Myanmar crisis rings the death bell for clothing industry, jobs and hope

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(Corrected to 86,000 kyat in paragraph 25)

FILE PHOTO: Workers iron and organize clothes in a textile factory in the Hlaing Taryar industrial area in Yangon, March 10, 2010. REUTERS / Soe Zeya Tun / File Photo

(Reuters) -Two years after opening his garment factory in Myanmar, Li Dongliang is on the verge of closing and firing his remaining 800 workers.

The business struggled over the COVID-19 pandemic, but orders were suspended following a February 1 coup that sparked mass protests and a deadly raid that set its factory on fire amid a wave of anti-Chinese sentiment.

Its story exemplifies the dangerous situation of a sector vital to Myanmar’s economy that, according to the UN, accounts for a third of its exports and employs 700,000 low-income workers.

“We would have no choice but to give up Myanmar if there are no new orders in the next few months,” Li said, adding that he has operated at around 20% capacity and only survived from pre-coup orders to 400 Employees cut.

Li said he and many of his colleagues are considering moving to other low-cost clothing hubs like China, Cambodia or Vietnam as major fashion brands like H&M and Primark stopped trading with Myanmar due to the coup.

According to the Myanmar Garment Manufacturers Association, by far the largest group of investors, Chinese nationals like Li fund almost a third of the 600 garment factories in Myanmar.

At least two other clothing factories financed by China in Myanmar with a total of 3,000 employees have decided to close, said Khin May Htway, managing partner of the MyanWei Consulting Group, which advises Chinese investors in Myanmar. She said the two companies are her customers but declined to identify them citing privacy protection.

Foreign investment in clothing has increased in Myanmar over the past decade as economic reforms, the end of Western sanctions and trade deals helped establish the sector as the greatest symbol of its burgeoning development as a manufacturing center.

According to UN Comtrade data, garment shipments in Myanmar increased from less than $ 1 billion in 2011, which is about 10% of exports, to more than $ 6.5 billion in 2019, which is about 30% of the Exports.

However, the sector was rocked by the pandemic that plunged the world into recession and stifled consumer demand, causing tens of thousands of jobs to be lost at a clothing factory in Myanmar and elsewhere in Asia.

Then the coup happened.

In the weeks that followed, many textile workers joined the protests or were unable to work as the streets became battlefields. The turmoil has also stalled the banking system and made it difficult to get goods in and out of the country, factory owners said.

Amid mounting international condemnation for the coup, European and US fashion brands issued a statement last month through their associations saying they would protect jobs and uphold commitments in Myanmar.

However, many have recently placed orders there, including the world’s second largest fashion retailer, H&M from Sweden, Next and Primark from the UK, and Benetton from Italy.

Next said it would split its orders that previously went to Myanmar between Bangladesh, Cambodia and China, while Benetton said it would mainly move business to China. H&M and Primark have not commented on how they will redistribute orders.

Escape from poverty

In Vietnam, textile mill owner Ravi Chunilal told Reuters that he was starting to get more business from European buyers branching out from Myanmar.

“They don’t want to abandon Myanmar … but it’s being forced on them,” said Peter McAllister of the Ethical Trade Initiative, a labor rights organization that also includes European high street brands.

McAllister said it would be very difficult for the clothing sector in Myanmar to recover if Chinese investors got out.

Anti-China sentiment has risen since the coup, with opponents of the Beijing takeover taking note of subdued criticism compared to Western condemnation. Against this backdrop, several China-funded factories, including Li’s, were set on fire by unknown attackers during a protest last month.

Human rights groups have repeatedly raised concerns about exploitation in the clothing sector in Myanmar, where most women workers earn only 4,800 kyat ($ 3.40) a day, the lowest in the region.

But it has enabled many to escape poverty as rural workers have migrated to factories, mainly around the Yangon commercial center, and sent money back to their families.

Khin Maung Aye, general manager of the Lat War garment factory, which employs 3,500 people, says the sector is on the verge of collapse unless the military re-establishes a democratically elected government.

That would lead to “dire consequences of poverty,” he said, adding that he was staying afloat with orders placed before the coup, but feared that orders for the next season, which is usually later in due this month would dry up.

Thin Thin, a 21-year-old textile worker, said her family of five survived on a monthly wage of 86,000 kyat ($ 59) her factory gave her while it was closed because of the coup.

“I feel so stressed out … We have nothing more to mortgage. We have to borrow from moneylenders at 20% interest a month. “

The United States, which has imposed targeted sanctions on Myanmar’s military, suspended trade talks with Myanmar late last month, saying that it is reviewing its eligibility for its Generalized System of Preferences, which cuts tariffs and offers other trade benefits for developing countries.

This could mean “a future disruption” for the Myanmar apparel sector, said Steve Lamar, president of the American Apparel & Footwear Association, which represents more than 1,000 fashion brands.

However, some unions representing women textile workers have called for the international community to impose tougher sanctions to put pressure on the military, even if this could further harm their industry.

“I accept exit orders,” said Myo Myo Aye, founder of the Solidarity Trade Union of Myanmar, through a translator. “The workers would face difficulties and hardships because there were no jobs. On the other hand, we simply do not accept the military regime. “

($ 1 = 1,400,000,000 kyat)

Reporting by Chen Lin and John Geddie; Additional reporting by James Pearson in Hanoi, Victoria Waldersee in Lisbon and Elisa Anzolin in Milan; Editing by Robert Birsel

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