Social Standards Handbook for local garment manufacturers in Myanmar

image001Through the comprehensive trainings and the capacity building with the SMART Myanmar Social Compliance Academy, which touch upon the most fundamental issues of social compliance, local factories have been able to learn how to implement long-term and ethically responsible practices, necessary to improve their competitiveness in the global market.

The easy-to-read guidance provides a general overview dedicated to factory managers on the main issues of social compliance, underlying its strategic role within the garment sector. In particular, the guide presents the most fundamental steps of how local factories should implement an effective social management system, by also giving clear examples and best practices derived from factories in Myanmar. Based on the experiences of the SMART Myanmar Social Compliance Academies this handbook was composed to specifically focus on the needs and constraints of Myanmar garment factories.

This handbook shall reach out and inspire a wide number of factories in Myanmar.

SMART Myanmar Social Compliance Handbook English

Repair and maintenance of machinery and equipment ensure smooth production flow

(How Shwe Sakar Co. Ltd. managed to overcome bottlenecks in production capacity)

Regular maintenance of machinery and equipment at Shwe Sakar was practically non-existant. Unused sewing machines were stored in the production area and partly in a separate storage room. None of these unused machines were covered to protect them from dirt and dust; nor were they serviced or repaired.

In case of a sudden machine break down in the sewing lines or an unexpected requirement to increase the production capacity, stored machines needed to be cleaned and adjusted first to make them ready for production. This hampered the production flow and led to bottlenecks and, in the worst case, stopped the entire production.

Read More: Artikel Shwe Sakar

Transforming a Garment Factory in Myanmar

How Hallmark Manufacturing Co. Ltd. takes big strides ahead with view to production management, social standards and occupational and health and safety.

Hallmark participated enthusiastically in SMART Myanmar’s various programs and takes pride in its achievements. This article presents a few examples of changes the management brought about during a short period of time.

Floor planning and organization

hallmarkDuring the first factory visit of Smart Myanmar along with international consultants from ESGE (Germany), production departments were disorganized and did neither have a structured floor planning nor sufficient space. Due to the production area being overloaded, there was no smooth production flow.

Prod. and eff. before

hallmark 2

Suggestions of SMART Myanmar consultants:

Generally, all items which do not necessarily belong to the production floor need to be removed and brought to a storage area. The layout of the production floor and the set-up of space between the workstations shall follow international good practice.

A space was assigned as a storage area and equipped with racks. The sewing department is no longer overloaded which allows the line in-charge to move the bundles from one work station to the other without space constraints. Bundles of cut garment pieces that are ready for sewing are placed in a designated area, adjacent to the sewing lines and easily accessible for the line in-charge. Thus, the line-in charge can monitor the production flow and plan accordingly.

hallmark 3

Efficient use of raw materials
The fabric warehouse was not organized. Rolls of fabric were placed haphazardly on the floor and became unwrapped. Dirt and moisture damaged several meters of fabric (in average 1 to 2 meters at the start of the roll and 5 to 10 cm at the edges) and made them unusable for production.

Such practice caused Hallmark and their customers a considerable loss of resources, especially with fabric accounting for 2/3 of the total production cost.

Likewise a quality inspection and recording of incoming fabrics, accessories and auxiliary items was lacking.

Resources before

Smart Myanmar´s suggestion with ESGE consultants
A well-organized garment production starts with a proper warehouse. A warehouse in-charge coordinates the quality and quantity inspections of delivered materials, attaches tags with customer information and production order and keeps inventory records about received and issued items. Materials are stored according to customer and production order.

Director Mr. Moe Pwint instructed his team to clear the whole warehouse and install racks. The warehouse in-charge was trained to carry out the following steps for maintaining the factories inventory:

• Check incoming goods by
1. quantity
2. weight
3. quality
• Assure the fabric is properly packed to protect it from dust, dirt and humidity
• Store all fabrics from same customer and production order in one place
• Place information tags for identification
• Keep an inventory register by recording “in” and “out”.

Due to arrange the storage system the raw material wastage is now decreased by approximately 3%.

hallmark 4

Human Resource Management

As part of their social standards agenda and in order to comply with international social standards Hallmark made use of the training and advise of the Social Compliance Academy conducted by Systain, an international consulting firm and made some changes and improvements in its human resources management.
Labor contracts were prepared for all workers in the company. Previously, only workers who joined the company from 2013 onwards were given contracts.

As birth certification and ID cards are not mandatory in Myanmar, it is advised that age identification for new workers is done by medical practitioners. Thus, Hallmark’s new entrants were sent for age identification in order to avoid employing under-age workers.

For day-job workers actual working hours were registered in order to compensate them adequately.
A bonus payment system was adapted which takes into account the seniority (years of employment in the factory) and the skill level of workers.
Deductions from workers’ salaries for uniforms was done away with.
Management introduced a suggestion box for giving workers an opportunity to voice grievances.

Fire Safety

As a result of its participation in the Social Compliance Academy Hallmark upgraded the fire safety of its factory – fire extinguishers were placed at the required locations and maintained according the user’s manual. Fire exits were vacated and marked and escape routes identified. Large emergency evacuation maps were placed in all departments.

