Sep 26, 2016
Myanmar garment industry exports soared by around 20% last year, while footwear exports also surged as the Southeast Asia country gained new sourcing partners and invested in high end manufacturing.
The latest figures shared with just-style by the Myanmar Garment Manufacturers Association (MGMA) showed garment exports reached around US$1.80bn in 2015, up from $1.70bn the year before.
Footwear exports also saw a significant increase, reaching around $150m last year from a stagnant $110m for the prior three years. The sudden growth, the MGMA says, is primarily due to an increase in footwear products going to the US, Germany, France and the UK. The country has benefited from new sourcing partners in the last few years, including German sportswear giant Adidas.
Previously, Myanmar had only produced footwear items such as flip flops and sandals, mostly for the Japanese market. While still only accounting for a small proportion of Myanmar’s total exports, around 25% of the footwear produced for export now includes more complicated athletic shoes and dress shoes. These, the MGMA says, are most commonly produced by entirely new foreign direct investment (FDI) factory facilities and bound for Western markets.
Japan remained Myanmar’s top export market last year, with a share of 33%. The EU and Japan both held a 25% share in 2015, while the US and China both held a 2.4% share of exports.
Last week, the US announced plans to restore trade benefits to Myanmar after a lapse of more than 25 years. The move will see the country, formerly know as Burma, added to the US’s Generalized System of Preferences (GSP) trade preference programme from 13 November, restoring trade benefits to the southeast Asia country. As a result, the MGMA says it is expecting to see a spike in garment exports to the US.
Earlier this year, the US Office of Foreign Assets Control (OFAC) removed seven Myanmar state-owned firms and three banks from its Specially Designated Nationals (SDN) list, often referred to as the blacklist, which effectively blocks US companies from trading with listed entities or people. It has also liberalised general banking licences regarding financial exchanges with the country.
"This will make business operations in Myanmar much easier for everyone, not just US companies," a spokesperson for the MGMA told just-style. "The corporate due diligence burden will be much less because the legal risk will be far less. Essentially, the US and Myanmar will have normalised relations. This should mean a spike in exports to the US and also general improvements in the ease of banking and money transfers into and from Myanmar."
Myanmar has continued to witness significant factory expansion and in the last year has established almost one new garment factory each week, bringing the total to around 330. This expansion and diversification of the sector’s manufacturing base has continued into 2016, the MGMA says.
Wages have also improved and in September 2015 the country’s first minimum wage was set at $70 per month, representing an approximate doubling of the average base pay for new workers. With bonuses and overtime at double pay – higher than all neighbouring countries – sewers in Yangon can expect to earn around $150 per month.
Myanmar has also invested in infrastructure, improving roads and transportation, with more factories moving goods in and out of both Thailand and China, and no longer having to rely only on the Yangon ports. The MGMA also established the country’s first ever Code of Conduct in February last year, in a move aimed at setting out responsible and ethical business practices for its burgeoning apparel industry.
SMART Myanmar – an EU-funded initiative aimed at promoting ’Made in Myanmar’ garments and sustainable practices – was also launched in 2014. To date, the MGMA says the programme has increased its scope and reach "substantially". In 2016, so far the programme has worked with 79 factories on items such as OHS, HR management, and environmental management, with plans to expand its reach even further in 2017.
Source: just-style