CMP garment sector face severe struggles due to collapse of demand

17 September 2020

Myanmar’s garment sector especially the cut-make-pack (CMP) garment factories is facing severe struggles due to the collapse of demand from the EU, Japan and South Korea said   U Tun Tun, a member of Central Executive Committee of Myanmar Garment Manufacturers Association.

If we say that the garment sectors in Myanmar, there are only 1% to 2% of the factories targeting the domestic market. And the rest from 98 % to 99 % of the garment factories in Myanmar rely on the orders from the global markets. More than 70 % of Myanmar’s garment products are exported to the European Union and then the rest are exported to Japan, Republic of Korea (ROK), Canada, US, China and other countries.

 

So far, the EU and the entire world face coronavirus crisis, the garment sector’s supply-chain is particularly severely hit. It has led to a collapse of demand for CMP industry in Myanmar.

U Tun Tun, a member of Central Executive Committee of Myanmar Garment Manufacturers Association, spoke to MI Radio about the struggles of CMP Garment Sector, “Since the early occurrence of the COVID-19, the garment factories in Myanmar were forced to stop running overtime due to the significant disruption on the supply. Around 90 percent of the supplies came from China which was blocked exporting and importing because of the infection in January. When the factories tried to run the operation, the outbreak appeared spreading all over the world. The buyer countries can’t not offer and even cancel the orders. So, the garment manufacturers in Myanmar are struggling for decline in revenue.”

A few factories are still running the operation but only because COVID-19 restrictions disrupted their operations and they need to complete old orders. Daw Hnin Thet Mon, Factory Owner, Shwe See Sar Garment said, “Most of the factories aiming at the local market have completely stopped operations after Thingyan holidays. But some factories were still running their operation for export market. We are just producing the garments for the old orders.  Before Covid-19 period, we used to have six-month ahead plan for every year but during this pandemic, we can only plan for over a month until the mid of October.

We don't know exactly if new orders will enter or what will happen after these months. The reoperation of export garment factories depends on their respective background buyer countries. Although we are facing many struggles, we don’t want our workers to become jobless. The factory workers do not want to get compensation from their employers but they just want stable job opportunity for long-term period. Although the tailoring industry is at a loss for several months, the local owners of tailoring factories tend to struggle during this Covid-19 situation rather than stopping the whole operation and shutting down the factories.”

U Tun Tun, a member of Central Executive Committee of Myanmar Garment Manufacturers Association also said, “We didn’t expect that the pandemic would take so long at first. So, we were planning for the renovation and to empower the workers’ skill. But it becomes hard for the factories to survive this situation for long.  Even though the government has helped the garment sector by providing the loan package, the effectiveness is barely seen due to huge losses in the sector. It will take only few days for the factories to share the remaining old orders. The CMP factories can perform for the local market. The demand for local market is just enough for the factories targeting the local people. If the CMP factories will enters the local market, only the market and the suppliers will be ruined. The recovery processes are going to be performed after the outbreak.”

Over 500,000 people are employed in garment sector. There are around 420 factories as MGMA members, including 236 Chinese-owned operations, 67 ROK, 20 Japanese factories and 92 factories based domestically.

Myanmar earned around US$4 billion (5.3 trillion kyats) from CMP garment exports in 11 months in the 2019-20 fiscal year— a year-on-year decline of US$65 million, according to the Ministry of Commerce.

Phyo Thi