YANGON — Several garment and shoe factories in Yangon plan to close this year amid a challenging global business environment and a lack of policy direction, according to industrial zone sources.
A garment factory in the Hlaing Tharyar Industrial Zone with some 500 employees recently said it would shut down soon because of financial constraints.
“It won’t shut down immediately. It just said that it plans to shut down and outlined how it will compensate employees,” said U Aye Thaung, chairman of the management committee of Shwe Lin Pan Industrial Zone.
“Closing a factory is the thing businessmen hate to do most. They will only shut down if they can no longer afford to continue,” he said.
According to manufacturers, frequent changes in government policies, low productivity and declining purchase orders from foreign countries are making it difficult for garment and shoe factories to survive.
No new investments are coming into the industry, as existing local and foreign-backed factories are struggling, U Aye Thaung said.
“There have been fewer and fewer job opportunities this year. And this trend will continue as existing factories are reducing their workforces,” he said.
“Many more factory workers will face redundancy,” he added.
A number of shoe factories are planning to close because Myanmar’s share of the world’s footwear market has declined, U Aye Thaung said.
“Mostly, walking shoes dominate the market now. So, it is difficult for leather shoe factories to survive. As orders from foreign buyers have declined, they have laid off workers,” he said.
Leather shoes are mainly exported to Western countries and certain Asian countries like Japan and Korea.
Nearly half of the 15 shoe factories currently operating in Myanmar are likely to shut down by the end of this year, said U Aye Thaung, who also owns a shoe factory. Only factories that make sports shoes and ladies’ footwear are doing well, he said.
“Adidas has built a shoe factory in Hlaing Tharyar that will employ around 100,000 people. But it dare not move forward with the project, mainly because of frequent changes in government policies,” he said.
“Big investors like that need to make long-term plans. So, I’m afraid it won’t start production until it can [be assured that it can] operate in the long run,” he said.
“It is a real cause for concern that factories are closing. It is not good for our country if foreign investors close their factories and go home,” said U Win Myint, a lawmaker from Hlaing Tharyar Township in the Lower House of the Union Parliament.
Many factories have been struggling since last year, said U Nay Lin Zin, managing director of Excel Int’l Trading Co., which is based in the Shwe Lin Pan Industrial Zone.
“Two factories have shut down this month because of increased [minimum] pay and other operational difficulties. Some are struggling and more are likely to shut down soon. It is surely not a good sign for industrial zones,” he said.
According to factory owners, complicated procedures regarding land acquisition and operation, unreliable electricity supply and the presence of squatters in factory compounds are among the major problems facing industrial zones.
Translated from Burmese by Thet Ko Ko.