Myanmar All Set To Scale-Up Garments Export With A Slew Of Favorable Factors Working In Tandem

Apparel, Footwear, Fashion

Myanmar All Set To Scale-Up Garments Export With A Slew Of Favorable Factors Working In Tandem

Unnoticed by mainstream media in several countries, the exports by Myanmar apparel industry has grown astronomically from a mere US$ 900 million in 2012 to nearly US$ 2 billion in 2015. The projections for the year 2016-17 are also very healthy.

The export growth took place in steps. In the year 2013, it scaled up to US$ 1.2 billion and subsequently in 2014 it touched the US$ 1.56 billion mark before scaling up to US$ 2 billion in 2015. According to Myanmar Garment Makers Association (MGMA) internet searches often throw up confusing and conflicting data about the growth as there is a dearth of scientifically rigorous data collection about the Myanmar textile industry. However, the MGMA has arrived at the figures by focusing on HS product code groups.

There is however, a combination of factors some outside of Myanmar and some within which have contributed directly to this robust growth. For example, China was faced with soaring wages and hardships in recruiting hands for their garment industry at Pearl River Delta (PRD) region. This resulted in China preferring to minimize costs by partly relocation to other cheaper labor cost countries and partly by diversification to areas where the labor cost was low. In their search for low cost labor countries in South East Asia, they found Myanmar the largest country in the zone equipped with natural resources and a young demographic profile. Likewise, removal of sanctions by EU and restoration of GSP benefits for Myanmar helped exports and investment in the country. In fact, Myanmar has gained more focus from serious investors in the recent past because their government went ahead and implemented a series of economic and political reforms post 2011.

To the outside world, it might not have gone unobserved that some 15 years ago, a major part, approximately 60 percent of Myanmar’s GDP came from export of natural resources and agricultural products, or from the primary sector. However, things changed when the Myanmar government under the stewardship of Thein Sein shifted focus to export and FDI oriented development strategies. The government created a favorable business environment for investors. In 2012, a new investment law was enacted which paved the way for development of Special Export Zones (SEZs) and industrial zones.

However, the surplus cheap labor for the garments market to flourish is not without its hitches. For, it was reported in a recently conducted survey that Myanmar’s labor productivity was much lower than that of China, around 50 to 70%. The figures also indicate that Myanmar was lagging Bangladesh in labor productivity. It led to a phase in which training was imparted to the incoming labor force and operational enhancements were made over a period of months. Here too, there were firms unwilling to impart training to workers because of the high attrition rate in the industry. This has given rise to some companies recruiting semi-skilled workers.

Hitches apart, there is the brighter side to the industrial growth in the garment sector of Myanmar and it is easy to evince that garment is one of the important products of Myanmar. Even way back in 2012 before the smooth government transition, garment exports had constituted 10% of all export revenue generated. At present the garment sector is the most labor intensive of Myanmar’s major industries. It employs 2,40,000 people. According to the MGMA, “The garment sector is an incredibly powerful generator of livelihoods and opportunity for hundreds of thousands of families in Myanmar.”

According to latest forecasts, the prospects for Myanmar in the garment sector are very bright. The prediction by government agencies indicate that there could be up to 1.5 million jobs in the garment sector by 2020. This compares not only favorable but also as a quantum jump from the current figure of 2,40,000 employees. The predictions also mentioned that the garment exports could rise from US $1.5 million in 2014 to a whopping US $12 billion in 2020.

Currently, business observers state that the Foreign Direct Investment (FDI) in the garment industry has been growing at a robust pace since the threshold year of 2012. This follows close on heels of the removal of sanctions. The statistics indicate that the clothing exports from Myanmar shot up by 26.5 per cent in 2013. The corresponding figure for 2014 was 27.4 percent.

Overall, the garment exports from Myanmar are scaling new heights and can be much more competitive with more impetus from the government and the private sector. This includes a host of measures that needs to be taken for further growth. At present what the industry requires is modern machinery, raw materials, skilled labor, social and environmental certification, energy sources that are reliable, a logistics infrastructure and a financing system which runs smoothly.