Commentary: Myanmar’s textile industry hangs by a thread after coup

SINGAPORE: The future of Myanmar’s garment industry hangs by a thread. Still reeling from the impact of COVID-19, he now suffers from the aftermath of the military coup.

As a result, its remarkable rise in the export business has been thwarted and there are fears that the industry may collapse.

In 2019, before COVID-19 hit, about a third (worth $ 6.5 billion) of all goods exported from Myanmar were produced by the garment industry, according to data from United Nations Comtrade. .

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According to SMART Textile & Garments, an organization funded by the European Union (EU) and co-funded by private sector partners, the industry employed 700,000 low-income workers. Expectations for strong growth were high.

The onset of the pandemic thwarted this increase. The industry has been beaten by a winning trifecta: supply chain disruptions from China, a drop in demand from Europe during the lockdown, and operational restrictions imposed by the Burmese government to reduce transmission of the virus. COVID-19.

Fortunately, an increase in exports to the United States and Japan offset the decline in exports to the EU, according to the International Labor Organization. Additionally, the outlook turned more optimistic towards the end of 2020 as China and Europe emerged from lockdowns and major clothing retailers resumed their orders.

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However, just as supply chains from China were restarted and restored and other logistical issues resolved, the military staged a coup in February.

The garment industry’s already frayed seams began to crumble. Strikes were called by the textile workers union, and martial law in some Yangon townships and roadblocks prevented workers from going to work.

Arson attacks on factories destroyed capital and property. Cash flow problems and a banking crisis are blocking operations, and transport problems inside and outside the country are plaguing delivery times.

As a result, the clothing industry has hit a low point. Big fashion brands such as H&M, Primark, Next and Benetton suspended operations between February and May due to human rights concerns and civil unrest.

Anti-coup protesters display placards during a demonstration in Yangon, Myanmar on February 23, 2021. (Photo: AP)

Some factories have said they are operating at one-fifth of their capacity and surviving on orders placed before the coup. Many garment factories have closed.

According to a preliminary investigation by the European Chamber of Commerce in Myanmar, a quarter of garment workers lost their jobs in May.

This grim situation eased slightly in May when H&M, Primark and Bestseller announced they would resume operations in Myanmar. Their rationale is based on the rhetoric of moral obligation – to their suppliers, the garment workers, the economy and the general welfare of Myanmar.

By adopting a moral stance, these companies justify continuing their business activities in Myanmar in the face of public condemnation of the military coup. This has come from several sides: the EU in the form of targeted sanctions, international and clothing organizations supporting the restoration of democracy and one of Myanmar’s clothing workers unions in the form of work stoppages.

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Here we see the interplay of two distinct political and moral orders that have plagued Myanmar watchers and stakeholders for decades. Since the coup, every aspect of life in Myanmar has become even more politicized and entangled in the struggle between the military regime and the country’s citizens.

How then can one engage in activities – for example, conducting business, providing health care, and providing aid – so as to undo the seams of the current military-political order? How should this be done (by sanctions and stopping trade?), And at what cost for individual jobs and the economy?

Is it a valid compromise if individuals, political parties and organizations (unions) in Myanmar demand it? Are they speaking on behalf of all Burmese citizens?

These thorny issues must be negotiated by individual companies. But the decision can eventually be made for them if operations cannot continue due to financial and logistical problems.

Access to cash deposits in banks continues to be a problem, and freight transport has been severely hampered by the five-fold increase in sea freight costs around the world as Myanmar is struck off companies’ sailing plans shipping, increased tariffs for limited air freight space and the impact of curfews on land transport.

FILE PHOTO: Soldiers stand next to military vehicles as people gather to protest against the militia

Soldiers stand next to military vehicles as people gather to protest the military coup, in Yangon, Myanmar, February 15, 2021. (Photo: REUTERS / Stringer)

In addition, escalating violence, such as urban assassinations and bombings, creates fear and uncertainty among the general public and will only worsen the situation. Given these issues, the likelihood of clothing retailers moving to Bangladesh or Cambodia, where costs could be similar or even lower, is high.

In this case, the European Chamber of Commerce in Myanmar fears the industry could collapse.

According to SMART, 54 percent of all clothing exports go to European clothing retailers. If they disengage, factories will be forced to close, and workers will be made redundant and skilled teams dispersed, causing the loss of nearly a decade of development and know-how.

It will also have a cascading effect on related industries such as footwear, handbags, logistics and transportation.

The outlook at the moment is bleak, and at the moment things are extremely volatile in Myanmar. The future of the garment industry, as well as that of the country as a whole, ultimately depends on the ability of the citizens of Myanmar to unravel the grumblings of their political system and reshape a political order that will end abuses. decades of military domination and violence.

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Sue-Ann Oh is Visiting Fellow in the Myanmar Studies Program at ISEAS – Yusof Ishak Institute. This article was first published as a commentary for Fulcrum.

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