Three weeks ago I completed a short study of he Myanmar garment industry during which time I visited a number of factories and held a series of discussions with the leaders of the Myanmar Garment Manufacturers Association (MGMA ) as well the ILO other interested organizations and some leading academics.
There is no doubt that the local industry faces serious challenges:
Not one of the factories I visited would meet minimum standards of compliance. Among the more serious problems is the employment of underage children albeit as apprentices; excessive overtime, sometimes reaching 12-hour days; and seven day work weeks. There are also structural problems such as improper layouts, poor lighting, and lack of machine guards, to name but a few.
At the same time, the local industry, having been cut-off from both the U.S. and EU markets, has little conception of the state of the global garment industry. For example, in the few instances where I was able to see cost sheets, I calculated that CM prices were below 5¢ per minute. To put this into context, a factory in Myanmar is paid less than the same factory in Bangladesh.
Finally local factories have little or no access to capital, with the result they are virtually CM operations, controlled by third-county middlemen who provide the necessary materials while taking the lion share of the profit. The sooner the industry rid itself of these parasites the faster it can begin the development process.
On the other side of the coin, the industry has some important positive advantages.
Despite statements to the contrary, wages are not unreasonably low. Qualified sewers are paid $85-$110 per month (including overtime and other bonuses, which compares favorable with Bangladesh’s $60 average, although well below wages in other Southeast and East Asian countries.
Workers are relatively well trained with an existing pool of unemployed multi-tasked sewers.
Furthermore, while the industry lacks qualified merchandisers, Myanmar has a large number of remarkable young university graduates with probably the best foreign language skills in Asia.
The product quality and range was better than I had expected. Lead times compare well with competitors in South East Asia and are far better than those in South Asia.
All things considered, Myanmar has the makings of a first class garment exporting industry. However, even with the best of efforts, the country will require two years to develop even a limited competitive capacity.
The first step must be political. We are all waiting for U.S. to drop import sanctions and for the EU to award duty free access (allowing third-country materials.
Much will then depend on the new U.S. and EU customers and even more on the transnational factories. In this regard, during the past few years the industry has become far more sophisticated and responsible. No one wants a second Bangladesh (the original model is bad enough). The ability to create a competitive but humane industry is in the hands of the stakeholders.
Everybody is going to Myanmar. It is the last untapped Asian resource with a large population. We can only hope we do a better job this time around.