The article below was published on 16 June and voices my concerns about the Myanmar Garment Manufacturers Association (MGMA) failures to work towards better compliance, particularly with regard to child labour and minimum wages. In the article, I suggest MGMA would do well to approach leading customers currently working in Myanmar — such as H&M and Gap — as well as international institutions such as the ILO to seek their opinions on the importance of these and other areas of compliance.

It is now clear that the month before my recent article MGMA had already met with H&M, Gap, the ILO and 200 other individuals and organisations to work out a comprehensive plan for labour law reform and institutional capacity building to improve labour rights and practices in Myanmar.

I applaud MGMA’s efforts and I find genuine pleasure in being proved wrong.

MGMA’s efforts are truly remarkable.

DAVID BIRNMAUM

See Gap and H&M back Myanmar Path to Labour Reform, just-style 24 June 2015.

Everyone wants to see a successful Myanmar garment industry. Governments in garment importing countries, importers, the international institutions and development banks are all on board. But by far the greatest obstacle is compliance, writes David Birnbaum.

A successful garment industry will increase direct employment by over 1 million workers. This will bring not only wages to workers and profits to factories, but also increased foreign exchange, higher GDP and more tax revenue.

We all want to help. No one wants to see Myanmar’s garment industry fail.

This support is so great, that the Government of Myanmar and its garment industry organisation MGMA (Myanmar Garment Manufacturers’ Association) need do nothing to achieve success — no new policies, no new strategies, no new initiatives. It is necessary only to remove the obstacles that currently block the efforts of Myanmar’s many friends.

I think we can all agree, the first and most important step forward must be free trade agreements (FTAs) with the US and the EU, Myanmar’s most important potential garment customers.

There are some political problems. However, by far the greatest obstacle is compliance. Not only does the country lack a statutory minimum wage – although this has been under consideration for the past two years. – but MGMA insists that child labour in garment factories should continue at least temporarily.

There can be no FTAs so long as the Government of Myanmar and MGMA allow these policies to continue.

Yes, there are efforts underway to remove these obstacles. The MGMA in February outlined the first Code of Conduct for its members – including a commitment to "work towards the effective remediation of child labour" and "no form of forced or compulsory labour."

My concern is that should Myanmar fail to remove these obstacles, the situation may become far worse.

On 26 April, ASEAN and the European Union agreed to take steps to resume stalled talks on a free trade agreement between the two regions. This may be the most important step forward for the 10 nations in ASEAN in the past decade.

You will recall that previous negotiations between ASEAN and the EU broke down in 2009 over the EU’s concerns about Myanmar’s human rights record. In the interim it entered into an FTA with Singapore and is currently involved in serious negotiations with Malaysia, Vietnam and Thailand.

The EU and ASEAN have agreed that towards the end of the year, senior officials from both sides will met again. In this regard, the European Trade Commissioner Cecilia Malmström pointed out: "The EU is committed to have a region-to-region free trade agreement, but it is important that we get it right and that is why we proposed this roadmap, a stock taking event by the end of the year."

ASEAN governments such as the Philippines and elsewhere are taking a pro-active approach, enacting new legislation to ensure that worker rights and safety meet EU standards before the December meeting.

Recently the EU has been very complimentary toward Myanmar, praising widespread political and economic reforms since the country emerged from outright military rule in 2011.

However, should Myanmar still hold to its positions concerning child labour and minimum wage, there will be no EU/ASEAN free trade agreement and Myanmar will be held responsible.

Please, do not take my word. Go to those in Myanmar who are more credible. Ask them.

  • Go to the major customers currently working in Myanmar: Gap, H&M M&S.
  • Go to the foreign officials with offices in Myanmar: The EU and the US.
  • Go to international labour unions with offices in Myanmar such as Solidarity.
  • Go to the institutions such as the ILO.

Everyone, without exception, will tell you the same thing: child labour and no minimum wage will kill the deal.

I recognise there are many who take the position that this and my previous articles are causing serious problems "on the ground" in Myanmar. I can only apologise. During the past three years my company Third Horizon led three projects, all aimed at bringing improvement to Myanmar’s garment export industry

Far from looking to fight, my only hope is to influence the Myanmar Government and its garment industry organisation to take the small steps necessary that will benefit Myanmar’s industry and its people.

UPDATE: David’s article has elicited a number of questions from just-style readers, which we pose to him below:

  • Why do you believe child labour is a real barrier? Burma doesn’t need an FTA with the EU, it will never get one with the US, China and Vietnam do well without one, and Asia is full of countries on the US Department of Labor’s child labour hit list. Phasing out child labour mustn’t be done overnight.
  • Do you have any evidence that Western buyers were avoiding Burma because of child labour before?

David replies:

  • MGMA is on record supporting a continuation of child labour and delaying minimum wages.
  • What the EU gives the EU can take away. The EU did not realise that MGMA was on record supporting child labour and opposed to minimum wages.
  • ASEAN is negotiating for a free trade agreement with the EU. In December, if all goes well, the EU will work out a road map leading up to the FTA. Last time ASEAN tried (2007-2009) the EU walked away blaming Myanmar. Between the plight of the Rohingya Muslims and the unacceptable standards of compliance, the chances of an ASEAN FTA are looking somewhat dim.
  • No large reliable buyer will work with a factory featuring child labour and no minimum wage.
  • Child labour is a problem in many countries. Only Myanmar has come out with statements supporting child labour. Not the smartest move.
  • MGMA to my knowledge has been supporting child labour since 2013. Again can you see any EU or US customer placing orders in a factory, employing children but promising to phase out child labour?

As I wrote in the article, don't take my word for it. H&M, Gap, M&S are all working in Myanmar. The ILO, Solidarity and the EU all have offices in Myanmar. Go ask them.

Western customers avoiding Myanmar: first hand information.

  • When I begin a project for a national industry, I enrol major customers both in the US and the EU. I first ask the customers: ‘What do you want?'
  • Myanmar was no different. The customers I enrolled were some of the world's largest retailers and brands. In July 2014 we invited senior sourcing executives from these companies to visit factories in Myanmar.
  • In January 2015, I gave an open presentation at the Textile Committee of the US Chamber of Commerce in Hong Kong.
  • At the conclusion we had a meeting with the customers I had enrolled to help the Myanmar project. The response was not good. For most, Myanmar was no longer considered to of strategic interest.
  • The preference was for Africa. Ethiopia was high on the list. Ethiopia is a land-locked county with no garment industry, with almost no infrastructure, where fabric would have to be imported from another continent.
  • Yet Ethiopia was preferable to Myanmar, a country with a reasonably well developed industry, a large pool of highly and located skilled workers, located down the block from the world's largest textile exporter.
  • Why Ethiopia and not Myanmar? If you have to ask the question, you should not be in the garment industry.

Anyone who tells you that compliance does not count more than likely has been asleep for the past decade.

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