Where are the garment factories in Myanmar?
A significant number of foreign-owned garment factories have been and are being constructed in Pathein, Bago and Thilawa. The most recent number for Pathein is four currently operating garment factories and several more under construction. The Thilawa SEZ has significant developments planned, but most major construction is yet to commence.
Yangon and its surrounding vicinity is home to approximately 200 garment factories. Many are high-quality and high-volume garment factories producing for international markets. Many are low-quality and low-volume factories producing solely for the domestic market. And of course, every stage in between. At MGMA, we keep meticulous records and maintain an active database on the industry. The vast majority of our member factories are foreign-export garment factories located in Yangon. Foreign-owned factories are currently hesitant to set-up in Yangon due to high land costs, but several overseas investors have struck-up joint-ventures with local partners. Many of these arrangements were arrived at in previous years, before Yangon’s land prices reached their current, rather exorbitant level.
Yangon has many advantages. Skilled garment sector workers are abundant. The electricity supply is better than the rest of the country and is improving from year to year. Yangon also has three ports, although none of them are deep sea ports.
Thilawa is the site of a 2,400 hectare special economic zone approximately 25km south of Yangon. Major infrastructure development projects for Thilawa are currently in the initial stages of implementation with support from JICA and other foreign partners. The deep sea port – Myanmar International Terminals Thilawa – is being developed and run by Hutchison Port Holdings. Some basic details for the Thilawa deep sea port include:
- Minimum number of berths: 5
- Maximum draft: 9m (Depends on latest sounding/monthly forecast draught)
- Tidal variation: Twice a day (Tidal range: 4.5m to 5.5m)
- Distance to nearest airport: About 50 km
- Distance/drive time from port/terminal to downtown Yangon: 25 km
As described by Hutchison Port Holdings, Ltd:
“Myanmar International Terminals Thilawa (MITT) is a multi-purpose container terminal located at Thilawa near the mouth of the Yangon River. The terminal offers a comprehensive range of safe, efficient and productive services to the shipping industry 24 hours a day, seven days a week. MITT is located just 25 kilometres from Yangon, the largest city in Myanmar and the country’s international trade portal, through which 90 percent of the nation’s maritime trade passes. The facility is also adjacent to the soon-to-be-operational Thilawa Special Economic Zone. MITT includes five berths capable of handling a wide variety of cargo. Large vessels with deep drafts can dock here thanks to the close proximity to the mouth of the Yangon River. Furthermore, the arrival and departure of containers to MITT is efficient due to the location of a rail terminal inside the facility.”
Several international garment manufacturers have expressed interest in establishing factories in the Thilawa SEZ, with initial investment being led by a consortium of investors from Hong Kong.
There is garment factory zone located near Pathein, Yangon’s 4th largest city. Over time, factories in Pathein will benefit from a concentration of skilled workers and industry expertise. Current incentives to set-up in Pathein include: relatively low land costs, availability of 50-year leasing for foreign factories and a government commitment to providing more consistent delivery of electricity. One downside to Pathein is that goods must be trucked in and out of Pathein, as the nearest international port is a 4 hour truck journey east.
There are over a half dozen garment factories which have set-up in Bago, less than 2 hours drive north of Yangon. Some have been operating for several years. Similar to Pathein, 50-year leases are possible for foreign investors wishing to set-up factories. Factories in Bago benefit from the close proximity to Yangon.
One garment factory has set-up in Hpa-An, approximately seven hours drive southeast of Yangon, and relatively close to the Thai border. As of August, 2014 there are six more garment factories under construction in Hpa-An’s industrial zone.
One benefit of setting up in Hpa-An are the reduced labour costs. Another is the opening of the ASEAN East-West Highway in 2015, which will connect Hpa-An with Mae Sot in Thailand significantly faster and more conveniently than before. Travel to Thailand will be reduced from six hours to two hours, alleviating the strain from the congested mountain road that is the current transportation artery. In short, similar to Pathein, Hpa-An’s industrial zone will very soon be a much more attractive site for garment production.
Mandalay is Myanmar’s 2nd largest city, and the area surrounding Mandalay is full of garment sector activity. Many would think this would means that lots of exportable garments are being produced. However, these businesses focus on catering to the domestic market. Around Mandalay are hundreds of workshops and small factories which produce and dye cotton textiles, primarily for use in longyis (the traditional garment worn by a majority of the Myanmar population). In addition, there are several cotton ginning factories and somewhat larger government run textile factories which are under Myanmar’s Textile Industries, a division of the Ministry of Industry. Therefore, Mandalay has a sizable textile industry, but not much of a garment industry. More still, the textiles produced are not used in export production garments due to the fabric being generally of low quality + lower quantities of fabric produced by any single textile mill + options are limited to 100% cotton, rather than any mixed-fibre possibilities.