Tools with the potential to cause injuries were secured, e.g. scissors were tied with ribbons at each workstation and labeled with the worker’s name.

Chemical Safety

Chemicals are used in various stages of manufacturing garments, e.g. ink for stamping in cutting department and stain removers in the finishing department. Previously, all workers that used chemicals had unrestricted access to these chemicals. Names of users, quantity of consumption were not recorded and chemicals not returned to the storage area which was reason for concern with regard to health and fire safety issues.

hallmark 6

Managing for Efficiency in the Garment Sector in Myanmar

The example of Golden Jasmine Intimates Manufacturing

jsamine 2Golden Jasmine Intimate Manufacturing is a Myanmar-Australian joint venture owned by Mr. Douglas Edward Zappelic and Mrs. Moe Moe Lwin who is also the General Manager of the company. Their main products are pyjamas, track pants, T-shirts and other knit wear.

The company strives to expand its business with the EU and wants to work with retailers that are interested in shifting their sourcing operations from China to alternative markets.

Golden Jasmin values good social standards. It provides meals and accommodation to staff members who have migrated to Yangon in search for better jobs. The company has installed fire safety equipment and introduced occupational health and safety measures. Golden Jasmin is equipped with a large sample room, a warehouse and a well-organized finishing department.

Golden Jasmin participated in various SMART Myanmar trainings and
workshops. They took part in a study mission to Europe to visit relevant trade fairs, get information on social compliance and gather knowledge on changing the production mode from CMP to FOB1.

As part of the improvement program the company had fourteen consultation visits by the SMART Myanmar’s SCP (Sustainable Consumption and Production) team. In ten of the visits, the SCP team was supported by international garment experts covering various topics.

Production Planning and Cost Calculation

The management of Golden Jasmin was not familiar with variable and fixed costs which are the basis for a precise cost calculation and serve as a guideline for calculating production lead time and capacity planning.
SMART Myanmar arranged a workshop with international experts for “Calculations and costing in General” in December 2014 where Golden Jasmin wasn’t able to attend. The internal expert arranged a separate meeting with Golden Jasmin in their factory to share the information.

In order to get a complete overview of the production cost the management instructed the bookkeeping in-charge to compile the expenses of all departments for recalculating the cost of one production order and to gather data for future production orders to assure full coverage of Net Cost plus a profit percentage. The calculation was an eye-opener for the management as it revealed all expenses by category and percentage-wise distribution. As General Manager Mrs. Moe Moe Lwin put it: “I was impressed in learning the calculation scheme.”

As part of the in-house consultancy on productivity improvements an assessment of production techniques and work flow was carried out on Golden Jasmin’s shop floor. Several unnecessary work steps while sewing a garment were identified which led to increased production time, higher cost and thus, decreased the profit of the company.

A demonstration for line supervisors and workers on how to construct the garment without using dummy stiches and hand cut check points was done by the expert. The staff were fast to learn and were wondering why they had put the stitches and check marks in the first place.

jasmine 2

Using the newly introduced calculation scheme and the SAM (Standard Allowed Minutes) time study method the international expert calculated the cost of the current production by excludunnecessary work steps in the sewing department. The calculation showed potential savings and higher profits by producing in a more efficient way.

jasmine 3

Energy Saving Measures

The production unit had sufficient lighting; lamps were even installed at unoccupied areas. Over each spread table three light panels were hanging and one more in-between the spread tables. Some lights were placed at workstations but in an inefficient way. One central light switch controlled the lighting of the entire shop floor instead of each department which led to waste of energy.

SMART Myanmar encouraged the management to decrease their consumption of valuable resources. As a quick action

example, SMART advised to remove lights at unoccupied areas and to install individual light switches to control each workstation separately. A further advice was to consider exchanging all lights with energy saving lamps such as LEDs. SMART also created a poster on ten “Energy Saving Tips” with many useful hints on how to save energy which was displayed in all departments. Most of the recommended energy saving measures require no financial investment.

jasmine 4

SWITCH-Asia project SMART Myanmar launches first Compliance Academy

DSC_8187Applying good working conditions boosts confidence and competitiveness of local garment industry as they embrace international trade
The textile industry in Myanmar is still young. Systematic management education at production sites that emphasises the business relevance of good employment conditions and that strengthens the managers’ people skills is needed. However, since the local industry is just starting to open up and develop, corporate structures are not yet fixed and relevant actors are keen to enhance their international attractiveness, which offers an excellent window of opportunity to provide capacity building.

Noticing this need and related opportunity, the EU funded SWITCH-Asia project SMART Myanmar has launched the “Compliance Academy”, an innovative approach for social responsibility that imparts knowledge and methodological competencies via an individualized learning environment that uses lectures, case studies, multimedia sequences and exercises to help develop targeted solutions to the participants’ challenges. The key to success is the in-factory consultancy visits of experts to improve their internal own management system and procedures to maintain good working conditions long term rather than choosing a “quick fix” approach.
From consulting to establishing an Academy

Since 2013 SMART Myanmar has been consulting Myanmar factories in the garment sector to enhance their accountability and competitiveness. In so doing, the project detected a strong need for improved social and environmental standards in local factories where limited knowledge exists on Cooperate Social Responsibility (CSR) and Sustainable Consumption and Production (SCP).

