Dili // It is no secret that charity clothes cast off from rich countries end up on the backs of some of the poorest people on Earth. But sometimes the best intentions go awry and result in increased poverty in some of the world's developing nations.
East Timor is one of many countries in Asia where donated used clothes have become a profitable business, enabling a single company to dominate the market and keep dozens of vendors mired in poverty.
In East Timor, that business is Intelligent Yield Trading, based in the country's capital.
The newest country in Asia, East Timor has never had a clothing factory and because of the sale of charity clothing, it may never have one.
Armindo da Silva Soares, 46, is one of a handful of East Timorese tailors in Dili. He learnt his craft after the Indonesian invasion in 1975.
"An Indonesian taught me," Mr Soares said. "I paid him US$50 [Dh183] and bought a sewing machine."
During the Indonesian occupation, Mr Soares ran a shop with 27 machines and 10 employees.
But in 1999, when the Indonesians left East Timor after a vote of self-determination, militias torched about 70 per cent of the tiny nation's infrastructure, including homes, businesses and public and private offices.
In the years following, East Timor has tried to rebuild its private sector, with varying degrees of success, but local tailors say they are worse off than before, thanks mostly to donated clothing from developed countries that is undercutting their sales.
In the past decade, Mr Soares's shop, located in what was once one of Dili's largest markets before it was razed in 2006, has been set alight four times, and he has only three machines left. He can no longer afford to pay any employees.
To make matters worse, his attempts to kick-start his business have been thwarted by the emergence of used clothing stalls, selling cheap charity clothing, that have mushroomed around the city since 2006. Several have set up on the same street as Mr Soares, taking most of his potential customers.
"The used clothing market is a big worry for us tailors," he said. "Those clothes are so much cheaper. They're all old, but they're cheap."
So far this year, none of Mr Soares's former clients have contacted him.
In 2000 Suyanto Tan, an Indonesian entrepreneur, opened Intelligent Yield Trading, a used clothing outlet in Dili. From his cavernous warehouses, bales of used clothes make their way to the markets and stalls of East Timor and even over the border to Indonesian West Timor.
At first there was some competition from other outlets, but according to Mr Tan, the last competitor closed in 2003. For five years now, a single company has been providing clothes for more than one million people. And the local tailors are certainly no competition.
Selling used clothes now provides a living for many East Timorese, particularly those who have been left with nothing after the numerous outbreaks of violence since the Indonesian withdrawal in 1999.
"I used to sell vegetables and fried snacks, but in 2006 my stall was burnt down," said Felicidade Gusmao, 50, who now has a used clothing stall. "I lost my home and everything I owned."
Ms Gusmao sits under the shade of shirts and pants while she waits for customers. She said her family scraped together some cash in 2007 and bought its first bale of used clothes from Intelligent Yield. She said she does not make much money selling clothes, certainly not enough to save - the shirts are $1 each, and the pants only slightly more. But she does make enough to survive and have something left over to make her monthly trip to Intelligent Yield for another bale of clothes.
"I can buy food and pay for what I need," Ms Gusmao said.
The bales come in shipping containers, delivered through an agent in Singapore. Intelligent Yield buys one container for about $2,000, which translates to about $18 per bale, which are then sold for around $150 each. When the ship comes in they can sell more than 20 bales in a single day.
Singapore acts as the distribution centre for the clothes with garments arriving there from first world countries packaged without any trace of the charity that sent them.
Each month Ms Gusmao hopes the bale she buys will have good clothes inside. Because the bales are packed in the countries of origin, no one - neither the clothing agent in Singapore nor Intelligent Yield in East Timor - knows the quality of the clothes contained within. There are no returns.
Often clothes are too big to fit on tiny East Timorese bodies or they are very old. These go in a pile Ms Gusmao dumps at the end of the month in a ditch across the street. When the rains come in a few months, the clothes will wash out to sea.
* The National
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Born November 11, 1948
Education: BA, English Language and Literature, Cairo University
Family: Four brothers, seven sisters, two daughters, 42 and 39, two sons, 43 and 35, and 15 grandchildren
Hobbies: Reading and traveling
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Wicked
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Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
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Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
The years Ramadan fell in May
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Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
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End of free parking
- paid-for parking will be rolled across Abu Dhabi island on August 18
- drivers will have three working weeks leeway before fines are issued
- areas that are currently free to park - around Sheikh Zayed Bridge, Maqta Bridge, Mussaffah Bridge and the Corniche - will now require a ticket
- villa residents will need a permit to park outside their home. One vehicle is Dh800 and a second is Dh1,200.
- The penalty for failing to pay for a ticket after 10 minutes will be Dh200
- Parking on a patch of sand will incur a fine of Dh300
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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T20 WORLD CUP
2024: US and West Indies; 2026: India and Sri Lanka; 2028: Australia and New Zealand; 2030: England, Ireland and Scotland
ODI WORLD CUP
2027: South Africa, Zimbabwe and Namibia; 2031: India and
Bangladesh
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2025: Pakistan; 2029: India
