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8 - Border Industry in Myanmar: Plugging into Production Networks through Border Industry

from PART II - Case Studies

Published online by Cambridge University Press:  21 October 2015

Toshihiro Kudo
Affiliation:
Institute of Developing Economies (IDE-JETRO) in Japan
Ikuo Kuroiwa
Affiliation:
Institute of Developing Economies (IDE-JETRO) in Japan
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Summary

INTRODUCTION

The chairman of the Myanmar Garment Manufacturers Association (MGMA) deplores the fact that the garment industry in Yangon and its suburbs has been losing workers, in particular experienced workers, to Mae Sot, a Thai border town opposite Myawaddy on the Myanmar side. His own factory employed 150 workers but has recently lost 10 sewing-machine-operators to Mae Sot. The question is why Myanmar workers have left Yangon, the former capital and business centre of the country, for a small border town on the Thai side.

The garment industry in Yangon was severely damaged by the United States’ sanctions of July 2003, which banned all imports from Myanmar. The industry exported nearly half of its products to the United States, and more than 80 per cent of U. S. imports from Myanmar were clothes. Myanmar' garment exports declined sharply from US$829 million in 2001 to US$312.4 million in 2005, a 62.3 per cent decline. Many factories were closed and many workers lost their jobs. Some garment workers who were made redundant went to Mae Sot to seek employment. Such a migration reflects the poor business conditions and serious unemployment problem in Myanmar, as well as the significant wage gap between the two countries. It is therefore only natural that Myanmar workers migrate to Thailand, attracted by abundant job opportunities and higher wages.

However, there are two important questions that must be answered: the first is why so many garment factories are concentrated in a small Myanmar-Thai border town. This question raises issues unique to Cambodia, Laos, and Myanmar, as shown below. The other question is why the industry is located on the Thai side, not the Myanmar side. Mae Sot and Myawaddy are separated by a small river called the Moei. The friendship bridge that was constructed by the Thai government in 1997 connects the two towns. The Thai garment industry could easily cross the bridge and relocate to Myawaddy, where it could probably employ more Myanmar workers at lower wages. However, this did not happen. The absence of a border industry in Myawaddy indicates that there exists some hindrance or impediment which prevents the Thai garment industry from operating on Myanmar soil.

Type
Chapter
Information
Plugging into Production Networks
Industrialization Strategy in Less Developed Southeast Asian Countries
, pp. 214 - 244
Publisher: ISEAS–Yusof Ishak Institute
Print publication year: 2009

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