Major Thai garment companies moving to Burma

Monday, 19 March 2012
Mizzima News

(Mizzima) – Some of Thailand’s top garment companies will move their operations to Burma in the coming year.

At least six leading garment manufacturers plan to set up shop to take advantage of lower wages by the second half of the year, according to an article in The Nation newspaper on Saturday. The companies would hire up to 3,000 workers, officials said. More than one dozen of Thailand’s largest garment manufacturers have moved to neighboring countries which offer a cheaper labour force.

The companies would start operations by investing about US$ 10 in each plant for a total of $60 million.

Thailand is already Burma’s second largest investor, following China. It is investing heavily in the oil and natural gas sector, and is expected to also take advantage of Burma’s cheaper labour force and its close proximity.

Vallop Vitanakorn, an adviser to the Thai Garment Manufacturers Association (TGMA), said, “The general election on April 1 will show that Burma will not move backwards. This will ensure that the country will have a clearer policy to promote growth and revise rules and regulations to facilitate investment.”

Burma's labour costs are one-third lower than Thailand's, according to the article.

Thailand current has a shortage of labour, said TGMA president Sukij Kongpiyacharn, and the plan to raise Thailand’s minimum wage next month to Bt300 (about $10) a day has encouraged the move.

Last year, many Thai garment producers have moved to Cambodia, Vietnam and Laos.

Sukij said he expected more than 10 local apparel producers would set up new plants in Burma this year.

“Factories in Burma will be larger than the other plants that Thai investors have set up in other Asean countries. Burma is the highest-potential destination for investment, since it has a large domestic market as well as being an export base to The Italian-Thai Development Plc. (ITD), the developer of the Dawei deep-sea port project on the southern coast of Burma, is in the process of securing around US$ 8.5 billion to move ahead on the infrastructure phase of the massive mega-billion energy project.”

Thailand's largest construction company by market value, ITD will require the backing of Thailand, Burma and a blend of international partners.

The energy project will cover 250 square kilometers. Located on the Andaman shoreline, Dawei is about 350 kilometers west of Bangkok. The project will supply oil and other goods to Southeast Asia, bypassing the Strait of Malacca and cutting costs.

The Dawei Special Economic Zone includes an integrated steel mill, power plants, a petrochemical complex and a fertilizer plant.