Joint ven­ture to build gar­ment fac­to­ries

The Myanmar Times - - Front Page - My­at­noeoo@mm­times.com MYAT NOE OO

Myan­mar’s Olym­pus Asia Group and South Ko­rea’s Panko Corp signed an MoU to build a free-on-board gar­ment fa­cil­ity on 500 acres of land.

A KOREAN firm and a lo­cal com­pany have teamed up with a view to build­ing free-on-board (FOB) gar­ment fac­to­ries on 500 acres of land through a 50-50 joint ven­ture.

Myan­mar-based Olym­pus Asia Group and Ko­rea’s Panko Cor­po­ra­tion signed a mem­o­ran­dum of un­der­stand­ing on Au­gust 20 and are look­ing for land in Yan­gon, Bago or Ayey­war­wady re­gions.

Olym­pus Asia Group CEO U Okkar Zaw Naing said the fac­to­ries would op­er­ate un­der the FOB model, and would fo­cus on cre­at­ing jobs for lo­cal peo­ple.

The vast ma­jor­ity of Myan­mar’s gar­ment fac­to­ries op­er­ate un­der the cut-make-pack sys­tem, ac­cord­ing to the Myan­mar Gar­ment Man­u­fac­tur­ers As­so­ci­a­tion.

Un­der the CMP model, a for­eign buyer with fi­nan­cial back­ing and tech­ni­cal ex­per­tise will con­tract a gar­ment fac­tory, usu­ally in an emerg­ing mar­ket, to carry out their labour­in­ten­sive work.

Un­der the FOB sys­tem, on the other hand, for­eign re­tail­ers place or­ders from well-fi­nanced fac­to­ries with tech­ni­cal ex­per­tise. Most fac­to­ries in Myan­mar lack ac­cess to fi­nanc­ing and do not have enough skilled work­ers to op­er­ate un­der the more prof­itable FOB model.

The project will start within one year and it will take three years to build the re­quired in­fra­struc­ture, said U Okkar Zaw Naing.

This time­frame is based on the time it took for Panko Cor­po­ra­tion to build a sim­i­lar zone in Viet­nam, which was launched in 2013 and com­pleted this year, he said.

The project will in­clude an in­ter­na­tional-stan­dard waste­water treat­ment plant; gen­er­ate its own elec­tric­ity; and in­clude dor­mi­to­ries for em­ploy­ees. The com­pa­nies will pro­duce their own cot­ton and but­tons in Myan­mar, as well as pro­duc­ing clothes for ex­port.

U Okkar Zaw Naing be­lieves the in­te­grated fac­to­ries will cre­ate be­tween 40,000 to 60,000 job op­por­tu­ni­ties for Myan­mar peo­ple. The com­pany will also of­fer train­ing and com­pet­i­tive salaries, he said.

“Now we have signed, the project can start within one year. We are look­ing at three places for the project, in Yan­gon, Bago and Aye­yarwady re­gions, but have not yet made a de­ci­sion,” he said. “It will de­pend on which place is best in terms of elec­tric­ity, em­ploy­ees and lo­gis­tics costs.”

Myan­mar’s gar­ments in­dus­try has great po­ten­tial, but its de­vel­op­ment will re­quire for­eign in­vest­ment, he added, and with­out good lo­cal busi­ness­peo­ple, for­eign com­pa­nies can­not in­vest.

The in­dus­try is grow­ing fast, and is a pri­or­ity sec­tor for the gov­ern­ment. How­ever, for for­eign com­pa­nies sourc­ing from Myan­mar, there are a host of chal­lenges in­clud­ing un­der­age work­ers, un­safe fac­to­ries and high lo­gis­tics costs.

For com­pa­nies build­ing new fac­to­ries in Myan­mar, in­fra­struc­ture is a ma­jor chal­lenge.

“Our part­ner com­pany has asked us to build our own sub­sta­tion for elec­tric­ity, be­cause power here is not re­li­able,” said U Okkar Zaw Naing.

Choi Yung Joo, chair of Panko Cor­po­ra­tion, said, “Myan­mar has the po­ten­tial to de­velop its tex­tile in­dus­try and we are sure this project will con­trib­ute to de­vel­op­ment.”

The gov­ern­ment wel­comes for­eign com­pa­nies that can cre­ate job op­por­tu­ni­ties while pro­tect­ing em­ployee rights, said U Phyo Min Thein, chief min­is­ter of Yan­gon Re­gion.

Speak­ing at a press con­fer­ence to an­nounce the in­vest­ment he said, “In­dus­tries cre­ate job op­por­tu­ni­ties … We will sup­port op­por­tu­ni­ties for all peo­ple ac­cord­ing to the rule of law.”

Olym­pus Asia Group, which was formed in 2010, is also work­ing on a waste­water man­age­ment project in Mandalay.

Photo: EPA

Women work in a gar­ment fac­tory at Hlaing Thar­yar in­dus­trial zone in Yan­gon.

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