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Myanmar’s manufacturing sector hit record high in February due to political instability

According to the Index Purchasing Manager of Nikkei Myanmar Manufacturing PMI (Manufacturing Purchasing Managers’ Index for February 2021), Myanmar’s manufacturing sector hit a record high with production and new orders. Due to the political events that took place on 1 February, political instability in Myanmar following the closure of factories and the manufacturing sector recorded a rapid decline. Due to the low demand, the number of new orders, purchases, imports and stocks set new records. According to the state of emergency declared on 1 February, workers return to their homes and transportation conditions became more difficult. Although the outlook for the future is positive, the optimism level is from the highest in the 11th month of January to fell moderate.

When it comes to prices, commodity prices from the burden of expenses rise sharply due to foreign exchange speculation. Myanmar’s PMI for February is 27.7 and manufacturing conditions signal a sharp decline since it fell from the January index of 47.8. Decline of 20.1 within one month is the strongest from the beginning of the survey five years ago to the present day. Due to the state of emergency declared on 1 February, factories and demand were shut down. In the calculation of the main index production, up to 65% of all indicators for new orders and imports hit a low record in February while 20% recorded employment rate was the third-largest drop in record number.

The 15% supply delivery period continued to grow (as supply chain pressures were always associated with increasing demand), allowing the PMI to depreciate as a whole. Companies reported lower orders received this month, while others reported customer closures. As a result, the rate of decline was the highest in the five-year period of the survey, higher than the highest decline last October. About 70 percent of companies reported a drop in production this month as factories shut down. As a result of declining productivity, companies cut staff in the last month. Respondents also reported that the workers had returned to their homes. Overall, there is a fair amount of surplus work due to weak demand and a shortage of manpower.

Purchases of imports fell sharply due to a record drop in new employment. Market research has pushed up commodity prices due to scarcity of raw materials and worsening exchange rates. Companies have tried to shift the burden of costs by slightly raising their selling prices. Procurement conditions declined in the worst case scenario due to shortages of raw materials and blockades of shipments. Over the next 12 months, the level of productivity optimism fell to a five-month low. Shreeya Patel, an economist at IHS Markit who conducted the survey, said the declaration of a state of emergency on February 1 only exacerbated the challenges facing Myanmar’s manufacturing sector. The survey is based on original data collected from industry by HIS Markit and sponsored by Japan-based Nikkei Media Group.

Source: Daily Eleven

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Myanmar’s manufacturing sector continues to suffer from lockdown restrictions, and the rate of production and new order continue to fall due to weak demand

According to the Nikkei Myanmar Manufacturing PMI (Manufacturing Purchasing Managers’ Index for January 2021), Myanmar’s manufacturing sector is still suffering from lockdown restrictions and production is still weak due to low demand. Manufacturing in Myanmar deteriorated further at the beginning of 2021. Due to continued restrictions imposed to control the spread of COVID-19, factories closed and production fell for five consecutive months. New orders fell for the fifth straight month, but were the slowest in the series, with job cuts continuing across the industry.  Declining production has led companies to control purchases and imports have plummeted.

 However, plans to expand the business boosted optimism in January and peaked in 11 months. Looking at prices, inflationary pressures have risen sharply due to a shortage of raw materials. Sales prices have risen sharply, indicating a limited burden of costs on shoppers. Myanmar’s PMI for January was 47.8, and the rise from December’s 44.7 indicates a weakening of the manufacturing sector. Production fell for the fifth straight month in January, but was the weakest for the second slump, which began in September. Most of those who pointed out the closure of factories and the weakening of demand. Reflecting the order of production, new orders received by producers in Myanmar fell at a slower pace, the latest slowing in the current five-month slump.

 Lockdown restrictions put pressure on demand, according to respondents. Companies that have documented growth report new customers and new arrivals. Despite low output, there were still signs of pressure on productivity, and inventory concentrated significantly in January. Producers continue to suspend hiring efforts, extending the current cut-off rate to five months. Some respondents reported that the workers had returned to their hometowns. Producers continued to be wary of inventories in January as efforts to rebalance stocks as demand weakened. As a result, pre-production and stockpiling of goods was significantly depleted.

