Myanmar’s low wages is among the top reasons foreign manufacturers choose to set up base in the country. The garment industry was under pressure to raise the minimum wage. Now that the minimum wage has risen, businessmen are thinking twice before investing in manufacturing-intensive sectors like garments. The country’s daily minimum wage has been raised by more than 30 per cent.

Rising land costs are also a problem. Some manufacturers have been forced to move out of industrial zones as a result of rising land leases. At the same time, productivity, which is already lower than other countries in the region, has not improved. As a result, many garment businesses no longer want to operate in Myanmar.

Seduno Fashion Company, run by a Chinese investor, is a recent example. Earlier this month, the firm closed its factory citing low production, the inability to export in time, rising land and factory rentals and higher minimum wages as the main reasons for ceasing operations.

On the whole, FDI in garment sector is still robust. FDI into manufacturing sector are the third highest in Myanmar. Manufacturing in Myanmar mainly consists of garments, which represent the country’s second largest exports.