TEXTINATION NEWSLINE
11-04-2014
MYANMAR'S GARMENT INDUSTRY IS RAPIDLY GAINING DYNAMIC
FOREIGN INVESTMENT TRIPLED,
MORE
PROJECTS EXPECTED / EU PREFERENCES FAVORING EXPORT
© k.h.S. / pixelio.de
Bangkok (gtai) - Myanmar's garment industry builds slowly to old
blooming times. Thanks to foreign investment and the EU preferential status the export already exceeds USD 1 billion. As a new
major customer, the US GAP takes the stage, others are likely to
follow. The investors are from Asia, of which Hong Kong favors the
special zone Thilawa. A platform for producers, buyers and suppliers is the international textile and clothing exhibition in November 2014 in Yangon.
Myanmar's garment industry develops very dynamically to a driving economical sector in the development of Myanmar. The deciding vehicle is the transfer of technology and know-how from
abroad, what the country must support with stronger efforts in the training of skilled personnel.
Other problem areas are to secure the power supply as well as the growing demands in quality
and logistics.
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But the concept seems to work. Foreign direct investment tripled in fiscal year 2013/14 (April / March) to USD 4.2 billion with
123 projects. According to the Investment Agency DICA these
were mainly manufacturing companies and mostly in the clothing industry. The Myanmar Garment Manufacturers Association
(MGMA) predicts a foreign involvement of USD 1.5 billion by
2015.
The Myanmar Investment Commission announced for the second half of 2014 the approval of six new factories with investments of USD 10 million each. In the last eight months of 2012 19 foreign companies have been
established, including Costic International, Honeys Garment Industry, Nadia Pacific Apparel,
Manufacturer GFT Enterprise, JS filter, Euro Gate Sports Goods, THY Garment, Shinsung Tongsang Inter, Korea Link Industrial and Mac Do. More newcomers are Jiangsu Garments Group,
Dong Fang Star Garment Factory, Manufacturing SDI, Solamoda Garments Group, Kamtex,
Richest Time, Sinobest Brothers, Archid Garment, Slita and North Star Manufacturing.
Dynamic export in the billions
Analog the clothing industry provides
the largest contribution in the export
statistics of the manufacturing sector. According to the customs department the export improved by
27% to USD 885 million in the fiscal
year 2013/14, representing a share
of almost 8%. According to the International Trade Center (based on
Comtrade) the value of exports exceeded already USD 1 billion and
has thus tripled since 2010. Also the
MGMA estimates the export value to
http://myanmargarments.org/media-room/export-data/
USD 1.1 billion. The Swiss strategy
consulting company Impact Economy believes in an export value of over USD 6 billion in a few
years as possible.
The main export countries are Japan and Korea (Rep.), while the PR of China follows dynamically. As future rich new markets Brazil, Argentina, South Africa and Turkey are seen. Germany
has imported goods with EUR 56 million from Myanmar in 2013 (+ 25%), EUR 47 million (+ 20%)
of it accounted for clothing. For the EU as a whole an import value of EUR 131 million (+ 17%),
was reached, also here clothing was the largest import group with a share of 59%.
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© wolfish. / pixelio.de
An important reason for the new export dynamic in the direction to Europe lies in the inclusion of
Myanmar in the Generalized Scheme of Preferences (GSP) of the EU since 2013. The GSP frees
Myanmar as a Least Developed Country (LDC) from customs duties and other import taxes. And
these tax incentives make the location for investors from Asian countries so interesting - mainly
from Korea (Rep.), SVR Hong Kong, PR of China, Japan and Thailand.
Large cost advantage, low added value
Thailand's market research institute Kasikorn
Research sees the attractiveness of the location
Myanmar especially in the low labor cost. In particular in comparison to other cheap production
countries, such as Vietnam, Laos or Cambodia,
there is a significant labor cost advantage. The
main problems KResearch sees in the incomplete value chain as well as in the shortage of
skilled workers.
Potential investors when deciding should take the
strengths and weaknesses profile of the industry and
the associated opportunities and risks into account
(SWOT analysis):
Strengths
Weaknesses
Great work potential
Shortage of power supply
Low wage level
High energy cost
Relatively good level of education
Expensive and ineffective logistic
International competitiveness
Low training capacity
Lack of bank financing
Opportunities
Threats
Generalized Scheme of Preferences (GSP) of
the EU.
Problems when operating larger order volumes.
Improvement of the infrastructure
Conservation of competitive prices in the long
run are difficult
Ongoing government reform policy
Compliance with international quality standards
Development of Human Ressources
On time delivery
Increasing attractiveness for foreign investors
Technologically Myanmar's garment industry is limited to the functions of cutting, skilled sewing and
packing (CMP - "cutting, making, packaging"), while the larger part of the added value is made in the
neighboring countries. The sector was founded in the early 1990s and produced in addition to clothing products various other articles such as shoes, hats, socks, rubber boots or hair nets.
