Global clothing retailers, including Fast Retailing and Marks & Spencer, are discontinuing their outsourced production in Myanmar due to concerns over human rights violations, labor issues, and operational difficulties. The military coup in February 2021 has resulted in the departure of many foreign firms, particularly those with joint ventures with local partners connected to the military. Some clothing brands continue to outsource production to small factories in Myanmar; however, some are leaving due to their inability to improve the country's rock-bottom wages and severance benefits under the local system.
Fast Retailing, which owns the Uniqlo casual wear chain, is the most recent company to leave Myanmar, removing its partners from its list of garment and processing factories. Muji also plans to end sourcing of down jackets and other items from Myanmar by August. Marks & Spencer announced last year that it would exit by March, and Primark has also stated that it is leaving Myanmar.
The daily minimum wage for factory workers has remained at 4,800 kyat ($1.68 at market exchange rate) since 2019, and workplace conditions remain unaddressed under military rule. Increasing power outages and logistics breakdowns pose risks to the management of product deliveries.
The European Union and the European Chamber of Commerce in Myanmar have established a network promoting appropriate levels of employment and will create a framework for monitoring labor conditions. However, responsible withdrawal is a challenge for global firms, and they typically avoid making any immediate decisions due to concerns for the many people in Myanmar who depend on international companies for their livelihoods.
The departure of foreign companies from Myanmar is likely to have a significant impact on the country's economy, which has already been affected by political instability. Clothing exports are a significant source of revenue for Myanmar, with the European Union, Japan, and the United States all reporting record-high imports from the country last year, totaling $4.7 billion. The loss of these exports could further destabilize Myanmar's already fragile economic situation.
As more brands leave Myanmar, consumers may start to demand greater transparency and accountability from the companies they purchase from.