Foreign direct investment in Myanmar’s garment industry has been significant. As of mid-2015, about 55 per cent of registered garment firms in the country were fully or partly foreign-owned. Among them, a quarter came from China, 17 per cent from Hong Kong, 29 per cent from South Korea and 12 per cent from Japan. Foreign-linked firms supply almost all garment exports and these have surged in recent years. The lifting of EU and American sanctions has helped further boost export growth.

However, these foreign-linked garment firms have produced few benefits, linkages or spillovers in Myanmar beyond export and job creation. These firms have few local managers, reflecting the country’s shortage of high-level skills. The country’s garment sector lacks entrepreneurial, management and technical skills. The short-to-medium term measure is labor circulation – the movement of foreign and domestic skilled employees from international businesses to existing and new local ones. Entrepreneur support policies should also be made available to foreigners as well as the Myanmar diasporas.

In the long term, the country should develop tertiary educational institutes dedicated to the garment industry to increase supply of managers and technicians in the sector. Other possible reforms are: making access to trade credit possible for garment exports and providing tariff-free fabric imports to both free-on-board and cut-make-package producers.