Exports of finished industrial goods drastically plummeted to US$3.137 billion between 1 October and 12 March in the current financial year 2020-2021, a severe drop of $1.66 billion compared with the corresponding period of the previous FY, according to the Ministry of Commerce. As per the ministry figures, the exports of finished industrial goods totalled $4.79 billion during the same period in the 2019-2020FY. Myanmar’s manufacturing sector is primarily concentrated in garment and textiles produced on the Cutting, Making, and Packaging basis, contributing to its GDP to a certain extent.
Myanmar’s garment export dropped by over 25 per cent as of the first quarter of the current FY compared with a year-ago period on the back of a slump in demand by the European Union market, the Ministry of Commerce stated. Myanmar’s garment industry has been facing challenges such as raw material supply disruption and orders’ cancellation amid the pandemic. Additionally, the current political changes dragged down the sector, a market observer shared his opinion. At present, the CMP garment factories temporarily shut down and left thousands of workers unemployed. Myanmar mainly exports CMP garments to markets in Japan and Europe, along with the Republic of Korea, China, and the US.
The garment sector is among the prioritized sectors driving up exports. The CMP garment industry has emerged as a promising one, with preferential trade from Western countries. Yet, the country’s current political changes are likely to aggravate the garment industry, traders stressed. Myanmar’s garment factories operate under the CMP system, and those engaged in this
industry are striving to transform CMP into the free-on-board (FoB) system. As the factories cannot enter into a contract for FoB, Own Design Manufacturing (ODM) and Own Business Manufacturing (OBM), the income is limited, according to the MGMA.
According to data from the Ministry of Commerce, exports of garments manufactured under the cut-make-pack (CMP) system were valued at US$4.798 billion in the last financial year 2019-2020. Although the sector is struggling due to the cancellation of order from the European countries and suspension of Western countries’ trade during the pandemic, export values rose in the previous FY (1 October 2019 30 September 2020). The export value of CMP garments was only $850 million in the 2015-2016 FY, but it has tripled over the past two FYs. In the 2016-2017FY, about $2 billion was earned from exports of CMP garments.
The figure increased to an estimated $2.5 billion in the 2017-2018FY and $2.2 billion in the 2018 mini-budget period (from April to September). It tremendously grew to $4.6 billion in the 2018-2019FY, according to the Commerce Ministry. Since an outbreak like COVID-19 might happen in the future, it is necessary to prepare for a sufficient raw materials supply. That’s being so, the public and private sectors will cooperate in setting up the supply chain on our own sources, including weaving, knitting, dyeing, and sewing factories. The MGMA has more than 500 members and garment factories in Myanmar, employing more than 400,000 workers. Investors prefer to invest in countries with inexpensive labour, such as Myanmar.
Source: The Global New Light of Myanmar