Myanmar has undergone remarkable economic shifts over the past decade. From being the promising rising star of Southeast Asia, its economic growth came to a halt in 2021 when a military junta overthrew the current elected government.
The country’s transition to democracy in 2011 and the subsequent market reforms initiated by Daw Aung San Suu Kyi’s government in 2015 played a crucial role in attracting investments and driving economic development. The coup led to widespread protests and violence, and the economy has been in a state of decline ever since.
According to Statista, the gross domestic product (GDP) of Myanmar has been on a steady rise. In current prices, the GDP is forecast to increase between 2023 and 2028 by a total of 18.8 billion U.S. dollars (+29.38 percent).
By 2028, the GDP is estimated to reach 82.78 billion U.S. dollars. This positive forecast underscores the country’s economic potential despite the challenges it faces.
The Rise and Challenges of Myanmar’s Garment Sector
Between 2010 and 2020, Myanmar’s garment sector flourished, benefiting from the latest economic reforms and foreign investments.
In 2020, the garment industry will account for about 10% of the country’s GDP and employ over 1 million people. The EU is the largest market for Myanmar’s garment exports, accounting for about 54% of total exports in 2020.
Europe became the main destination of Myanmar’s garment exports thanks to the EU’s Generalized System of Preferences (GSP). In simpler terms, GSP is a scheme that allows developing countries to pay lower tariffs on their exports to the EU. It is also a way for the EU to promote sustainable development and good governance in developing countries.
That made the big names in the retail sector outsource to Myanmar, but one by one they are pulling their operations from the country due to various reasons, from political instability to labor rights concerns.
One of the world’s largest fashion retailers, Inditex, which owns the brand Zara, suspended new orders from Myanmar in March 2021. The decision was a direct response to the political situation and growing concerns over human rights violations in the country.
Following suit, Primark, a major player in the fast-fashion industry, also suspended new orders from Myanmar in March 2021. The brand cited similar reasons, emphasizing the importance of ethical sourcing and the safety of workers.
Another one was Marks & Spencer, which also suspended their operations. Even though the reasons are not clear, it’s known that they too took significant measures in response to the political upheaval in 2021.
The Danish clothing company Bestseller, which owns the brands Vero Moda and Jack & Jones, suspended its operations in Myanmar in March 2021, aligning with the stance of other major retailers. And Italian fashion brand Benetton took a firm stand by suspending all new orders from Myanmar in the same month.
H&M Could Be The Next Retailer to Exit Myanmar
H&M announced on August 17, 2023, that it would be phasing out of Myanmar by the end of 2023. The company cited the ongoing political instability and human rights abuses in the country as reasons for its decision.
According to this Al Jazeera video below, H&M’s factory in Myanmar, which is Chinese-owned, faced a significant disruption when workers rioted. The rioting led to damage to the factory building. This unrest was the result of an industrial dispute that occurred the previous month.
This incident not only disrupted its operations but also raised broader concerns about the treatment of low-paid workers in Myanmar. The situation was severe enough for H&M to decide to halt its orders from this particular factory.
It’s worth noting that such incidents can be indicative of underlying issues, such as poor working conditions, wage disputes, or other grievances that workers might have.
If H&M indeed leaves the country, this decision will be a major blow to the country’s garment industry. Women who work in the garment industry in Myanmar are often the sole breadwinners for their families. The international press called out that the loss of jobs would have a devastating impact on their families’ incomes and well-being.
In addition to the job losses, the potential decision by H&M to phase out of Myanmar will also have a negative impact on the country’s economy. The garment industry is a major contributor to the country’s GDP, and its decline will have a ripple effect throughout the economy.
Main Photo: H&M's garment production facility in Myanmar via Wikimedia Commons.