Myanmar has the potential to become an emerging manufacturing hub due to its large and low-cost workforce, however it faces several challenges. It has a history of garment production and export prior to sanctions in the 1990s-2000s. While sanctions have been lifted and exports are growing again, Myanmar's factories have low efficiency and productivity and lack experience in FOB production. Improving infrastructure, the banking system, energy supply and factory compliance would help Myanmar realize its manufacturing potential.

1. //feature presentation

2. DOES MYANMAR HAVE THE POTENTIAL
TO BE AN EMERGING MANUFACTURING HUB?

3. Economic
Data
Population
Surface Area
Workforce
GDP Growth
T&C Exports
2017 Total Export
Minimum Wage
54 million
676,578 square kilometres
340,000 (90% are women and
working age group is 18-27 years)
- 0.62% of total population
8.1% (US $ 68 billion)
3.5% of total GDP
US $ 14 billion (Apparel export:
US $ 2.7 billion)
US $ 88 (after recent hike of 33%)
166 million
130,170 square kilometres
4.5 million (median age is 26
years) - 3.70% of total population
7.6% (US $ 285 billion)
12.3% of total GDP
US $ 35 billion (Apparel export:
US $ 29.21 billion)
US $ 68
102 million
11,04,300 square kilometres
37,000
8% (US $ 80 billion)
5% of total GDP
US $ 3.17 billion (Apparel export:
US $ 68 million)
US $ 55

4. US imported apparels worth US $ 400 million from Myanmar before it
imposed sanctions in 2003, which is followed by EU at US $ 335
million. The total apparel export of Myanmar was US $ 817 million
before the US imposed sanctions.
Despite sanctions imposed in 1996 by EU, apparel exports from
Myanmar grew from US $ 94.1 million in 1997 to US $ 457 million in
2004.
But, since 2004, apparel exports from Myanmar declined by 60% as
some US buyers stopped buying altogether and some EU buyers
were afraid of boycott campaigns by consumers, stimulated by US
sanctions of 2003.
Scenario of Myanmar's Export — Pre and Post Embargo

5. After the sanctions were lifted, apparel exports from
Myanmar to US reached US $ 135 million in 2017 out of
the total export of US $ 2.7 billion by Myanmar.
However, export has still not picked up because of the
unstable policies of US banking system which is expected
to be free in November 2018; also the GSP benefits have
been accorded to the country only recently in April 2018.
Apparel Exports After US
Sanctions were Lifted

6. In April 2013, the EU also lifted
sanctions against Myanmar (except
for arms and armaments) and
accorded them GSP benefits.
EU apparel import now stands at nearly
US $ 1.27 billion (47%) of the total
garment export of Myanmar (US $ 2.7
billion) in 2017.
Apparel Exports After EU Sanctions were Lifted

7. Myanmar exports to Japan valued at US $ 729 million in 2017, while export value to
South Korea stood at US $ 324 million. Both the countries are 2nd and 3rd largest
apparel importers of Myanmar respectively after EU.
Export Value in
Million, Japan,
729
Export Value in
Million, Korea,
324
Japan Korea
US $ 729 million
US $ 324 million
Major Apparel Importers of Myanmar After EU

8. While knit products were the focus of
export pre-embargo, during
post-embargo, the focus of export
shifted to woven products mainly to
Japan and South Korea.
Knit Versus Woven

9. EU JAPAN SOUTH KOREA US
Around 47% of the country's CMP products were exported to EU in 2017. Japan and South Korea
accounted for 27% and 12% respectively. The share of US was around 5% in overall garment
exports by Myanmar.
Major Markets

10. Export value in billion
US $ 1.7
billion
US $ 2.1
billion
US $ 2.7
billion
US $ 10
billion
Myanmar Garment Exports

11. Type of Business: Cut-Make-Pack (CMP)
The banking system is virtually non-existent in the country with few private banks restricted to
only accepting deposits. An unstable foreign currency exchange rate has led to a scenario where
all documentation and paperwork need to be organised either by the buyer/client or through
domestic/regional agents.
Due to lack of local textile mills and not so developed supply chain, all input materials which
include fabrics, threads, buttons, zips, labels, linings and even the packaging are imported and
have to be provided by the buyer/client.
The local factory is thus restricted to assembling the predesigned article, packaging it and
exporting it and hence these are just small operations called ‘workshops’.

12. Major Product Categories and Facts
All types of jackets, men’s shirts and coats,
women’s overcoats, capes and wind jackets
80% of garment manufacturing dominated
by woven products and 20% by knit
products 80% 20%

13. As on 31st July 2018, the total number of registered
factories in Myanmar were 506.*
Whereas, in 2016, the total number of factories existing in the
country were 430 and the bifurcation of those are as follows: 9
SOEs, 2 joint ventures with Myanmar textile industry, 34
joint ventures with private companies, 224 FDI companies
and 161 local companies. Only 20% were really local
companies according to Myanmar Garment Manufacturers
Association (MGMA).
Number of Factories
*The list of 500 exporters/manufacturers is available at apparelresources.com

14. Leading Foreign Investors
With over 55% FDI, 25% FDI is from China, 17% from Hong Kong, 29% from South Korea,
12% from Japan and the remaining 17% are from others.
55% FDI
25% CHINA
17% HONG KONG
29% SOUTH
KOREA
12% JAPAN
17% OTHERS

15. Some Leading International Companies in Myanmar
Nadia Pacific Apparel Co., Ltd. (South Korea):
The company majorly produces down and padding jackets,
woven shirts and pants with an annual production capacity of
1.08 million pieces.
Atsumi Myanmar (Japan): Manufacturer of foundation
garments, panties, nightwear, sportswear, swimwear, camisoles
with an annual production capacity of over 7.50 lakh products.
They have 6 production lines.
GFT Enterprise Co., Ltd. (Japan): Manufacturer of
men’s and boy’s apparels and furnishings. The company has
400 workers working across 4 production lines.

