The lifting of European Union sanctions on April 22 might herald a bright future for Myanmar’s garment sector if the country can benefit from the generalised system of preference status, which lowers import tariffs, in the EU and United States.
U Myint Soe, chairman of the Myanmar Garment Manufacturers Association (MGMA), said at the start of a business matching event between Myanmar and Hong Kong garment and textile industries on April 24 that Myanmar might be granted GSP status on June 4.
“EU sanctions were lifted last Monday and hopefully we will be granted GSP status by the US on June 4,” he told the 30 representatives at the meeting, which was held at the Union of Myanmar Federation of Chambers of Commerce and Industry. “This is the huge opportunity for international companies to invest in Myanmar’s garment sector.”
“If we can get GSP status from the US it will mean we can do more business with international companies. They will be able to invest in Myanmar and be assured that they can get access to the EU and US markets,” he said.
U Myint Soe said Myanmar’s garment sector had many incentives for foreign companies, including tax breaks, cheap labour and an attractive foreign investment law. However, he said electricity shortages in the hot months were problematic but expected the shortages would be solved by the government, which is working to ensure adequate supplies.
Myanmar’s garment exports hit a high of about US$826 million in 2001, just before the United States announced a ban on imports. But by 2012, the value of exports had recovered to more than $900 million, with more than 75 percent shipped to Japan and South Korea. Less than $200 million worth of goods were sent to Europe.
U Aung Win, MGMA vice chairman, told The Myanmar Times: “We have continuously made and exported garments since 1993. We are waiting for GSP status but we must also ensure that our quality levels meet the standards required for those markets.”
He added that there are more than 300 garment factories in Myanmar.
Daw San San Myint, deputy director of Myanmar Investment Commission’s Yangon branch, which opened on April 10, said most of the information requests handled by the office since it was opened have concerned the garment sector. She added that 25 of 40 requests have been about the sector.
“MIC has to explain to investors about the foreign investment law first, especially equity ownership ratios, as well as taxation,” she said. “Companies from Singapore, Hong Kong and Taiwan have shown the greatest interest so far but I think there might be investments made from the EU and possibly Canada too if Myanmar is granted GSP status,” she said.
Mr Lewis Leung, president of Price Edward Road Management in Hong Kong, which operated garment factories in Myanmar from 1995 to 2000, said Myanmar could compete with Cambodia and Bangladesh if it receives GSP status.
“Myanmar can compete with them but the profit won’t be as high as in Bangladesh,” he said. “I am interested in investing in Bago Region because it is so near to Yangon and has a large available workforce,” he said. He added that the quality of Myanmar’s garments is good.
However, U Myint Soe said companies would need to increase their awareness of international standards, especially labour rights and conditions. But the MGMA, International Labour Organisation and labour activists would assist companies in this effort.
He added that the average wage for a garment worker is about $100 a month.
U Myat Thin Aung, chairman of the Hlaing Tharyar Industrial Zone, said many international companies operate garment factories in Thailand but might shift production to Myanmar if it is given GSP status.
“But we still need to solve the electricity shortages and high land prices,” he added.
MIC data shows that most garment production in Myanmar – about 60pc – is cutting, manufacturing and processing work, which provides quick profits to operators but does not help the nation to build a manufacturing base since all raw materials are imported from abroad.
By Soe Sandar Oo | 29 April 2013 | The Myanmar Times