The History of the Garment & Textile Industry in Myanmar
Garment and textile production in Myanmar has occurred for longer than memory. Indeed, the beauty and craftsmanship of the traditional regional textile workshops in Myanmar – the Shan, Chin and Naga among others – are a testament to the exquisite talent and artistry of the country.
The beauty and craftsmanship of the traditional regional textile workshops in Myanmar – the Shan, Chin and Naga among others – are a testament to the exquisite talent and artistry of the country.
Under the British, textile factories were built and industrial scale expertise was cultivated. Although not a focus for the colonial government, some textile factories were built to service the demands of the domestic market. Such investments continued up until the military coup of 1962.
During the years of the Socialist Republic of the Union of Burma (1962-88) all major industries in Burma were nationalized. In consequence, any continued developments in the garment sector occurred under the auspices of the Ministry of Industry. Even during this period, garment & textile production in Myanmar received some foreign investment and machinery inputs, chiefly from Germany, China and Japan.
Rebirth of the Private Sector
In November 1988, the government of Myanmar enacted the Foreign Investment law which allowed foreign companies to start doing business in the country. This was the impetus for the development of the modern garment industry in Myanmar.
The Myanmar Textile Industry and the Union of Myanmar Economic Holdings Limited entered into joint-ventures with garment firms from South Korea and Hong Kong, such as Daewoo Group and Segye. Some 100% wholly foreign owned firms also established themselves in the country. Between 1990 and 2001, garment production increased from 2.5% of total exports in 1990 to 39.5% of exports in 2000 – meaning it became the largest export industry in Myanmar. In early 2000 there were approximately 400 factories with 300,000 employees generating an export volume of US$ 600 million. The majority of exports went to the USA (over 50%), 15 countries in the EU (40%), Canada, Singapore, Korea, Malaysia, and Australia.
The future looked bright for garment production in Myanmar.
The ‘Lost Decade’
However, in 2003 sanctions and a trade embargo were imposed on the country and this greatly impacted the garment industry. Overnight the United States market was lost. Changes in Myanmar’s taxation and regulations also adversely affected the industry, as did the phasing out of the international Agreement on Textiles and Clothing in 2005. Other factors, including the continued emergence of China and Bangladesh as garment export powerhouses, meant that Myanmar’s garment factories were made less competitive at the same moment as they became internationally isolated. Limited access to finance also precluded many producers from realizing their ambitions to expand or renovate factories to be more competitive.
In consequence, hundreds of factories closed their doors and more than a hundred thousand garment workers became unemployed.
International sanctions in 2003 and, shortly thereafter, the phasing out of the international Agreement on Textiles and Clothing resulted in hundreds of Myanmar garment factories closing their doors and more than a hundred thousand garment sector workers becoming unemployed.
Finding New Markets
Between 2005 and 2010, the 130 or so surviving garment factories started to explore new markets, particularly in Asia, and Japan & Korea quickly became the largest foreign buyers of Myanmar’s garment products. In 2010 Myanmar accepted 37.5% of Japan’s CMP orders and 25.3% of Korea’s. Despite orders from these markets, the Myanmar garment sector grew slowly during these years.
As of mid-2014, Approximately two new garment factories are opening for business in Myanmar every week.
2011 to present
In March 2011, the State Peace and Development Council formally transferred power to a new Union Government. The new government embarked on a series of sweeping changes and reforms which have resulted in the lifting of a majority of foreign sanctions by the EU, USA, Australia and Canada. To facilitate trade and foreign direct investment, the government lowered export taxes, eased restrictions on the financial sector, implemented currency reform and revised the Foreign Investment Law.
Due to these dramatically improved business & political conditions, the garment sector is currently experiencing rapid growth. Currently, approximately two new garment factories are opening for business in Myanmar every week. As such, MGMA is in a prime position to promote the responsible and productive growth & development of the sector.