Myanmar

The PRIME research team has conducted the first mission in the garment sector in Myanmar in March 2015. This briefing note provides: (i) insight into the sector choice based on the preparatory feasibility study, (ii) an overview of the first mission and (iii) the next steps.

 Sector Choice

The first step of the case study was the conducting of a feasibility study to determine which sector in Indonesia was most suitable to conduct the case studies. Given the scope of CBI activities, the importance of garment exports in the Myanmar economy, and the potential of the sector in employment creation and poverty reduction the garment sector was chosen as the focus sector for this case

The next step was the selection of companies. Based on the list of firms with which CBI has worked in the 2014-2015 start-up phase of its activities in the garment sector in Myanmar, appointments for face-to-face interviews were made with approximately 10 firms. These included both firms that had been engaged more intensively in the CBI activities, and those that had been so to a lesser extent. In addition, a number of non-supported firms were contacted to be interviewed to obtain insights in the comparability of supported and non-supported firms, selection into the programs and other aspects of the processes and mechanisms underlying the impact of the activities.

Finally, key stakeholders in the sector including MGMA, SMART Myanmar & the ILO were also contacted for interviews.

 Overview Economy Myanmar

 Myanmar is considered ‘the last frontier’ in South East Asia. Having been under military rule since 1962 and largely closed from foreign influences since it dissolved its dictatorship in 2011 and opened up its country to foreign visitors and investors.  With a population of over 50M and GDP/capita of approximately $4.500/year, Myanmar ranks near the bottom of the human development index (150 out of 183). It has one of the largest income gaps in the world, with many of the wealth still controlled by supporters of the former military regime[1].

 Myanmar2Figure 1: map Myanmar

After rapid growth in the 1990s and a subsequent decline in the 2000s following sanctions from the EUR and US, garment exports currently constitute around 7.3% of Myanmar’s total exports (MIT, 2015). It is estimated there are around 200 operational factories – of which around 70% locally owned[2] – with an estimated 450 workers/factory (Kudo, 2012). Average monthly wages are around 65$ including overtime (ibid). Given the country’s opening to foreign investors and low labor costs compared to other textile manufacturing countries in the region it is expected that there will be substantial growth in this sector in the upcoming years. In 2008, the largest export markets for Myanmar garment were Japan (34%), Germany (24%), Spain (14%), UK (10%) and South Korea (8%)[3].  Key challenges and developments in the sector include: (i) low labor productivity (due to various reasons including equipment, management skills, high employee turnover), (ii) competition for domestic SMEs from large foreign owned companies opening up factories in Myanmar, (Iii) bad infrastructure: frequent power outages and high fuel costs, (iv) un-conducive business environment: difficult for firms to get access to finance, contracts etc.

First mission

The first mission took place between March 22-31, 2015. For the first mission we have chosen to focus on SMEs in the region of Yangon, where the vast majority of garment factories are located. During this mission 12 SMEs – both supported and supported – as well as various key sector stakeholders (including MGMA and ILO) were interviewed on a range of topics such as: (i) key challenges & dynamics in firm and sector, (ii) how support from CBI has been applied thus far, (iii) which factors influenced the success with which SMEs could apply the support to the benefit of their organization. The interviews were planned by- and conducted jointly with Jan Fransen from IHS Erasmus University. myanmar

What’s next?

The research team is working together with Stanford University in implementing a sector wide study on the garment sector in Q3 2015. Stanford has already implemented two rounds of survey data collection in 2013-24 with circa 175 garment factories in Myanmar, with questions on a range of topics including: exports, management & technical practices, firm performance and labor conditions. In the third round of data collection additional questions on CBI support will be integrated. This study will serve to provide insights in (i) the comparability of supported & non-supported firms in the sector, (ii) estimations of the causal effects of export promotion support on firm exports, practices, performance and labor conditions.

In addition, a second mission will be implemented in 2016 to explore and deepen observations from the first mission and explore enablers and barriers of effectiveness of the support activities. The overall case study analysis will be done late early 2017, followed by a verification workshop to present and discuss the findings.

[1] http://en.wikipedia.org/wiki/Burma

[2] David Birnbaum, ILO/ SWITCH Asia garment conference Yangon, 30-31 March 2015.

[3] Fukunishi ed., Dynamics of the Garment Industry in Low-Income Countries: Experience of

Asia and Africa (Interim Report). Chousakenkyu Houkokusho, IDE-JETRO, 2012, accessed 27-01-2015 via: http://www.ide.go.jp/Japanese/Publish/Download/Report/2011/pdf/410_ch8.pdf