Inflation of costs is the highest since November 2018. Suppliers have pushed up prices due to scarcity of raw materials and rising shipping costs. Producers decided to raise factory prices in January, but some companies cut prices to boost demand, and overall inflation was not significant. Looking to the future, respondents are optimistic. Shreeya Patel, an economist at IHS Markit who conducted the survey, said that the January survey, which recorded a further decline in Myanmar’s manufacturing sector, indicates a slump in 2021. Weak demand and factory closures have been linked to lower production and new orders. At the same time, job cuts continue and imports are plummeting. The survey is based on original data collected from industry by IHS Markit and sponsored by Japan-based Nikkei Media Group.

Source: Daily Eleven

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In November 2020, the second wave of COVID-19 closed car showrooms and car factories, leaving no brand new car sales and production

In November 2020, the second wave of the COVID-19 epidemic closed car showrooms and manufacturing plants in Myanmar, leaving no brand new car sales or production, according to regional car sales and production data released by the ASEAN Automotive Federation. The ASEAN market as a whole saw sales of 256,158 new cars in November 2020, down 13.9 percent from the same period last year, with Myanmar down 100 percent. In 2017, 8225 brand new cars were sold in Myanmar, more than 97% more than in 2016. In 2018, there were 9,299 vehicles compared to the same period in 2017. Sales increased by 113% to 17,524 vehicles in 2018.

In the Myanmar market, 4,392 vehicles were sold in 2019 compared to 2018, with 21,916 new cars (an increase of 25.1%). In January 2020, 2034 new cars; In February, 2,286 vehicles; 1979 were sold in March, and showrooms closed in April due to the first wave of COVID-19. 1253 in May; 1985 in June; 2258 vehicles in July; In August, 2,238 vehicles were sold. Due to the second wave of COVID-19, only about half of the showrooms opened in September, selling only 1,112 units, and closed again in October and November. In 2016, 4,168 new cars were sold in Myanmar. In 2018, more than 17,000 new cars were sold, and in 2019, nearly 22,000 new cars were sold. 

Myanmar is an emerging market for the sale and production of new cars, and growth is expected to continue year on year. Despite the continuous growth of new car production in Myanmar, as well as the growth of new car sales, car assembly production declined during the COVID-19 period. In January 2020, 1,459 vehicles; 1388 in February; In March, 1214 units were produced, and in April, the first wave of COVID-19 shut down car factories. 703 in May; 1313 vehicles in June; In July, 1,438 vehicles; In August, 1,558 vehicles were produced. Due to the second wave of COVID-19, the plant was operational for about half a month in September, producing only 1,587 units, and in October and November, the second wave of COVID-19 shut down car factories. 

Six ASEAN countries, including Myanmar, are involved in the production of new car assemblies. Myanmar will increase by more than 320% in 2017; In 2018, it will be close to 150 percent. In 2019, it increased by more than 24%. The Asean market as a whole saw 325,242 new car assemblies in November 2020, down 4.6 percent from the same period last year, and Myanmar was down 100 percent from the same period last year. The number of new cars assembled in Myanmar in 2017 was 4,930, an increase of 3,788 units from 2016, an increase of 328%. In 2018, 12,292 cars were assembled, an increase of 7,362 from the previous year, an increase of 149%. In 2019, 15,496 cars were assembled, an increase of 3,204 from the previous year, an increase of 26%.

Source: Daily Eleven

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YRIC endorses $12.7 mln worth seven proposals in four months(Oct-Jan)

The Yangon Region Investment Committee (YRIC) has endorsed four foreign enterprises from China, Japan, Singapore and Hong Kong SAR in the manufacturing sector, with an estimated capital of US$12.7 million, in the four months (Oct-Jan) of the current financial year 2020-2021. Additionally, one domestic enterprise is also given the go-ahead, with the capital of K2.9 billion. Those enterprises are to create over 3,700 jobs.

