Insiders urge govt to expand garment making value chain as exports decline in Myanmar

Myanmar is raising efforts to draw factories that produce raw materials for the garment manufacturers such as buttons and thread to invest in Myanmar, said U Aye Thaung, , chair of the Shwe Lin Pan Industrial Zone.

Currently, garment manufacturing in Myanmar is carried out in a cut-make-pack style, where fabrics and accessories are imported and then cut, sewn and styled. The finished products are packed for exports to big fashion brands overseas.

“We would encourage the government to consider expanding the garment value chain to include the whole manufacturing process so the factories become more profitable and our workers are able to receive more benefits by adding value,” he said.

Myanmar’s garment exports have declined by more than US$60 million in fiscal 2019-20 compared to the previous year and will continue to be under pressure in the current fiscal year, said U Khin Maung Lwin, assistant secretary of the Ministry of Commerce.

Garment exports in 2019-20 were valued at $4.8 billion. This year so far, revenues have totalled just US$ 87 million, which is a decline of ore than US$172 million compared to the same period last year.

The sector first started facing difficulties when the supply of Chinese raw materials needed for garment manufacturing began to face disruptions. Meanwhile, order cancellations from major importers like Europe also affected production. That culminated in factory closures, job losses and declines in export revenue.

Around 70 percent of Myanmar-made garments are exported to Europe, while the remaining is sent to Japan, Korea, the US and China.

Since the pandemic started, operations at around 500 garment factories in Myanmar have been seriously affected. Meanwhile, those that reopened are only able to employ a third to half of their workforce due to COVID-19 risks and restrictions, said U Aye Thaung.

“Factories must observe the instructions of the Ministry of Health and Sports. Otherwise, they would be putting their employees’ lives at risk and that could cause further damage to the economy,” said U Myint Soe, chair of the Myanmar Garment Entrepreneurs Association.

He added that most factories have not received any new orders in recent months and since the second wave of the virus started in Myanmar in September, the factories which have been permitted to reopen are working on older orders.

The factories that produce shoes and bags are facing the most difficulties, U Aye Thaung said.
Things have deteriorated further since the recent lockdown in Yangon, under which all factories were instructed to close for two weeks. Many orders were forfeit during this period.

“The key to factory operations is consistent orders and a stable supply of raw materials. We faced challenges in obtaining raw materials during the first wave of the virus in March and April. During the second wave, our orders were cancelled and we were told to send our materials.

Source : Myanmar Times

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