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

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

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 dealing with a sector essential to Myanmar’s financial system, which accounts for a 3rd of its exports and employs 700,000 low-income employees, based on UN information.

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

Li stated he and lots of of his friends had been contemplating transferring to different low-cost garment hubs like China, Cambodia or Vietnam, as massive trend manufacturers like H&M and Primark have stopped buying and selling with Myanmar because of the coup.

Chinese language nationals like Li fund almost a 3rd of Myanmar’s 600 garment factories, based on the Myanmar Garment Producers Affiliation, by far the biggest investor group.

Not less than two different Chinese language-funded garment factories in Myanmar, using a mixed 3,000 employees, had determined to shut, stated Khin Could Htway, managing companion of MyanWei Consulting Group, which advises Chinese language traders in Myanmar. She stated the 2 corporations had been her purchasers however declined to establish them citing privateness.

International 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, based on UN Comtrade information.

However the sector has been rocked by the pandemic which plunged the world into recession and choked client 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 employees joined protests or could not 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 stated.

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

ESCAPE FROM POVERTY

In Vietnam, garment manufacturing unit proprietor Ravi Chunilal informed Reuters he was beginning to get extra enterprise from European consumers diverting from Myanmar.

“They do not need to abandon Myanmar … but it surely’s being pressured upon them,” stated Peter McAllister of Moral Commerce Initiative, a labour rights organisation whose members embrace European high-street manufacturers.

McAllister stated that it will be very tough for Myanmar’s garment sector to get well 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, had been torched by unidentified assailants throughout a protest final month.

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

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

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

That might end in “horrible outcomes of poverty”, he stated, 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.

The US, which has imposed focused sanctions on Myanmar’s army, late final month suspended commerce talks with it and stated it was reviewing its eligibility for its Generalized System of Preferences scheme, which reduces tariffs and gives different commerce advantages for creating international locations.

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

However some unions representing garment employees have known as for the worldwide group to impose more durable sanctions to press the army, though it could additional harm their business.

“I settle for orders transferring away,” Myo Myo Aye, founding father of the Solidarity Commerce Union of Myanmar, stated via a translator. “Staff would face difficulties and hardship as a result of there could be no jobs. Alternatively, we merely do not settle for the army regime.”

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