Two years after opening his garment manufacturing facility 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 facility 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 economic system, which accounts for a 3rd of its exports and employs 700,000 low-income staff, in line with UN knowledge.
“We would have no choice but to give up on Myanmar if there are no new orders in the next few months,” mentioned Li, including he has been working at about 20 per cent capability, surviving solely on orders positioned earlier than the coup, and had already shed 400 workers.
Li mentioned he and a lot of his friends have been contemplating shifting to different low-cost garment hubs like China, Cambodia or Vietnam, as massive style manufacturers like H&M and Primark have stopped buying and selling with Myanmar as a result of coup.
Chinese nationals like Li fund practically a 3rd of Myanmar’s 600 garment factories, in line with the Myanmar Garment Manufacturers Association, by far the most important investor group.
At least two different Chinese-funded garment factories in Myanmar, using a mixed 3,000 staff, had determined to shut, mentioned Khin May Htway, managing accomplice of MyanWei Consulting Group, which advises Chinese buyers in Myanmar. She mentioned the 2 companies have been her purchasers however declined to determine 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 US$1 billion in 2011, about 10 per cent of exports, to greater than US$6.5 billion in 2019, about 30 per cent of exports, in line with UN 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 hundreds of garment manufacturing facility jobs misplaced in Myanmar and elsewhere in Asia.
Then the coup occurred.
In the weeks that adopted, many garment staff joined protests or couldn’t get to work as streets grew to become battlegrounds. The turmoil additionally jammed the banking system and made it tough to get items in and overseas, manufacturing facility homeowners mentioned.
With worldwide condemnation of the coup rising, European and US style manufacturers final month issued a press release by way of their associations saying they might defend jobs and honour commitments in Myanmar.
However, many have lately halted orders there together with the world’s second-biggest style retailer, Sweden’s H&M , Britain’s Next and Primark, and Italy’s Benetton.
Next mentioned it might cut up its orders beforehand going to Myanmar between Bangladesh, Cambodia and China, whereas Benetton mentioned it might primarily transfer enterprise to China. H&M and Primark haven’t commented on how they’ll redistribute orders.
ESCAPE FROM POVERTY
In Vietnam, garment manufacturing facility 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,” mentioned Peter McAllister of Ethical Trade Initiative, a labour rights organisation whose members embody European high-street manufacturers.
McAllister mentioned that it might be very tough for Myanmar’s garment sector to get better if Chinese buyers 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 largely ladies staff earn as little as 4,800 kyat (US$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 refund to their households.
Khin Maung Aye, managing director of Lat War clothes manufacturing facility, which employs 3,500 folks, says the sector faces collapse if the army doesn’t restore a democratically elected authorities.
That would end in “terrible outcomes of poverty”, he mentioned, 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.
The US, which has imposed focused sanctions on Myanmar’s army, late final month suspended commerce talks with it and mentioned it was reviewing its eligibility for its Generalized System of Preferences scheme, which reduces tariffs and gives different commerce advantages for growing international locations.
That may “portend future disruption” for Myanmar’s clothes sector, mentioned Steve Lamar, president of the American Apparel & Footwear Association, which represents greater than 1,000 style manufacturers.
But some unions representing garment staff have known as for the worldwide neighborhood to impose more durable sanctions to press the army, despite the fact that it might additional injury their trade.
“I accept orders moving away,” Myo Myo Aye, founding father of the Solidarity Trade Union of Myanmar, mentioned by way 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.”