MGMA backs garment industry to boom when US sanctions are lifted

Myanmar’s leading garment industry body has been buoyed by the lifting of sanctions it hopes will see a return to the glory days for the sector, when in the early 2000s a majority of country’s garments were shipped to the US.

Speaking at a manufacturing trade fair in Yangon yesterday, U Myint Soe, chair of the of Myanmar Garment Manufacturers Association (MGMA), toldThe Myanmar Times that the lifting of sanctions is a boon for the fledgling industry, as international garment buyers from the US would have more confidence in doing business with Myanmar, while relieving pressure on financial transactions would also encourage more US trade.

He said that Japan, Europe and South Korea are the leading markets for local garment exports, with the US trailing those countries.

“There has not been a lot sent to the US market in the last year utill recently,” U Myint Soe said. “The exports to the US are said to be low because of the sanctions.”

But the industry is confident that is all about to change, U Myint Soe said.

In 2001, total garment exports reached US$817 million, he said, which was the second largest export industry behind oil and gas. At the time, the US market made up about 65 percent of the garments shipped, he said.

“If we can get that kind of market back this time, garment exports will reach up to 3 billion in 2017,” U Myint Soe predicted.

The MGMA chief said reentry into the c (GSP), announced by US President Barack Obama at the same time as the lifting of sanctions, would not return immediate benefits like it does with similar trade preferences in the EU, as garments were not among the list of 5000 products covered by the US GSP.

Increased exports would eventually lead to greater foreign investment into the industry, U Myint Soe added, but poor infrastructure was still a key obstacle to FDI.

Both tax incentives and logistics costs needed greater clarity in order to stimulate investment, he added.

“Especially for local factories, they need support relating to the government’s tax regulations or they will be out of business in the next five years,” he said.

Speaking at the trade fair, U Thein Naing, director of Baw Ga Mandaing Manufacturing, said increased exports to the world’s largest consumer market was a big win for the local industry.

“As the EU’s economy is slowing at the moment, the US will become another route for Myanmar’s garment sector to take off after the sanctions are lifted,” he said.

But more would need to be done to lift standards in the industry if it was to capitalise on opportunities, he said.

“I am exporting to Japan at the moment, and sometimes it is very hard to meet their quality standards and I can’t get regular orders,” he said.

President of textile trade event organiser Messe Frankfurt France, Mr Michael Scherpe, said that the export industry was still dominated by countries like China and Bangladesh, but Myanmar was seeing steady improvements in the sector.

“From 2013 onward, within a very short time, Myanmar has achieved a very good result,” he said.


Source: The Myanmar Times

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