Myanmar Garment Factories Report 75% Fall in Orders Amid COVID-19

Yangon — Garment manufacturers in Myanmar are struggling as the European Union’s orders for spring clothing have declined by more than half, U Kyaw Win, vice chairman of the Myanmar Garment Manufacturers Association (MGMA), told The Irrawaddy.

August is when manufacturers normally start producing spring clothing for Europe but they have barely received any orders, he said.

“We have only received 20 to 25 percent of the orders [of 2019]. We are not sure if there will be orders for the remaining 75 percent. Previously, we usually have the final orders for winter clothing by October. But the orders declined this year. And we have not yet received any orders for summer clothing,” he said.

The garment sector mainly relies on the US and EU markets. Some factories are planning to reduce their workforces and temporarily or permanently close due to declining orders, said U Kyaw Win.

“Some factories have not received orders at all. The association is surveying the orders received. As the demand for winter goods declined, many factories that manufacture jackets and woolen clothes were hit,” factory owner U Aung Myo Hein told The Irrawaddy.

A few factories are still offering overtime but only because COVID-19 restrictions disrupted their operations and they need to complete old orders, he said.

“Orders have declined by 50 percent. Previously, when the container trucks left carrying winter clothes, we began manufacturing spring clothing for the EU. Jacket factories still received orders for pants. But now there are no orders at all for any goods,” said U Aung Myo Hein.

Factories have reduced their staff numbers and were forced to either temporarily or permanently close when COVID-19 hit China, stopping the delivery of around 90 percent of supplies to clothing factories in Myanmar.

The dollar has also weakened against the kyat with manufacturers reporting a 40 to 50 percent decline in profits.

The exchange rate was 1,500 kyats to a dollar in early 2020 but in August it was below 1,350. As a result, Myanmar’s garment industry, dominated by the cut-make-pack (CMP) model, has seen a decline in revenue.

Over 500,000 people are employed in the sector. Around 420 factories are MGMA members, including 236 Chinese-owned operations, 67 South Korean, 20 Japanese factories and 92 factories based domestically.

Myanmar earned around US$4 billion (5.3 trillion kyats) from CMP garment exports in 11 months in the 2019-20 fiscal year— a year-on-year decline of US$65 million, Commerce Ministry spokesman U Khin Maung Lwin said.

Following a wave of COVID-19 cases in the Rakhine State capital, Sittwe, the minister of labor U Thein Swe said the ministry would perform surprise checks on clothing factories.

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Source : The Irrawaddy

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