Myanmar crisis sounds death knell for garment industry, jobs and hope

(Corrects to 86,000 kyats in paragraph 25)

(WBHnews) -Two years after opening his garment manufacturing unit in Myanmar, Li Dongliang is on the verge of closing down and shedding his 800 remaining staff.

Enterprise had been struggling due to the COVID-19 pandemic, however after a Feb. 1 coup that sparked mass protests and a lethal crackdown, throughout which his manufacturing unit was set alight amid a surge of anti-Chinese language sentiment, orders stopped.

His story is emblematic of the perilous state of affairs going through a sector vital to Myanmar’s financial system, which accounts for a 3rd of its exports and employs 700,000 low-income staff, in accordance with U.N. information.

“We might don’t have any selection however to surrender on Myanmar if there are not any new orders within the subsequent few months,” mentioned Li, including he has been working at about 20% capability, surviving solely on orders positioned earlier than the coup, and had already shed 400 employees.

Li mentioned he and plenty of of his friends have been contemplating shifting to different low-cost garment hubs like China, Cambodia or Vietnam, as large trend manufacturers like H&M and Primark have stopped buying and selling with Myanmar as a result of coup.

Chinese language nationals like Li fund practically a 3rd of Myanmar’s 600 garment factories, in accordance with the Myanmar Garment Producers Affiliation, by far the most important investor group.

No less than two different Chinese language-funded garment factories in Myanmar, using a mixed 3,000 staff, had determined to shut, mentioned Khin Might Htway, managing associate of MyanWei Consulting Group, which advises Chinese language traders in Myanmar. She mentioned the 2 companies have been her shoppers however declined to determine them citing privateness.

Overseas funding in clothes surged in Myanmar over the previous decade as financial reforms, an finish to Western sanctions and commerce offers helped set up the sector as the best image of its nascent emergence as a producing hub.

Myanmar garment shipments rose from lower than $1 billion in 2011, about 10% of exports, to greater than $6.5 billion in 2019, about 30% of exports, in accordance with U.N. Comtrade information.

However the sector has been rocked by the pandemic which plunged the world into recession and choked shopper demand, leading to tens of 1000’s of garment manufacturing unit jobs misplaced in Myanmar and elsewhere in Asia.

Then the coup occurred.

Within the weeks that adopted, many garment staff joined protests or couldn’t get to work as streets turned battlegrounds. The turmoil additionally jammed the banking system and made it tough to get items in and in a foreign country, manufacturing unit homeowners mentioned.

With worldwide condemnation of the coup rising, European and U.S. trend manufacturers final month issued a press release via their associations saying they’d defend jobs and honour commitments in Myanmar.

Nevertheless, many have just lately halted orders there together with the world’s second-biggest trend retailer, Sweden’s H&M, Britain’s Subsequent and Primark, and Italy’s Benetton.

Subsequent mentioned it could break up its orders beforehand going to Myanmar between Bangladesh, Cambodia and China, whereas Benetton mentioned it could primarily transfer enterprise to China. H&M and Primark haven’t commented on how they may redistribute orders.

ESCAPE FROM POVERTY

In Vietnam, garment manufacturing unit proprietor Ravi Chunilal instructed WBHnews he was beginning to get extra enterprise from European patrons diverting from Myanmar.

“They don’t wish to abandon Myanmar … however it’s being pressured upon them,” mentioned Peter McAllister of Moral Commerce Initiative, a labour rights organisation whose members embrace European high-street manufacturers.

McAllister mentioned that it could be very tough for Myanmar’s garment sector to recuperate if Chinese language traders left.

Anti-China sentiment has risen because the coup, with opponents of the takeover noting Beijing’s muted criticism in contrast with Western condemnation. It was towards this backdrop that a number of Chinese language-funded factories, together with Li’s, have been torched by unidentified assailants throughout a protest final month.

Rights teams have repeatedly raised considerations about exploitation in Myanmar’s garment sector, the place largely ladies staff earn as little as 4,800 kyat ($3.40) a day, the bottom charges within the area.

But it surely has supplied an escape from poverty for a lot of, as staff have migrated from rural areas to the factories, primarily across the business hub of Yangon, and despatched a reimbursement to their households.

Khin Maung Aye, managing director of Lat Conflict clothes manufacturing unit, which employs 3,500 individuals, says the sector faces collapse if the army doesn’t restore a democratically elected authorities.

That will lead to “horrible outcomes of poverty”, he mentioned, including that he was additionally staying afloat on orders positioned earlier than the coup however feared orders for subsequent season, usually due later this month, will dry up.

Skinny Skinny, a 21-year-old garment employee, mentioned her household of 5 was surviving on a 86,000 kyat ($59) month-to-month retainer her manufacturing unit had given her whereas it shut down due to the coup.

“I really feel so confused … We’ve nothing left to pawn. We’ve to borrow from cash lenders at 20% curiosity a month.”

America, which has imposed focused sanctions on Myanmar’s army, late final month suspended commerce talks with it and mentioned it was reviewing its eligibility for its Generalized System of Preferences scheme, which reduces tariffs and gives different commerce advantages for growing nations.

That might “portend future disruption” for Myanmar’s clothes sector, mentioned Steve Lamar, president of the American Attire & Footwear Affiliation, which represents greater than 1,000 trend manufacturers.

However some unions representing garment staff have referred to as for the worldwide neighborhood to impose harder sanctions to press the army, despite the fact that it might additional harm their business.

“I settle for orders shifting away,” Myo Myo Aye, founding father of the Solidarity Commerce Union of Myanmar, mentioned via a translator. “Staff would face difficulties and hardship as a result of there can be no jobs. Alternatively, we merely don’t settle for the army regime.”

($1 = 1,400.0000 kyat)