They will execute manufacturing of bags, footwear, underwear and garments on a Cutting, Making, and Packing (CMP) basis and production of pulses and beans, and production and distribution of fish sauce, YRIC stated. Between 1 October and 30 September of the previous financial year 2019-2020, Yangon Region attracted FDI of $308.768 million from 137 foreign enterprises. The manufacturing sector has attracted the most foreign investments in Yangon Region, with enterprises engaging in pharmaceuticals, vehicles, container boxes, and garments on a Cutting, Making, and Packing (CMP) basis.

To date, foreign investments from China, Singapore, Japan, Hong Kong, the Republic of Korea, Viet Nam, India, China (Taipei), Malaysia, the British Virgin Islands, and Seychelles arrive in the region. To simplify the verification of investment projects, the Myanmar Investment Law allows the region and state Investment Committees to grant permissions for local and foreign proposals. The initial investment does not exceed K6 billion, or $5 million.

Source: The Global New Light of Myanmar

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Discussion of the economic situations and the impact of ongoing COVID-19 on various ASEAN countries, including Myanmar

According to the Myanmar Garment Manufacturers Association (MGMA), various ASEAN countries, including Myanmar, are discussing the economic situation and impact of the garment industry due to the ongoing COVID-19 in their countries. ASEAN Federation of Textile Industries (AFTEX) Indonesia Laos Malaysia Singapore Philippines Thailand The ASEAN Economic Community (AEC) and the ASEAN Economic Community (AEC) have agreed to increase cooperation in various fields. COVID-19 conditions and effects; International investment conditions. They also discussed the export and import conditions of garment industries in various countries and their cooperation with their governments.

Central executives and executives of the Myanmar Garment Manufacturers Association (MGMA) also discussed Myanmar’s export and import situation in 2020. During COVID-19, MGMA provided services for member factories. They also discussed the assistance provided by the Myanmar government to garment factories. According to the Position Paper released by the Myanmar Garment Manufacturers Association, 114 factories were closed or temporarily closed during COVID-19, and currently only 606 are in operation, 90 percent of which are mainly export-oriented. Difficult access to raw materials in the garment industry. Decreased or suspended orders and late or non-receipt of payments. Some companies go bankrupt.

According to a survey conducted by the Myanmar Garment Industry, most of the orders are pending until July, with only 30 per cent of members receiving orders from September. However, the garment sector was affected by the economic situation in the countries with the highest orders. When it comes to export orders, they have become more of a problem than buying from other countries. Currently, Myanmar’s largest exporter is Japan. Germany is second. In terms of blogging, the 28-nation EU has the most. The US is buying now. However, Korea, not as many as Japan, given the domestic situation in Korea, its economy is declining. There is also the fear of COVID. So when those countries have limited access to their offices, they also have limited access to Myanmar. It is also noted that the highest number of cases of corona virus are the countries order from Myanmar, so that the economic impact and challenges of Myanmar were a challenge.

Source: Daily Eleven

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Myanmar’s first textile-based industrial zone to be established in Sagaing

Eastern Development International (Myanmar) and Dongzhan Textile Group, a Chinese company, are set to jointly develop a textile industrial cluster worth over US$371 million in Sagaing Region. The two companies will work with the private sector on all stages of construction of the project, making it the first textile-based industrial zone in Myanmar. The project is designed to include two phases: construction of factories and the installation of machinery in those factories. Phase 1 will include the construction of 12 new garment related factories, knitting fabric factories, dyeing and printing factories, and down and feather factories; and residential buildings for employees. Eight of these factories will be located at No.3 Textile Factory Branch (Sagaing) while the remaining four factories, including a waste water treatment system, thermal power plant, will be set up at No. 3 Textile Factory (Sagaing). Phase 2 will include the construction of five garment related factories, embroidery factory, carton factory, and polyester wadding factory.

An international textile supermarket will also be created in Sagaing. The project is proposed to be operational for an initial term of 20 years. Following the expiration of its initial 20-year term, it could be extended twice for a further term of five years for each renewal. The project is scheduled to begin in the financial year 2020-2021 and is expected to be completed in the financial year 2029-2030. It will also benefit stakeholders across the textile value chain (small and medium-sized enterprises, employees, fashion designers) by making available locally produced raw materials for textile and garment sectors, and creating entrepreneurial opportunities. It is anticipated that the imported volume of raw materials across the textile value chain will be reduced, and export earnings using locally-produced raw materials will be increased. Establishment of a textile-based industry cluster will reduce transportation cost; using a common infrastructure, resource and labour pool advantage; and speed up the learning process leading to internationally competitive and commercially sustainable textile industry.

