PHNOM PENH (Bernama): High-quality garments, handbags, and shoes produced in Myanmar for international fashion brands are facing mounting challenges that threaten to erode their competitiveness and export performance.
The exit of global brands and skilled workers, coupled with the reciprocal 40 per cent trade tariff imposed by the United States (US) in August, has dealt a severe blow to the industry - a key pillar of the nation’s economy.
"The garment sector will suffer slightly because of the tariffs, but the most affected will be the shoe and handbag producers. They may have to close shops or lay off workers,” SMC Garment Company Limited Director U Aung Myint told Bernama.
Located in Yangon, SMC Garment specialises in men’s and ladies' lines of clothing and garment accessories, mainly for export markets.
Online news portal The Irrawaddy, citing an industry official, reported recently that at least six factories ceased operations in Yangon due to the high American tariffs that were detrimental to exports.
For over two decades, young, skilled Myanmar workers slogged for paltry wages, producing world-class goods for well-known Asian, British, European and American brands.
Since 2024, several international fashion brands have withdrawn from the market, leaving thousands jobless. Many abandoned their homeland to seek better-paying jobs in neighbouring countries.
Approximately 600 garment factories, producing garments, shoes, and handbags, are currently operating in Myanmar.
"At its peak, this sector employed about 500,000 workers but now there are about 400,000. Many left the industry or the country and moved to Laos or Thailand, where they earn better salaries.
"Shortage of skilled workers will be our biggest challenge compared to the tariffs,” said Aung Myint.
Myanmar producers operate under a cut-make-pack model, producing export-quality garments that include anoraks, jackets, shirts and blouses.
Under the model, producers receive raw materials from overseas, and factories are tasked to finish the garment products. It also produces luggage and footwear.
According to the World Bank’s Myanmar Garment Industry in 2023 Report, the country enjoyed trade preferences from the European Union, which accounts for over half of Myanmar’s total garment exports, and the US. The sector remains a major employer for the young workforce.
"The garment industry is an important source of employment in Myanmar, particularly for young migrant women from rural areas of the country.
"Women play a comparatively large role in garment firms as workers, managers and owners,” said the report.
Despite its resilience over the years, the sector faces a mammoth task in overcoming perennial challenges, such as frequent power shortages, political instability and natural disasters.
"Persistent power outages, ongoing political instability, and difficulties in accessing cash (both kyat and foreign currency) were the main challenges,” according to a company survey by the World Bank.
The Myanmar Garment Manufacturing Association forecasts the industry will be worth RM21 billion (US$5 billion) this year and expects it to triple to RM63 billion (US$15 billion) by the next decade, employing about 1.6 million workers.
It rolled out a 10-year strategic master plan from 2025 to 2034 two years ago to navigate political instability, infrastructure deficiency, financial constraints, labour migration and raw material scarcity.
"It will be tough because we keep losing skilled workers. We have lost about 70,000 workers since last year. We need to train more skilled workers for the industry.
"We have been around for more than 20 years now, and I am sure we can manage. Currently, we are working with more Japanese and (South) Korean markets to run our factories.
"We want more EU buyers to return and work with us. It can help to create more jobs for our workers,” said Aung Myint. - Bernama
