Severe Epidemic Situation And Unstable Political Situation, Some Textile Orders From Myanmar Flow To Cambodia

Due to the severe new crown epidemic in Myanmar and unstable political factors, the manufacturing industry including Myanmar textile enterprises is facing an unprecedented crisis.

According to international sources, a few days ago, bestseller, a well-known Danish clothing brand, issued a statement once again that it would suspend sending new garment orders to Myanmar garment factories until the risk of epidemic situation has been removed. According to the statement issued by bestseller group, the company will suspend sending orders to Myanmar, but will not cancel orders already placed.

At present, the new epidemic situation in Myanmar is still grim. Prior to this, the World Federation of labor (industriall) and Myanmar Federation of production, industry / handicraft workers (iwfm) jointly issued a statement that at least two iwfm members had died after infection with the new crown.

Bestseller is a well-known fashion company established in Denmark. It owns many famous clothing brands such as Vero Moda, only, Jake & Jones selected, etc. Bestseller has thousands of Direct stores all over the world, with more than 6000 agents. However, it does not have its own processing plants. Its main suppliers are located in Europe and Asia.

In May this year (2021), a number of internationally renowned fashion companies, including bestseller, H & M, Primark and benneton, said that they would send new orders to Myanmar suppliers, and resume the new orders that had been tentatively scheduled due to the political turmoil in Myanmar. However, as Myanmar's new crown epidemic ushered in the third wave of epidemic peak, all this hope seems to be "bubble".

Affected by various factors, Myanmar's manufacturing and production industries, which are already exhausted, have been hit hard for many times. A number of foreign investors with difficulties in operation have suspended their projects in Myanmar and will not continue to invest until the business environment improves.

On the other hand, the pressure comes from the devaluation of Myanmar currency. Since February this year, the exchange rate of Myanmar dollar has fallen sharply, devaluing nearly 20%. Although the Central Bank of Myanmar continuously put more than 120 million US dollars into the market and issued a series of monetary and financial policies, the effect was very little. What part of the policy also caused market panic, which led to the continuous depreciation of the Myanmar dollar exchange rate.

At present, the reference exchange rate price of kyat is about 1734 kyat to US $1, but the actual market transaction price has dropped to 1850-1900. Currency devaluation makes food and drug prices face greater upward pressure, and cash flow shortage caused by bank withdrawal restrictions also makes many enterprises and trade difficult to maintain operation.

If there is no "double attack" by the epidemic situation and the political situation, Myanmar textile will have a chance to "turn over". The reason is that the epidemic situation in India, Vietnam and other countries is out of control, and the loss of orders is very serious. However, due to the political instability in Myanmar, many customers dare not rashly place more orders in Myanmar, so the phenomenon of order influx is not obvious.

A person in charge of a garment factory in Yangon told reporters that the epidemic had little impact on the operation of Myanmar factories, and the most influential factor was the political instability at the beginning of the year. Garment factories mainly purchase raw materials from China, receive orders from Europe and America, Australia and other places to process finished clothes and then send them to the international market. At the beginning of the year, the political situation was unstable and many enterprises closed down. Due to the uncertainty of the future situation, many customers were afraid to place orders in Myanmar factories. From May 20 to July 20, the garment factory did not receive new orders for two months.

To make matters worse, the rising prices of raw materials and freight have further weakened the profits of Myanmar's garment factories. Take shipping as an example. In previous years, enterprises purchased raw materials from China and transported them to Myanmar, which cost about $2000 per container. Now it has increased to about $4000-5000 per container, doubling. Shipping is expensive, and land transportation is forced to bypass Vietnam and Cambodia to Myanmar due to the epidemic prevention and control at the border port between China and Myanmar.

Under such circumstances, some orders, including Myanmar, are being transferred to Cambodia.