Investor interest in Myanmar garment sector still strong despite lower exports

Foreign investor interest in the garment manufacturing sector is still strong despite a fall in the volume of garment exports in fiscal 2019-20, according to the government.

Of the 178 foreign enterprises endorsed by the Myanmar Investment Commission (MIC) and permitted to invest in Myanmar between October 1 and May 31, more than three quarters channeled capital into the manufacturing sector, according to the Directorate of Investment and Company Administration (DICA). The data showed that the new investors include garment manufacturers.

The MIC will prioritise investments in garment manufacturing going forward as these are labour intensive industries likely to create a large number of jobs, Director General of DICA U Thant Sin Lwin told state media. Manufacturers that are able to produce face masks and other personal protective equipment related to COVID-19 will also be given priority.

Enquiries from investors are still flowing in even though garment exports fell to just US$2.7 billion between October 1, 2019 and May 31, representing a $24 million decline from the same period a year before due to order cancellations from the EU as a result of COVID-19, according to U Khin Maung Lwin, assistant secretary of the Ministry of Commerce.

This has also led to a rising number of disputes between employers and their employees as factories are forced to lay off or close. The industry hires up to 700,000 predominantly female workers across 600 factories, according to data provided by the EU.

Disruptions to the Myanmar garment sector first started in February, when raw material imports from China became sporadic as a result of COVID-19 closures and lockdowns. Things got worse after the coronavirus was declared a global pandemic by the World Health Organisation on March 11, with order delays and cancellations from major export countries like the EU becoming more frequent.

“The garment sector has been facing problems since COVID-19 broke out. We have yet to receive any major new orders from the EU,” U Khin Maung Lwin said. Around 70 percent of garment products made in Myanmar are exported to the EU as well as Japan, Korea, Canada and the US.

Buoyed by financial aid from the government and the EU though, the industry is now showing signs of recovery. “We are hearing news of orders that were previously cancelled being revived again. There is also some export revenue coming from the Myanmar-Thai border, where garment businesses in Myawaddy have exported around $71 million worth of products to Thailand,” U Khin Maung Lwin said.

The EU in April launched a €5 million (K7.9 billion) Myan Ku emergency cash fund to support garment workers who have lost their jobs as a result of COVID-19. Since then, it has already disbursed over K1 billion from the fund to 12,913 garment workers, including more than 11,000 female garment workers in Yangon, Pathein, Bago, Mandalay and Magwe.

The government, through its COVID-19 Economic Response Plan has also set aside up to $500 billion in loan funds for troubled industries, including garment manufacturing.

The garment manufacturing sector generated $5 billion worth in export revenues in fiscal 2018-19, according to the Ministry of Commerce. – Translated

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Source : Myanmar Times

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