Posts in category: MANUFACTURING

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

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

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

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

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

The 15 members of the RCEP will have more business opportunities, and Myanmar’s small and medium enterprises will be able to connect to the global manufacturing network, according to the Ministry of Investment and Foreign Trade. Than Aung Kyaw, Director-General of the Department of Foreign Economic Relations said. The Regional Comprehensive Economic Partnership (RCEP) is for the 10 ASEAN members and its six dialogue partners: China, Japan Korea India It is a free trade agreement between Australia and New Zealand. The agreement, which includes developed countries, will provide better trade and investment opportunities for Myanmar’s exports as it seeks to revive Myanmar’s economy beyond COVID-19.

According to state-run newspapers, the technology and assistance required for the transition to a technology-based digital economy, especially in the post-COVID-19 period, will be available in accordance with the terms of the Economic and Technological Cooperation Chapter of the Convention. The RCEP is comprised of 10 ASEAN member states and six dialogue partners: Australia, China, India, Japan, South Korea and New Zealand are negotiating a Regional Comprehensive Economic Partnership (RCEP) agreement, which began in 2013. RCEP accounts for almost half of the world’s population, accounting for 42.2% of the global economy; It is expected to become one of the world’s largest trade groups, accounting for 29.1 percent of world trade and 32.5 percent of global foreign investment.

According to the Ministry of Investment and Foreign Trade, Myanmar’s participation in the RCEP will increase Myanmar’s exports to a market that accounts for about half of the world’s population with duty-free access. The RCEP is intended to be a more modern, comprehensive, high-quality and mutually beneficial free trade agreement than the current ASEAN Free Trade Agreement. Myanmar’s participation in the Regional Comprehensive Economic Partnership (RCEP) will provide opportunities for Myanmar’s exports to more than half of the world’s population with duty-free access, and the agreement will also increase investment from signatories to Myanmar.

Source: Daily Eleven

The ASEAN manufacturing sector continues to struggle in the bottom line, with Myanmar outperforming the worst of the seven countries surveyed, according to an October IHS Markit survey sponsored by the Nikkei. According to the latest data from the IHS Markit Purchasing Managers’ Index (PMI), the downward trend in the ASEAN manufacturing sector continued in October. The sector has been in decline for eight consecutive months, but the rate of decline has weakened and softened within a month. According to the latest data, both production and new order volumes continued to decline, and the decline was slightly lower and generally moderate. However, companies remain optimistic about production for the next 12 months.

The ASEAN PMI in October stood at 48.6, slightly lower than the significant 48.3 in September, indicating a modest decline in the ASEAN manufacturing sector. By country, four of the seven participating countries reported operating declines in October, with Burma hitting a record 30.6. Elsewhere, Indonesia posted a modest decline of 47.8, but was slower than in September. Malaysia, on the other hand, has seen a slowdown in the 48.5 index, signaling a moderate decline. The Philippines was below 50 in October with a score of 48.5, falling again. Thailand rose for the first time since December 2019, hitting a one-and-a-half-year high of 50.8. Vietnam also saw strong growth in October, with an index of 51.8. In October, Singapore recorded the first increase in manufacturing conditions since July 2018, raising the index to 52.

Overall, the ASEAN manufacturing sector remained challenging in October, and the continued decline in factory production and new orders was the main reason for the overall downturn. However, the decline was not as noticeable as in September. Weak external demand has been a major drag on factor as new export orders have plummeted. As inventory declines further, the latest data underscores further signs that pressure is on productivity. As a result, job cuts continued and the rate of layoffs changed slightly from last month, and overall remains strong. Consumer demand weakened, and companies cut their purchases in October. The latest drop was the slowest since February, but remains strong. However, there were still difficulties in delivering supplies, and the average time to complete the work was longer than in September.

Production costs rose sharply in September, and overall, pressure on profits increased, and average sales fell further. Looking to the future, companies are confident that production will increase in the coming year. Success has been the highest since January, slightly below the survey’s long-term average. Lewis Cooper, an economist at IHS Markit, said: “The October data highlights the continued downturn in the ASEAN manufacturing sector. As manufacturing and new orders continued to decline, operating conditions declined for the eighth straight month, and the decline was slightly weaker than the previous month. Due to weak demand and weak production pressures, the workforce continues to cut. The only positive sign is the futures index, which is above 50, ”he said.

Source: Daily Eleven

Majority of foreign enterprises eye the manufacturing sector for investments in the past financial year 2019- 2020, pulling in US$1.128 billion from 188 projects, the Directorate of Investment and Company Administration’s statistics indicated. Of 245 foreign enterprises permitted and endorsed by Myanmar Investment Commission and the respective investment committees between 1 October and 30 September of the last FY, 188 enterprises pumped FDI into the manufacturing sector. However, the quantum of investment in power is higher than in any other sectors. Power sector topped $1.67 billion from eight enterprises.