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With the onset of the US economic sanctions in
2003 the industry shrank from 400 to around 130
companies, the employment dropped from 400,000
to 100,000 people.
About the current situation quite different information exists. The professional association MGMA is
counting about 200 member companies with approximately 20,000 employees, as it is published
on the website of this year's trade show. Nationally, according to Impact Economy approximately
350 companies exist. Taking into account all small
and micro enterprises, the sector employs approximately 150,000 people.
http://myanmargarments.org/media-room/factory-zones/
A new "cluster" grows in the together with Japan established special economic zone
Thilawa. Here the Hong Kong Apparel Society
secured with 200 ha half of the terrain, where a
dozen Hong Kong clothing manufacturers will
create about 30,000 jobs until the end of 2015,
with an investment of at least USD 3 million
each. The land lease will be annual USD 52
million for a contract period of 50 years. Nationwide a total of 30 clothing manufacturers
from Hong Kong are said to be engaged, mainly thanks to the wage advantage of USD
100 to 120 a month compared to up to USD
600 $ in Guangdong.
© Dachkammer. / pixelio.de
Countrywide settlement proceeds
Regionally the settlement is concentrated in greater Yangon, mainly due to the logistic advantages
of the nearby harbor infrastructure. MGMA considers the employment density here as already overflowing, therefor new allocations are preferred in other regions - especially since 90% of the workers
are coming from such areas and the land leases have strongly increased. In this context 50 new
businesses are planned in Pathein, Ayeyarwady Region.The first factory was taken into operation by
the Delta Industrial Group in May 2013.
The market entry of large customers such as recently GAP should continue to drive the sector. As
the first American wholesale group GAP will let produce vests and jackets for the brands "Old Navy"
and "Banana Republic" from mid-year 2014 at two South Korean companies. The investment
amount is not known, but the volume of orders should create 700 direct and 4,000 indirect jobs. First
order samples also the Swedish outfitter Hennes & Mauritz will let produce in four factories; as other
interested parties like Tesco, Guess or Dewhirst (UK).have announced their interest.
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Responsible for the professional qualification is the Myanmar Garment
Human Resource Development Centre. The MGHRDC was founded in
2009 and has trained by its own account more than 1,000 workers. The
center will be expanded, while the training standard should be raised
gradually to the upscale quality requirements of the new foreign investors. The EU has initiated a SMART program with over EUR 2 million,
which should support the small and medium enterprises in competitiveness, training and sustainable production in cooperation with local organizations.
© Martin Berk. / pixelio.de
Shortage of skilled personnel and power outages are scotch
blocks
According to a leading German manufacturer of branded shirts in Yangon mainly the poor electricity
infrastructure with several power outages a day, causes a significant additional cost burden. As the
only alternative the manufacturers use diesel engines equipment, but the monthly operating costs
quickly add up to several thousand dollars. It is a fact for the entire country that the current demand
exceeds the production by over a third and will increase annually by 15%. Yangon alone claims 720
MW, almost half of the total capacity of 1,500 MW.
© k.h.S. / pixelio.de
In general, the clothing industry plays a prominent role in the industrial policy approach of the
government. Industry Minister Soe Thane sets
the focus for the modernization of the manufacturing sector especially on labor-intensive
products, such as food, shoes, toys and clothing. The industry profile is currently composed
of 41 industrial zones, including 19 in the room
Yangon and six in Mandalay, the remaining 16
zones are spread across nine other locations.
The main emphasis is on processing of agricultural and fishery products, the timber industry,
simple electrical products and the manufacturing of clothing.
Interesting trade fair event
As a premiere the four-day "Myanmar International Textile and Garment Industry Exhibition" was
formed in December 2012 in the Tatmadaw Hall in Yangon. Represented were manufacturers, distributors and suppliers of machinery, equipment and parts. In total more than 100 exhibitors from 17
countries - including the People's Republic of China, Hong Kong (SVR), India, Indonesia, Korea
(Rep.), Singapore, Switzerland and Germany, came to show their products. As partner for the organization, the industry association MGMA chose the Yorkers Trade & Marketing Services Company from Hong Kong. The next exhibition will be held in November 2014.
Internet addresses:
Catalina Research
Myanmar Garment Manufacturers Association (MGMA)
No. 29, 6th Floor, Min Ye Kyaw Swar Road, Lanmadaw, UMFCCI Tower, Yangon
E-mail: garment.mgma@gmail.com
Myanmar Textile Garment Directory 2011
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Internet : http://www.myanmartextile-directory.com
2014 Myanmar International Textile and Garment Industry Exhibition
Tatmadaw Exhibition Hall, Yangon
Termin: 20.-23.11.14
Internet: http://www.myanmar-expo.com/MTG/
© http://www.afza.gov.ae
Source: Waldemar Duscha, Germany Trade & Invest www.gtai.de
Translation: Textination-Team
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