More woes for Myanmar garment industry as EU cancels orders

Update: More garment factories stopped operations in Myanmar as European Union countries, a major export market, cancelled orders last week amid the spread of the COVID-19 pandemic, a senior industry leader said.

U Myint Soe, chair of Myanmar Garment Manufacturers Association (MGMA), said the EU market accounts for 70 percent of the country’s garment export.

“All operations of the factories that have accepted orders from the EU have stopped. I don’t know how we will deal with this issue,” he said.

The bad news came as the supply of raw materials from China re-started to flow back into the country after three months of stoppage due to the virus outbreak.

“We began to receive raw materials from China. We have no more raw materials problem. Now, the EU no longer accepts our garment exports. It happened since last week,” U Myint Soe said.

“As COVID-19 spread in Europe, all shops closed there. Garment factories in Myanmar face difficulty as they told us not to make the clothes, which they have bought, and not to ship them. This problem is big. That’s why, factories have shut down and reduced their number of workers,” he added.

Among the garment companies that suffered cancellations of orders are the Global Apparel Textile Myanmar Co. Ltd, which no longer has problems with the supply of raw materials but left with huge inventory due to cancelled purchase orders.

Daw Sandar Min, a Yangon regional MP, said another garment firm, the Lat War Co. Ltd., is stuck with 500,000 pieces of garments after a European buyer cancelled the order. Other companies in the same predicaments are Gold Emperor, Hong Text, and Myanmar Irrawaddy.

The shutdown of more garment factories led to more labour unrest, including the strike at the Grand Enterprises Garment Co. Ltd at Yangon’s East Dagon Industrial Zone on Thursday as the company announced a layoff of thousands of workers.

Before the cancellation of orders from the EU, at least 20 out of the 500 factories in Myanmar have shut down due to the pandemic, leaving more than 10,000 workers unemployed, industry sources said.

Since January, 38 cut-make-pack factories that includes the garment factories, have shut down, according to the Ministry of Labour, Immigration and Population. Among these were 22 garment factories. Others reduced the number of workers at their facilities.

U Myint Soe said besides the EU, the US market has also started cancelling its orders.

So far, Japanese and Korean companies have not cancelled their orders.

This story has been updated at 6:11pm on March 29.

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Source : Myanmar Times

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