make the changes recommended, do so and submit the final proposal by Tuesday, June 30," he asserted authoritatively.

Those who easily withstood the scrutiny were Selina Trading Plc, Akaki Textile Factory, Quaderant Plc and Getachew Aynalem Plc.

Selina Trading, a company that is not new to the industry, still holds tight in its offer. Selina is in the business of importing textile raw materials like yarn and zippers for local manufacturing factories and has been representing foreign companies as an agent to export textiles and garments from the local manufacturers since 2009.

Akaki Textile Factory has roots going all the way back to 1972 when it was established by Emperor Haile Selassie. It was the country's only national military cloth manufacturer up to 1996. Three years after its privatisation in 2006, it manufactured military cloth for the US in 2009.

Its age and track record may contribute to the company's confident claim that nothing is too big for Akaki since it already is able to manage two factories, according to its owner and Managing Director, Getachew Biratu. Akaki also owns G.G. Super Garment Factory located in Debre Zeit,

The third company, Quaderant Investment Group S.C., made the highest offer of the eight, taking a shot at two 5,500sqm sheds, with no experience in the textile sector but with over six years' experience on the logistics service networks with international giants. It plans to construct a 120 million Br bottling factory in Bishoftu. They have not yet decided which of their three proposals will be applied to the Hawassa Park.

Three of the eight that originally made offers for space in Hawassa Park actually went down from their high horse and settled for beginning investment on 2,750sqm.

These companies, KJ General Trading, Nasa Construction Materials Equipment Rental Plc, Aster Getachew Construction Equipment Rental Plc, along with Getachew Aynalem Plc went down for the new offer of 2,750sqm.

KJ, a company established in 2009 and located in Hawassa, has a flour factory and also operates a coffee export trading business under it. The owner of the business, Kedir Bargecho though with no experience in the textiles and garments industry and limited experience in coffee export, relied on impressive growth from humble beginnings as an assurance for obtaining success in the Hawassa Industrial Park.

Nasa Construction Materials Rental Plc, which began operations in 2011, started the year with different plans for next year, setting its eyes on waste water management and raised floor construction of new buildings. However the company shifted its interest to the smallest area, originally the offer was for the whole size of the shed.

A company also involved in construction equipment rental, Aster Getachew, which started business seven years ago was the first one to ask about the possibility of leasing a smaller shed, even before the announcement. This company claims to have the benefit of contacts in the foreign market network of the industry, according to its General Manager, Aster Getachew, a former employee of Ethiopian Airlines.

Last week's meeting was the first time it was communicated to the local investors that they could settle for half the space they initially sought - a new scheme developed to accommodate the limited local capacity evidenced in the business proposals.

Arkebe was blunt in telling Ethnic Fashion Plc and Lovegrass Agro Processing Plc that they were not ready to take the huge leap.

Ethnic Fashion, a new textile and garment factory planned to be constructed under the title East Africa Synthetic Yarns, has been dropped for equity mobilisation unlikelihood. However, Fortune learned that the company has no interest in accepting this decision, setting its offer to other industrial parks yet to be constructed as was suggested by Arkebe.

Lovegrass, which is still being established accepted the recommendation to move its offer to the Debre Berhan Industrial Park, stating that entering into an Agro Processing Industrial Park would be more convenient.

The contenders had various views on the rationale raised to tell them they were unfit.

"I was not ready for such intense and one-way communication on our feasibility; it was unusual and surprising," said Marta Z. Amde, one of the bidders, who was dropped.

At the bid opening held at the Commission's meeting hall on May 31, bidders were told that results would be communicated in two weeks time.

The model feasibility study too was a surprise giving some a whack on the head that led to their reconsideration of business plans they had submitted more than two weeks earlier.

"Where the Commission comes from sets unrealistic expectations," said Sentayehu Teshome, deputy manager of Nasa Construction. "We just want to give it a try on a smaller scale and see how it unfolds."

The tailored study was prepared in two weeks time and was carried out in a similar timeframe by five individuals - three from the Development Bank of Ethiopia (DBE) and one each from the Ethiopia Textile Industry Development Institute (ETIDI) and the Commission.

A source close to the process of developing the feasibility study but who wished not to be named also admitted it was done at short notice and therefore not done in the best possible manner.

Responding to the challenges presented from the audience, Belachew Mekuria, deputy commissioner for industrial parks at the Commission said that it was a mere draft open for comment and adjustment.

The study concluded that business can flourish if locals invest on 5,500sqm shed with initial capital of 138 million Br and can achieve a production capacity of 7.32 million pieces per year generating 54 million Br turnover per annum.

Local investors disagree. The road to their attempts to come on board has not been easy.

The first two rounds got none and only two interested parties, respectively, for the Hawassa sheds.

The third bid floated by the Commission was held six weeks ago. The final verdict on those interested in parks other than Hawassa is yet to be given by the Commission.

Come Tuesday, those who were given a green light and those advised to reconsider are all expected to confirm that they had made the recommended adjustments.

Only those who do so will be part of the official inauguration On July 3, 2016, six months later than the timeline originally set.