SINGAPORE CNA: The future of the garment industry in Myanmar hangs by a thread. Still reeling from the impact of COVID-19, it is now suffering from the aftermath of the military coup.
As a result, its
remarkable ascent in the export sector has been thwarted, and there are fears
that the industry will unravel.
In 2019, before COVID-19
struck, about one-third (amounting to US$6.5 billion) of all goods exported
from Myanmar was produced by the garment industry, according to United Nations
Comtrade data.
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. There were high expectations for strong growth.
The onset of the
pandemic scuppered this upward rise. The industry was battered by a trifecta:
Disruptions in the supply chain from China, plummeting demand from Europe in
lockdown, and operational restrictions imposed by the Burmese government to
reduce the transmission of COVID-19.
Fortunately, an increase
in exports to the US and Japan offset decreases in exports to the EU, according
to the International Labor Organization. Also, the outlook became more
optimistic towards the end of 2020 as China and Europe emerged from lockdowns
and the large clothing retailers resumed their orders.
CUE
THE MILITARY COUP
However, just as supply
chains from China were restarted and restored and other logistical issues
resolved, the military staged a coup in February.
The already frayed seams
of the garment industry began falling apart. Strikes have been called for by
the garment workers’ union, and martial law in some Yangon townships and
roadblocks hindered workers from getting to work.
Arson attacks against
factories destroyed capital and property. Cash flow problems and a banking
crisis are stalling operations and transportation problems in and out of the
country plague delivery schedules.
Consequently, the
garment industry experienced a low point. Big fashion brands such as H&M,
Primark, Next, and Benetton suspended operations between February and May
because of human rights concerns and civil unrest.
Some factories reported
operating at a fifth of their capacity and surviving on orders placed before
the coup. Many garment factories closed down.
According to a
preliminary survey conducted by the European Chamber of Commerce in Myanmar, a
quarter of garment workers had lost their jobs by May.
This grim situation was
slightly alleviated in May when H&M, Primark, and Bestseller announced that
they would resume business in Myanmar. Their rationale for doing so is garbed
in the rhetoric of moral obligation – to their suppliers, garment workers, the
economy, and the general welfare of Myanmar.
By taking a moral
stance, these companies are justifying their continued trading in Myanmar in
view of the public condemnation of the military coup. This has come from many
quarters: The EU in the form of targeted sanctions, international and garment
organizations supporting the restoration of democracy, and one of the unions of
garment workers in Myanmar in the form of work stoppages.
KNOTTY
POLITICAL AND MORAL QUESTIONS
Here, we see the
interplay of two distinct political and moral orders which have bedeviled
Myanmar watchers and stakeholders for decades. Since the coup, every aspect of
Myanmar’s life has become even more politicized and woven into the struggle
between the military regime and the country’s citizens.
In this case, how can
one engage in activities – for example, conduct business, provide healthcare,
and deliver aid – in ways that unpick the seams of the current
military-political order? How should this be done (through sanctions and the
termination of trading?), and at what cost to individual jobs and the economy?
Is this a valid
trade-off if individuals, political parties, and organizations (trade unions)
of Myanmar call for it? Do they speak for all Myanmar citizens?
These knotty questions
have to be negotiated by individual companies. But the decision may eventually
be made for them if operations cannot continue because of financial and
logistical problems.
Access to cash deposits
in banks continues to be an issue, and the transport of goods has been severely
impeded by the global five-fold increase in sea freight costs, Myanmar being
struck off the sailing plans of shipping lines, premium rates for limited space
on air freight and the impact of curfews on ground transport.
In addition, escalating
violence such as assassinations and bombings in urban settings is creating fear
and uncertainty among the public at large and will only aggravate the
situation. Given these snags, the likelihood that clothing retailers will
relocate to Bangladesh or Cambodia, where costs might be similar or even lower,
is high.
In that case, the
European Chamber of Commerce in Myanmar is concerned that the industry will
unravel.
According to SMART, 54
percent of all apparel exports go to European clothes retailers. If they
divest, factories will be forced to close, and workers will be made redundant
and skilled teams dispersed, causing almost a decade’s worth of development and
know-how to be lost.
This will also have a
cascade effect on allied industries such as footwear, handbags, logistics, and
transportation.
The outlook at the
moment is dismal, and, at present, 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 whether Myanmar citizens will be able to untangle the
snarls in their political system and refashion a political order that ends
decades of military dominance and violence.
Source: CNA