16. Some Local Companies in Myanmar (Export Turnover)
Tri Sea Garment Manufacturing Co., Ltd.:
Manufacturer of polo shirts, panties, knitwear, maternity
wears and jackets. They have 750+ machines, 1200 workers
and are one of the few garment manufacturers in Myanmar
capable of producing Japanese products.
Eurogate Sportswear Ltd.: Manufacturer of outdoor
jackets, down jackets and coats with an annual production
capacity of 3 million pieces. They have 2,400 workers across
24 sewing lines.
Maple Garment Factory: Manufacturer of pants,
woven items, kidswear, coats and wool jackets. Their MOQ is
5,000 pieces and has over 900 workers.

17. Major Ports
Myanmar has a total of 9 well-connected ports in the country. Following are the 3
major ports vital in connecting the world’s most dynamic economies:
Asia World Port (in Yangon) - 436,936 TEU
Myanmar International Terminal Thilawa Port (in
Thilawa) - 140,000 TEU
Myanmar Industrial Port (in Yangon) - 40,000 TEU

18. Major Industrial Zones
Yangon: 200 garment factories, skilled workers and better electricity supply
Thilawa: Lot of investment from Hong Kong. This is a 2,400 hectare special
economic zone that is 25 km from Yangon and 50 km from airport
Pathein: Skilled workers and low land cost
Bago: More than half a dozen garment factories with 50-year leases
possible for foreign investors wishing to set up factories
Hpa-An: 1 garment factory already established and 6 garment factories
under construction. Low labour cost. Also, ASEAN East-West
Highway in 2015, which will connect Hpa-An with Mae Sot in
Thailand significantly faster and travel time to Thailand will reduce
from 6 to 2 hours
Mandalay: Hundreds of workshops and small factories that produce and dye
cotton textiles. Additionally, there are several cotton ginning factories

19. Trade Relationships of Myanmar
EU-Myanmar: Myanmar, as a least developed
country, benefits from the most
favourable regime available under
the EU's Generalised Scheme of
Preferences (GSP).
EU-ASEAN: Myanmar is a member of ASEAN.
Actively included in discussions on
trade and investment issues.
USA: USA has re-established USAID
mission, thereby easing economic
sanctions.

20. Challenges in Garment Production
Factory efficiency and productivity need to be improved.
Factories must switch from the Cut-Make-Pack (CMP) system to
Free on Board (FOB).
Most of the factories are still not BSCI certified.
All fabrics and trims are imported.

21. Strengths
Excellent workmanship:
Quality workmanship and experience in
making complex products
Market experience:
Experience of working previously for
Japan and Korean markets
Easy availability of labour:
The country has huge pool of cheap labour
Competitive lead times:
Aligning technology with business strategy leads to
a high performance industry and an integrated
service provision shortens lead times
Well-connected roads and ports:
Government has unveiled plans to construct
34,400 km of roads over the next two decades.
Work is expected to focus on the country’s
economic hubs of Yangon, Mandalay, Bagan and
Pyay

22. Weaknesses
Highly restricted banking sector:
Lot of FDI companies are reluctant due to the
non-existent banking system
Low efficiency and productivity:
Most of the garment companies have been facing the
concern of low efficiency and productivity
High land price:
Land prices are not only high but also erratic
and keep fluctuating often
Power shortage:
There are too many instances of power cuts in
Myanmar and there has been no effort to control it.
Lack of experience in FOB:
Lack of textile knowledge and sourcing skills
required for FOB and full package export
Lack of compliance in many factories:
Majority of locally owned garment makers are not certified by
internationally recognised standards or guidelines
Less knowledge of EU market:
Most of the factories have never worked with
any European brands
Tourism taking away lot of workforce:
According to Asian Development Bank, tourism
revenues grew by 19% last year as inbound traffic
increased, totalling US $ 2.1 billion

23. Opportunities
Removal of international
sanction and improving trade
relations
Industrial zones offering
incentives for foreign
investment
Garment sector is a priority
sector for Government
International commitment to
assist Myanmar in technology
and production training

24. Threats
Political instability
and unrest
Industry requires
more time to achieve
compliance standard
No textile industry
in the country to
support garment
production

25. Prominent Associations and Organisations
Myanmar Garment Manufacturers Association, 6th Floor, 29, Min Ye
Kyaw Zwa Rd, UMFCCI Tower, Ward (8), LMDW, Yangon, Ahlone
Township, Myanmar. Role: Provides valuable technical training services
and helps in finding business opportunities.
Union of Myanmar Federation of Chambers of Commerce and
Industry, No. 29, Min Ye Kyaw Swar Road, Lanmadaw Township, Yangon,
Myanmar. Role: UMFCCI supports the business communities by sharing
knowledge, expertise and opportunities and provides services like training,
business facilitation, conducting trade fairs, etc.
Smart Myanmar, 11th Floor UMFCCI Tower, 29, Min Ye Kyaw Swar Street,
Lanmadaw Township, Yangon, Myanmar. Role: The project actively
supports sustainable consumption and production of garments ‘Made in
Myanmar’ – a concept with emphasis on resource efficiency and social
responsibility. Shwe Job, launched by Smart Myanmar, is a Myanmar
language educational app that teaches factory workers and managers
about occupational safety & health and provides information on the
country’s labour laws.

26. //contact@apparelresources.com