The agricultural sector has attracted $17.73 million from three projects. The livestock and fisheries sector has drawn five foreign investment projects worth $138.48 million. Two projects worth $300.454 million have been approved in the transport and communications sector. The hotels and tourism sector has pulled in the investment of $53.342 million from five foreign enterprises. The real estate sector has also pulled 1.115 billion from eight foreign projects, while industrial estate sector received $273.49 million from two enterprises. Over $469 million of FDI has been pumped into the other services sector from 29 businesses. At present, the labor-intensive enterprises are facing financial hardship, disputes between the employers and employees and the closure of factories. However, those cases in the industry did not hinder new investments.

The manufacturing enterprises and businesses that need large labor force are prioritized. MIC is endeavoring to clear those kinds of projects so fast that they can start running in the post-COVID-19 period, the DICA official said. Moreover, MIC has shown readiness to accept the projects regarding the production of mask, pharmaceuticals and medical equipment, in responding to the activities of prevention, control and treatment of COVID-19. Myanmar attracted foreign direct investments of more than US$5.68 billion between 1 October and 30 September in FY2019-2020, including the expansion of capital by existing enterprises and acquisitions in the Special Economic Zones, according to the Directorate of Investment and Company Administration (DICA).

Source: The Global New Light of Myanmar

CMP raw materials import has registered at US$2.17 billion in the past financial year 2019-2020, which plunged from $2.37 billion recorded in the 2018-2019FY, according to the Ministry of Commerce. Myanmar manufacturing sector has mostly concentrated in garment and textiles produced on the Cutting, Making, and Packing basis, and it contributes to the country’s GDP to a certain extent. At present, some CMP garment factories have shut down on the reason for the lack of raw materials due to the COVID-19 negative impacts, leaving thousands of workers unemployed. The COVID-19 badly batters the labor-intensive enterprises, said an official of the Directorate of Investment and Company Administration.

To deal with the shortage of raw materials for the CMP garment factories in Myanmar, the Ministry of Commerce, the Myanmar Garment Manufacturers Association and the Chinese Embassy in Myanmar, the China Enterprise Chamber of Commerce in Myanmar (CECCM) have jointly imported raw materials through border trade channels and airlines. However, import values of raw materials by CMP businesses in the last FY dropped by $197.7 million compared to a year-ago period. The CMP garment sector in Myanmar has been hit hard by the coronavirus impacts amid the global demand slump, said an official of Myanmar Garment Manufacturers Association. Supply chain disruptions and cancelling customer orders following the coronavirus outbreak hurt the global textile industry. Similarly, the CMP garment sector which contributes to 30 per cent of Myanmar’s export sector is bracing for downward trend owing to the cancellation of order from the European countries and suspension of the trade by western countries amid the pandemic.

Exports of garments manufactured under the cut-make-pack (CMP) system were valued about US$4 billion around the past eleven months in the last financial year 2019-2020, said an official of the Ministry of Commerce. Since an outbreak like Covid-19 might happen in the future, it is necessary to prepare for a sufficient supply of raw materials. The public and private sectors will cooperate in setting up the supply chain on our sources, including weaving, knitting, dyeing, and sewing factories. Japan is the largest market for Myanmar apparel, followed by the European Union. The MGMA has more than 500 members, and garment factories in Myanmar, employing more than 500,000 workers. Investors prefer to invest in countries with inexpensive labor, such as Myanmar.

Source: The Global New Light of Myanmar

Myanmar’s manufacturing sector has been hit hard by the new Lockdown program, which has led to a slump in production and the closure of many factories, reducing many jobs, according to the September 2020 Nikkei Myanmar Manufacturing PMI. Myanmar’s manufacturing sector has been hit hard by a number of new lockdown plans to combat the growing Coronavirus outbreak. Factories in Rangoon Division, including major industrial zones, temporarily closed, both production and new orders fell sharply and jobs were cut. Deteriorating business conditions in September abruptly ended the short recovery period between July and August.

Myanmar’s manufacturing PMI stood at 35.9 in September, down from 53.2 in the previous month, signaling a sharp decline in manufacturing. At 35.9, the second-lowest level in the survey, which began in December 2015, was higher than April 29, but the one-month PMI decline of 17.3 was the highest in record history, surpassing the April drop of 16.3. Four of the five components of the PMI were negative in September, with the exception of supply delays. Both production and new orders fell for the second-highest rate in survey history, with indexes falling more than 28 points in a single month. The list of jobs and inventories fell at the fastest rate in three to six months, respectively. Production fell sharply in September as the virus forced the closure of factories in key areas. More than half of the companies surveyed, 54 percent, reported lower production than the April record 81 percent, the latest decline in the three-month period after the spring lockdown.

New restrictions slowed demand during the period, and the number of new jobs fell in June-August, after a surge in new production, making it the second-highest rate in survey history. Demand in domestic markets was particularly weak, with new export orders, which stabilized in August, fell this month. India Thailand Businesses reported weak demand in Asian markets, including Vietnam and Qatar. New jobs fell sharply in September, while inventories fell at the strongest pace in three months, and the 12-month production outlook slipped to its weakest point in April. Many factories closed and jobs plummeted, declining again for the first time in seven months in August. About 16 percent of companies cut their workforce, the highest number of any period since the second quarter of 2020. Imports fell sharply in September, and inventories fell to a four-month high. Depreciation pressures continued in September, with selling prices hitting record highs as import prices fell.

Source: Daily Eleven