The garment industry in Myanmar has grown significantly over the past five years. Myanmar’s garment exports have been increasing yearly, especially since 2013, when the EU granted goods from the Southeast Asian country preferential access to its market. Myanmar is also implementing the National Export Strategy (NES), under which there will be measures like the transition of cut-make-pack (CMP) garment system into free-on-board (FOB) system, adoption of bonded warehouse system and establishment of special textile and garment zone for boosting export. Myanmar launched a national level textile policy with the help of German global development organization GIZ to promote the country’s textile industry, attract investment by inviting foreign trade partners, build the necessary infrastructure and reduce imports. At present, some garment factories shut down due to lack of raw material, and thousands of workers became unemployed.

Some garment factories in Myanmar have reduced working hours and cut jobs, and some factories have not received orders from abroad amid the ongoing coronavirus pandemic. Myanmar’s CMP garment sector earns about US$300 million, annually and the country will get US$3 billion if it can manage to shift from the CMP system to the free-on-board (FOB) system. Myanmar’s manufacturing sector is largely dependent on the CMP garment and textile exports. The total export earnings from Myanmar’s garment and textile industry are expected to reach US$10 billion by 2024, according to the Myanmar Garment Entrepreneurs Association. The CMP garment sector contributes to over 20 per cent to the country’s exports.
Thousands of Myanmar people are employed in garment, textile, footwear and accessories factories across the country. Additional tens of thousands indirectly work in the industry through logistics and transport services. Myanmar earned some US$850 million from CMP garment exports in the financial year 2015-2016, US$2 billion in FY2016-2017, US$2.5 billion in FY2017-2018, US$4.6 billion in FY 2018-2019 and US$4.28 billion in FY2019-2020.

Source: The Global New Light of Myanmar

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Myanmar’s manufacturing sector is still badly affected by the lockdown restriction

According to the Manufacturing Purchasing Managers’ Index (PMI) for November 2020, the Myanmar manufacturing sector is still badly affected by the lockdown, and demand and production continue to fall due to weak demand. Manufacturing in Myanmar continued to decline in November, with a slump in production; New orders All jobs and imports fell to record lows. The closure of factories due to restrictions imposed to control the spread of COVID-19 infection has been cited as the cause of the latest downturn. However, many indexes rebounded from last month’s lows and are the slowest in the current three-month slump. Companies expect production to increase in the next 12 months, but overall optimism is weak.

Looking at prices, inflation in the cost of production has accelerated during the last survey period, and survey respondents have often pointed to a shortage of raw materials. At the same time, declining factory prices have been linked to efforts to boost sales. Myanmar’s PMI for November was 43.2, up from 30.6 in October. The latest figures point to a recovery in Myanmar’s manufacturing sector, despite further signs of a downturn. When industries are shut down and demand weakens, up to 85% of the PMI is focused on components such as manufacturing, New orders Imports, inventories and workplaces came under heavy pressure on key indicators in November.

 Jobs were cut short as workers were forced to return to their hometowns due to lockdown restrictions. In the meantime, buying volatility has fallen at its strongest pace since December 2015, when the survey began, due to the stress of volatile demand in the coming months. Companies reported lower orders in November. Overall, the rate of decline was strong, but significantly weaker at the beginning of the last quarter. The latest drop in production with new orders further reduced the workforce. Production costs have risen for the second time in a row, with respondents explaining the scarcity of raw materials and rising transportation costs. Meanwhile, demand for the product fell sharply for the ninth straight month.

Finally, business confidence remains positive in the middle of the last quarter. Companies report plans to expand production and invest in equipment over the next year. Optimism is at its strongest in three months, but remains weak in survey data history. An economist at IHS Markit who conducted the survey said that Myanmar’s manufacturing sector is still severely affected by the latest lockdown restrictions. New orders As production and purchases fell sharply in November, job cuts also intensified. The latest downturn as a whole has been strong, the same amount as in February-June. The survey is based on original data collected from industry by IHS Markit and sponsored by Japan-based Nikkei Media Group.

