(Reuters) -Two years after opening his garment manufacturing facility in Myanmar, Li Dongliang is on the verge of closing down and shedding his 800 remaining employees.
Enterprise had been struggling due to the COVID-19 pandemic, however after a Feb. 1 coup that sparked mass protests and a lethal crackdown, throughout which his manufacturing facility was set alight amid a surge of anti-Chinese language sentiment, orders stopped.
His story is emblematic of the perilous scenario going through a sector crucial to Myanmar’s financial system, which accounts for a 3rd of its exports and employs 700,000 low-income employees, based on U.N. knowledge.
“We might haven’t any alternative however to surrender on Myanmar if there are not any new orders within the subsequent few months,” mentioned Li, including he has been working at about 20% capability, surviving solely on orders positioned earlier than the coup, and had already shed 400 workers.
Li mentioned he and lots of of his friends have been contemplating transferring to different low-cost garment hubs like China, Cambodia or Vietnam, as large trend manufacturers like H&M and Primark have stopped buying and selling with Myanmar because of the coup.
Chinese language nationals like Li fund practically a 3rd of Myanmar’s 600 garment factories, based on the Myanmar Garment Producers Affiliation, by far the biggest investor group.
A minimum of two different Chinese language-funded garment factories in Myanmar, using a mixed 3,000 employees, had determined to shut, mentioned Khin Could Htway, managing companion of MyanWei Consulting Group, which advises Chinese language traders in Myanmar. She mentioned the 2 corporations have been her purchasers however declined to establish them citing privateness.
International funding in clothes surged in Myanmar over the previous decade as financial reforms, an finish to Western sanctions and commerce offers helped set up the sector as the best image of its nascent emergence as a producing hub.
Myanmar garment shipments rose from lower than $1 billion in 2011, about 10% of exports, to greater than $6.5 billion in 2019, about 30% of exports, based on U.N. Comtrade knowledge.
However the sector has been rocked by the pandemic which plunged the world into recession and choked client demand, leading to tens of hundreds of garment manufacturing facility jobs misplaced in Myanmar and elsewhere in Asia.
Then the coup occurred.
Within the weeks that adopted, many garment employees joined protests or couldn’t get to work as streets turned battlegrounds. The turmoil additionally jammed the banking system and made it tough to get items in and in a foreign country, manufacturing facility homeowners mentioned.
With worldwide condemnation of the coup rising, European and U.S. trend manufacturers final month issued a press release by their associations saying they might shield jobs and honour commitments in Myanmar.
Nonetheless, many have not too long ago halted orders there together with the world’s second-biggest trend retailer, Sweden’s H&M, Britain’s Subsequent and Primark, and Italy’s Benetton.
Subsequent mentioned it could cut up its orders beforehand going to Myanmar between Bangladesh, Cambodia and China, whereas Benetton mentioned it could primarily transfer enterprise to China. H&M and Primark haven’t commented on how they are going to redistribute orders.
ESCAPE FROM POVERTY
In Vietnam, garment manufacturing facility proprietor Ravi Chunilal advised Reuters he was beginning to get extra enterprise from European patrons diverting from Myanmar.
“They don’t wish to abandon Myanmar … but it surely’s being pressured upon them,” mentioned Peter McAllister of Moral Commerce Initiative, a labour rights organisation whose members embrace European high-street manufacturers.
McAllister mentioned that it could be very tough for Myanmar’s garment sector to get better if Chinese language traders left.
Anti-China sentiment has risen for the reason that coup, with opponents of the takeover noting Beijing’s muted criticism in contrast with Western condemnation. It was in opposition to this backdrop that a number of Chinese language-funded factories, together with Li’s, have been torched by unidentified assailants throughout a protest final month.
Rights teams have repeatedly raised issues about exploitation in Myanmar’s garment sector, the place principally ladies employees earn as little as 4,800 kyat ($3.40) a day, the bottom charges within the area.
But it surely has supplied an escape from poverty for a lot of, as employees have migrated from rural areas to the factories, primarily across the business hub of Yangon, and despatched a refund to their households.
Khin Maung Aye, managing director of Lat Battle clothes manufacturing facility, which employs 3,500 individuals, says the sector faces collapse if the navy doesn’t restore a democratically elected authorities.
That will end in “horrible outcomes of poverty”, he mentioned, including that he was additionally staying afloat on orders positioned earlier than the coup however feared orders for subsequent season, usually due later this month, will dry up.
Skinny Skinny, a 21-year-old garment employee, mentioned her household of 5 was surviving on a 8,600 kyat ($59) month-to-month retainer her manufacturing facility had given her whereas it shut down due to the coup.
“I really feel so harassed … Now we have nothing left to pawn. Now we have to borrow from cash lenders at 20% curiosity a month.”
America, which has imposed focused sanctions on Myanmar’s navy, late final month suspended commerce talks with it and mentioned it was reviewing its eligibility for its Generalized System of Preferences scheme, which reduces tariffs and offers different commerce advantages for growing nations.
That would “portend future disruption” for Myanmar’s clothes sector, mentioned Steve Lamar, president of the American Attire & Footwear Affiliation, which represents greater than 1,000 trend manufacturers.
However some unions representing garment employees have referred to as for the worldwide group to impose more durable sanctions to press the navy, though it might additional injury their trade.
“I settle for orders transferring away,” Myo Myo Aye, founding father of the Solidarity Commerce Union of Myanmar, mentioned by a translator. “Staff would face difficulties and hardship as a result of there could be no jobs. However, we merely don’t settle for the navy regime.”
($1 = 1,400.0000 kyat)
Reporting by Chen Lin and John Geddie; Extra reporting by James Pearson in Hanoi, Victoria Waldersee in Lisbon and Elisa Anzolin in Milan; Modifying by Robert Birsel