With the change in the political scenario, Myanmar is trying to establish itself as a leading manufacturing hub. The ongoing quest for low cost production has drawn manufacturers' attention to the clothing industry in Myanmar. The country has a long history of making yarn, fabric and garment. According to the Myanmar Garment Manufacturers Association (MMA), exports from the nation's 200 garment factories, 195 of which are privately held, reached US$770 million in 2011.
The key export markets are Japan (US$348 million) and South Korea (US$232 million), with remaining exports going to Brazil, Argentina, South Africa and Turkey. Since the US has planned to lift most of the trade sanctions on Myanmar, the garment manufacturers anticipate a lot of demand in the coming years. Prior to the sanctions, about 85% of the nation's exports were apparel and textiles of which an estimated 25% went to the U.S. Currently; Japan is Myanmar's largest garment customer, with shipments of US$243m taking a 34% of total clothing exports.
Currently, there are over 200 garment factories in Myanmar, employing about 20,000 people. Myanmar has seen 19 foreign companies entering the country's garment industry within the last eight months of 2012. These includes Costic International Co.,Ltd, Honeys Garment Industry Ltd, Nadia Pacific Apparel Co Ltd, Manufacturer GFT Enterprise Co Ltd, JS Filter Co Ltd, Eurogate Sportsware Ltd, THY Garment Co Ltd, Shinsung Tongsang Inter Co Ltd, Korea Link Industrial Co Ltd & Mac Do Co Ltd.
Further, some of Thailand's top garment companies will be moving their operations to Myanmar soon. The Myanmar Investment Commission has allowed six foreign companies to run garment factories and to take advantage of lower wages by the second half of this year. The companies would start operations by investing about US$ 10 in each plant for a total of US$ 60 million.
Outsourcing labor to Myanmar offers significant cost savings to western manufacturers, as Burmese workers are among the lowest paid in Asia, earning an average US$2 per day versus US$20 per day in neighboring Thailand. But, it is not just the cheaper and abundant labor, but the investment and tax incentives, the Myanmar government is offering for those manufacturers established in special economic zones which are attracting interest. Incentives include a 5 year holiday on tax, custom duty exemptions on imported machinery and equipment as well as the value of the machinery being considered part of the capital investment requirement.
Although Myanmar currently pales by comparison to its regional neighbors, there remains the possibility that the nation will develop into a viable apparel sourcing destination. The country's predicted economic growth and the low-cost of labor are seen as pros for foreign companies. A significant amount of education and training is also needed to bring factories up to a level to meet international standards required by major retailers and brands. But if the necessary investments are made to ease certain problems, experts believe that the Myanmar will be the new textile and clothing supplier country to watch.
(Source: Insight Alpha)