Chinese-funded garment factories in Myanmar have decided to shut operations due to COVID-19 led disruptions, says Khin May Htway, Managing Partner, MyanWei Consulting Group, which advises Chinese investors in Myanmar.
Foreign investment in garments surged in Myanmar over the past decade as economic reforms, an end to Western sanctions and trade deals helped establish the sector as the greatest symbol of its nascent emergence as a manufacturing hub.
Myanmar garment shipments rose from less than $1 billion in 2011, about 10 per cent of exports, to more than $6.5 billion in 2019, about 30 per cent of exports, according to UN Comtrade data.
However, the sector has been rocked by the pandemic resulting in tens of thousands of garment factory jobs lost in Myanmar, says Oman Observer. Then the coup happened.
In the weeks that followed, many garment workers joined protests or couldn’t get to work as streets became battlegrounds. The turmoil also jammed the banking system and made it difficult to get goods in and out of the country, factory owners said.
With international condemnation of the coup growing, European and US fashion brands last month issued a statement through their associations saying they would protect jobs and honour commitments in Myanmar.
However, many have recently halted orders there including the world’s second-biggest fashion retailer, Sweden’s H&M, Britain’s Next and Primark, and Italy’s Benetton.
Next said it would split its orders previously going to Myanmar between Bangladesh, Cambodia and China, while Benetton said it would mainly move the business to China. H&M and Primark have not commented on how they will redistribute orders.
In Vietnam, garment factory owner Ravi Chunilal said he was starting to get more business from European buyers diverting from Myanmar.
Peter McAllister of Ethical Trade Initiative, a labor rights organization said that it would be very difficult for Myanmar’s garment sector to recover if Chinese investors left.