Business and Finance

Myanmar crisis sounds death knell for garment industry, jobs and hope By Reuters

© Reuters. FILE PHOTO: Workers iron and organize clothes at a garment manufacturing unit at Hlaing Tar Yar trade zone in Yangon

By Chen Lin and John Geddie

(Reuters) -Two years after opening his garment manufacturing unit in Myanmar, Li Dongliang is on the verge of closing down and shedding his 800 remaining staff.

Business had been struggling due to the COVID-19 pandemic, however after a Feb. 1 coup that sparked mass protests and a lethal crackdown, throughout which his manufacturing unit was set alight amid a surge of anti-Chinese sentiment, orders stopped.

His story is emblematic of the perilous scenario dealing with a sector essential to Myanmar’s financial system, which accounts for a 3rd of its exports and employs 700,000 low-income staff, in line with U.N. knowledge.

“We would have no choice but to give up on Myanmar if there are no new orders in the next few months,” stated Li, including he has been working at about 20% capability, surviving solely on orders positioned earlier than the coup, and had already shed 400 workers.

Li stated he and lots of his friends have been contemplating shifting to different low-cost garment hubs like China, Cambodia or Vietnam, as large trend manufacturers like H&M and Primark have stopped buying and selling with Myanmar as a result of coup.

Chinese nationals like Li fund almost a 3rd of Myanmar’s 600 garment factories, in line with the Myanmar Garment Manufacturers Association, by far the biggest investor group.

At least two different Chinese-funded garment factories in Myanmar, using a mixed 3,000 staff, had determined to shut, stated Khin May Htway, managing companion of MyanWei Consulting Group, which advises Chinese traders in Myanmar. She stated the 2 corporations have been her shoppers however declined to establish them citing privateness.

Foreign funding in clothes surged in Myanmar over the previous decade as financial reforms, an finish to Western sanctions and commerce offers helped set up the sector as the best image of its nascent emergence as a producing hub.

Myanmar garment shipments rose from lower than $1 billion in 2011, about 10% of exports, to greater than $6.5 billion in 2019, about 30% of exports, in line with U.N. Comtrade knowledge.

But the sector has been rocked by the pandemic which plunged the world into recession and choked client demand, leading to tens of 1000’s of garment manufacturing unit jobs misplaced in Myanmar and elsewhere in Asia.

Then the coup occurred.

In the weeks that adopted, many garment staff joined protests or could not get to work as streets turned battlegrounds. The turmoil additionally jammed the banking system and made it troublesome to get items in and in another country, manufacturing unit homeowners stated.

With worldwide condemnation of the coup rising, European and U.S. trend manufacturers final month issued a press release by means of their associations saying they might defend jobs and honour commitments in Myanmar.

However, many have not too long ago halted orders there together with the world’s second-biggest trend retailer, Sweden’s H&M, Britain’s Next and Primark, and Italy’s Benetton.

Next stated it could cut up its orders beforehand going to Myanmar between Bangladesh, Cambodia and China, whereas Benetton stated it could primarily transfer enterprise to China. H&M and Primark haven’t commented on how they may redistribute orders.


In Vietnam, garment manufacturing unit proprietor Ravi Chunilal advised Reuters he was beginning to get extra enterprise from European patrons diverting from Myanmar.

“They don’t want to abandon Myanmar … but it’s being forced upon them,” stated Peter McAllister of Ethical Trade Initiative, a labour rights organisation whose members embody European high-street manufacturers.

McAllister stated that it could be very troublesome for Myanmar’s garment sector to recuperate if Chinese traders left.

Anti-China sentiment has risen for the reason that coup, with opponents of the takeover noting Beijing’s muted criticism in contrast with Western condemnation. It was towards this backdrop that a number of Chinese-funded factories, together with Li’s, have been torched by unidentified assailants throughout a protest final month.

Rights teams have repeatedly raised issues about exploitation in Myanmar’s garment sector, the place principally girls staff earn as little as 4,800 kyat ($3.40) a day, the bottom charges within the area.

But it has offered an escape from poverty for many, as staff have migrated from rural areas to the factories, primarily across the business hub of Yangon, and despatched a reimbursement to their households.

Khin Maung Aye, managing director of Lat War clothes manufacturing unit, which employs 3,500 folks, says the sector faces collapse if the navy doesn’t restore a democratically elected authorities.

That would lead to “terrible outcomes of poverty”, he stated, including that he was additionally staying afloat on orders positioned earlier than the coup however feared orders for subsequent season, usually due later this month, will dry up.

Thin Thin, a 21-year-old garment employee, stated her household of 5 was surviving on a 8,600 kyat ($59) month-to-month retainer her manufacturing unit had given her whereas it shut down due to the coup.

“I feel so stressed … We have nothing left to pawn. We have to borrow from money lenders at 20% interest a month.”

The United States, which has imposed focused sanctions on Myanmar’s navy, late final month suspended commerce talks with it and stated it was reviewing its eligibility for its Generalized System of Preferences scheme, which reduces tariffs and offers different commerce advantages for creating international locations.

That might “portend future disruption” for Myanmar’s clothes sector, stated Steve Lamar, president of the American Apparel & Footwear Association, which represents greater than 1,000 trend manufacturers.

But some unions representing garment staff have referred to as for the worldwide group to impose harder sanctions to press the navy, although it might additional harm their trade.

“I accept orders moving away,” Myo Myo Aye, founding father of the Solidarity Trade Union of Myanmar, stated by means of a translator. “Workers would face difficulties and hardship because there would be no jobs. On the other hand, we simply don’t accept the military regime.”

($1 = 1,400.0000 kyat)

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