A mannequin wears a stylish yellow shirt in the DI clothing shop. Pic: Hein Latt Aung

SLOWING demand resulting from the global financial crisis has begun to have a dramatic effect on Myanmar’s industrial sector, Yangon-based experts say.

Job orders from EU market and Japan – which, together with Latin America, normally accounts for all Myanmar’s garment exports – are dramatically decreasing.

Myanmar’s industrial sector is second in size and importance only to the country’s agricultural output. In the 2007-2008 financial year, Yangon’s 5600 factories contributed about K671 billion to the national total industrial income of K1.19 trillion, or more than half. Of these, more than 1440 are heavy industries, 1440 small and medium industries, and more than 2700 are small industries. Yangon’s industrial workforce is estimated at more than 120,000, the majority of whom are garment workers.

U Myat Thin Aung, president of Myanmar Hlaing Tharyar Industrial Zone, told The Myanmar Times that market demand was falling, except for essential food items. The industrial sector faced many challenges, he said.

“Consumer demand is stagnant,” said U Myat Thin Aung, who is also a patron of Myanmar Industrial Association (MIA).

Most factories have now reduced output because of lack of demand, which has a knock-on effect on the wages of workers who no longer work overtime.

“The crisis has a particular impact on our CMP industry (cutting, manufacturing and packaging), whether directly or indirectly,” U Myint Soe, president of Myanmar Garment Manufacturers’ Association confirmed.

“Lack of market demand is a major issue for you industrial sector now,” U Myat Thin Aung said. Price volatility had set in as investors and manufacturers cut prices to maintain sales.

U Myat Thin Aung urged Myanmar traders to cooperate in setting agreed prices for commodities during the crisis, as in Thailand, where traders agree on a fixed price.

However, said U Myat Thin Aung, the crisis affected Myanmar businessmen less than foreign competitors because they were not so reliant on the banking system.

“They fund their business with their own investment. Moreover, the Myanmar industrial sector is like an import substitution business, and is not export-oriented. So, it does not affect our business as much as in other countries,” he said, adding that the crisis offered an opportunity to train workers to build their capacity.

Despite the sagging sales, industry sources told The Myanmar Times that workers in the industrial zone had not yet suffered layoffs. Nor were food shortages expected because of Myanmar’s agricultural economy. But business was expected to remain stagnant for some time to come.