Source: Daily Eleven

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Myanmar manufacturing sector hit by new lockdown measures

Manufacturing in Myanmar was hit hard in September by a range of new lockdown measures introduced to fight a surge in coronavirus cases, according to the latest Purchasing Manger Index (PMI) survey data from IHS Markit. The measures, which includes instructions for factories to shut down for two weeks and employees not listed under an essential services list to work from home, has reversed the beginnings of a recovery in manufacturing.

The Myanmar PMI index fell to 35.9 in September from 53.2 in August and 51.7 in July. The index varies between 0 and 100, with a reading above 50 indicating an overall increase in purchasing activity compared to the previous month. A score below 50 indicates an overall decrease. The impact has so far been less severe that the record deterioration in business conditions seen in April.

Still, four of the five components that make up the PMI- such as purchasing activity, output and new orders – had negative directional influences in September, with the exception being suppliers’ delivery times. Manufacturing production suffered a severe decline in September with factories temporarily closed in key regions like Yangon and Mandalay.

Domestic demand faltered amid the introduction of new restrictions, while international demand was tepid as well, with managers reporting lower demand from Asian markets including India, Thailand, Vietnam and Qatar. With many factories temporarily closed in September, the overall level of employment in the sector also fell sharply.

Source: Myanmar Times

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COVID-19 shuts down more than 100 garment factories

The Covid-19 pandemic has led to the closure of some 100 MCP (Cut Make Pack) factories in Myanmar, said a representative from the Myanmar Garment Manufacturers Association. It is said that the pandemic has resulted in difficulties in meeting orders and a decline in global sales, forcing these factories to either halt work temporarily or cease operations for good.

It is also said that there are over 700 member factories registered under the association, of which more than 50 shut down during the first wave of the pandemic and another 50 closed during the second wave. Some factories have to take a break due to order difficulties. Nevertheless, about 350 member factories are applying for export and import licenses.

One owner of a garment factory said that such closures are necessary as it makes more financial sense. There are factories that do not get orders at all and the factories that do not have enough money will have to close for a while. Business owners said that many of the suspended factories are owned by foreigners, many of whom are Chinese nationals.

Source: Myanmar Times

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New ASEAN-led trade deal to boost Myanmar manufacturing sector

The newly formed ASEAN- led global trading bloc, Regional Comprehensive Economic Partnership (RCEP), could boost the Myanmar manufacturing sector, according to the research and advisory firm Oxford Business Group. Myanmar could capitalize on the 15- country trade bloc, the biggest in the world, to grow its manufacturing base, the research group said. Peter Crowhurst, the chief executive officer of the British Chamber of Commerce Myanmar, told OBG that “local, regional and indeed global manufacturers who wants to be active in the ASEAN market place are taking advantage of the opportunities in Myanmar”. The Myanmar economy is very young, it is agriculturally based and overall manufacturing is in its infancy.

Crowhurst noted that Myanmar has a lower cost base, a growing infrasture and a receptive government that is seeking to strengthen and diversity its economy. The fresh overwhelming mandate the ruling National League for Democracy received during the November 8 polls would give impetus for more reforms that would enable the country to take advantages of the RCEP. With the new government under the direction of Daw Aung San Suu Kyi, now is the time to build and strengthen capabilities of the respective ministries to support the effective and balances implementation of RCEP. During the last five years, international business invested over US$6 billion in 711 manufacturing businesses in Myanmar.

Similarly during those five years, firms mostly from Japan and Singapore invested US$1.1 billion in 50 businesses in Myanmar special economic zones. Manufacturing sector attracted the most foreign investments during the from 2016 to 2020 with $7.4 billion according to Directorate of Investment and Company Administration. The RCEP was signed on November 15 on the sidelines of the ASEAN summit. The signatories are the 10-country ASEAN, China, Japan, South Korea, Australia and New Zealand. The new trading bloc represents around 30 percent of the world’s population, 30pc of global gross domestic product and about 28pc of the international trade. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

Source: Myanmar Times