2013 Aug 11
August 11, 2013

Jitters over ASEAN market

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YANGON – Forty-year-old Aye Aye Khaing has been employed in the garments sector for almost two decades now – one of the many industry workers across the region on a hand-to-mouth existence who are feeling jittery over the planned economic integration of the Association of Southeast Asian Nations.

Khaing, who earns at least $90 a month, or barely P130 a day, is not aware of the details of the Asean Economic Community that is supposed to be implemented by 2015, but feels insecure just the same.

In the Philippines, garments is one of the nine industries that will receive government support under the Manufacturing Industry Roadmap that aims to help local sectors boost their competitiveness ahead of the ASEAN economic integration in 2015.

According to Philippine Exporters Confederation Inc. Sergio Ortiz-Luis Jr., the Philippines has had high comparative advantage in the labor and capital-intensive garments sector which is expected to post roughly $1 billion in exports this year, up from $800 million posted in 2012.

But Ortiz-Luis admitted that the garments industry has yet to fully recover, noting that at its height, exports were at $1.6 billion annually.

ASEAN trade liberalization has sparked fears that the local markets of the 10 member-states will be exposed to cheaper fabrics from neighboring countries where wages are lower and workers are plentiful.

Integration for the ASEAN market, with an estimated consumer base of 600 million people, not only means duty-free importation from any member-country but tougher competition as well.

Not only workers like Khaing are feeling worried but industry leaders as well, including Federation of Chambers of Commerce and Industry of Myanmar vice president Maung Maung Lay who said that local manufacturers are “not prepared” for the integration.

“We are totally not that ready. We are lightweight compared to the heavyweights in the region,” Lay said in an interview.

“This is making us a bit jittery. We are not ready for the big event. There is fear that we can be overwhelmed,” he added.

Cambodian manufacturers who have yet to recover from the slump in 2009 feel the same, said Garment Manufacturers Association secretary general Ken Loo in a paper presented during an ASEAN meeting in October last year.

ASEAN member-countries are finding ways to boost the capacity of their respective garments industries without resorting to protectionist policies and in line with the principles of a single market economy.

The Philippines is now looking at ways to attract more investments, address missing gaps as well as create linkages in allied or support industries, among others.

The Philippine Industry for Development Studies has recommended aggressive marketing and promotion to lure investment, especially those bringing in new technology, to “enable our industries to take advantage of the opportunities and face the challenges that would arise from Asean Economic Community 2015.”

Cambodia, where one can buy brand new $30 (P1,200) branded tops or coats for only half a dollar (P20), is now eyeing to expand its share in the ASEAN market after exporting mainly to the United States and the European Union.

Thailand is bullish as well of the benefits of the integration, according to National Federation of Thai Textile Industries chairman Pilan Dhammongkol who said the country is positioning itself as the region’s manufacturing hub for textiles and garments.

Besides Indonesia, Thailand is the only country in the region with a complete supply chain from upstream to downstream production as well as fashion design, Pilan said.

For Khine Khine Nwe, deputy managing director of the garments firm Best Industrial Company Ltd. and secretary of the Myanmar Garment Manufacturers Association, facilitation and capacity-building are necessary to ride the wave of ASEAN integration.

“We have huge disparities. Everybody is worried, but being ready for the AEC is something that we should all do,” she said.

With two years to go before the AEC, Myanmar’s garments association is now taking pro-active steps that include skills-training and market expansion.

Myanmar’s garments industry is no stranger to trying times, having faced sanctions from the US and the EU in the past over human rights issues that forced workers like Khaing to produce a dozen branded jeans for the ridiculously low price of $2.50 or less than P10 per denim jeans.

“It was our peak season when the sanctions were imposed in 2003, and we were hit in the middle. We had nowhere to turn to,” Nwe said.

From a peak of 400,000 workers in the garments sector, Nwe said the figure went down to 60,000 by 2005, and is now slowly picking up with the lifting of the sanctions.

For Myanmar’s chamber of commerce leader, all member-states in the bloc must roll up their sleeves and gear up for the inevitable integration.

“In some areas, we will not be ready, but this will happen to Asean countries and not just us… There can be no reverse gear for the AEC,” Lay said. –Joyce Pangco Panares, Manila Standard Today