In order to support the local garment industry embrace compliance standards, SMART Myanmar started by training the SCP staff of the Myanmar Garment Manufacturers Association on national labour and OHS laws. ILO added to that by training them on industrial relations. Site visits to local factories followed, where attention was drawn to the importance of complying with social and environmental standards and where need analysis were conducted combined with consulting the factories on lean management. SMART Myanmar discussed with a core group consisting of the top management representatives of locally owned garment factories on their strategy to export to EU markets, the problems they face when doing so and their mind set regarding the improvement of working conditions.

DSC04336In cooperation with several well known international experts in the field of social compliance specialised in garment and textile supply chain, SMART decided to launch a Compliance Academy. The SMART Myanmar Compliance Academy is based on a product developed by Systain. Systain is an internationally operating CSR strategy consultancy. As an expert for global and complex value creation, Systain generates solutions to worldwide challenges regarding environmental, working and production conditions. In its first pilot phase, the academy addressed ten “best” factories that had been selected by SMART according to their interest in European markets, their mind set to drive necessary changes in their factories and their progress made so far with the suggestions previously offered by SMART. To pilot changes on factory level, the best 3 factories were then chosen to be part of the in-factory consultancies included into the Compliance Academy services.

How the Academy works

The first SMART Myanmar Compliance Academy comprised of three workshops for participants from ten factories and three intensive on-site consultancies for a focus group from three factories. It was implemented between September 2014 and January 2015 to allow the factories sufficient time to make necessary changes at their site.

The target participants of the Academy were middle management staff but included also some top management representatives. All factories sent their HR management and, those who had already established compliance teams sent their representatives.
During the workshops tailor-made trainings with individual assistance by experts were offered in management of social compliance issues, including root-cause analysis, mapping of processes and structures, implementation of social compliance policies, communication between workers and management. The workshops applied various learning methods such as lectures, multimedia presentations, case studies and learning based on experiences so to foster individual understanding and increase learning success. With a strong focus on peer learning, they allowed participants to share their individual experiences and work together with case studies, thus internalising the management practices even better.

Three factories that were highly motivated and committed were then selected to work closely with the international compliance consultant and the SMART team for on-site factory assessment and improvement. The on-site visits focused on the analysis of necessary improvements and their root causes as well as the improvement of the current practice regarding working conditions. The consultant team, comprising of SMART and systain expert Nancy Fend, supported the factories by designing management policies and procedures to sustainably improve the system for good working conditions in the factory.

Additionally, SMART also funded a legal expert from Polastri & Wint to clarify on Myanmar’s current labour laws. An overview was produced and published on MGMA’s website that has been used by many buyers and factory owners to get a better understanding on the current rules and regulations in Myanmar and also to motivate local factories to comply with it. SMART Myanmar also provided technical assistance to build and manage the MGMA website as a knowledge management tool on SCP for businesses in Myanmar and international businesses.

Academy results

The pilot project of the SMART Myanmar Compliance Academy was very well received by all participants. At the end of the project, the three factories from the focus group shared their learning, achievements, challenges and future plans to motivate other factories, and provide them with valuable and practical information.

“I had the social audit from customers before, but they just check and then go. They didn’t tell us how to improve. After the SMART Myanmar Compliance Academy, we understand how to fix the issues in short term and long term.”, said the General Manager of Maple Trading Company.

Following their participation to the Academy, the focus group factories reported noticeable achievements on various areas despite the limited time duration of the academy. All of them made improvements on their internal policy establishment especially for HR and Health & Safety management.

After completing the Academy, all participating factories have established a comprehensive child labour prevention and remediation policy with a strictly defined age verification process “After the first audit of an EU brand, I was so stressed out and worried because we didn’t pass it. But now I learned how to write a policy and describe procedures. I can assure that everyone follows the procedure and that guarantees the compliance.”, explained the CSR manager of Myanmar Synergy Company.

For health and safety, the management teams got a better understanding about the requirements on each related aspect and took actions to correct current practices, such as the management of fire fighting equipment, evacuation maps, fire exits etc. To prevent the recurrence of the same issues, the factory managers understood the importance of the OHS (occupational health & safety) policy and developed this accordingly. Dedicated teams were formed with clear responsibilities, work procedures, supporting documents and evaluation methods.

With regard to working hours, the factories have paid high attention and worked closely with technicians and the production team to reduce overtime gradually, with one of them already reporting a weekly reduction of 5 hours in their overtime.

Despite this encouraging good start in the right direction, many challenges remain for factories to comply with other international standards, such as the difficulties to get ID cards, the high costs on building safety inspections and the limited knowledge and skills on management systems. All of the factories need to continue their work and follow up visits from the Academy Experts to further support the factories in their own efforts to increase their standards are forseen.

Coming up next: more in-factory consultancies to improve management and policies and an academy for local government officials

Follow-up actions of the Academy will be discussed a workshop on 13 February 2015 of top level management of MGMA and the local Myanmar garment factories, in combination with a set of planned activities that complement also the follow up of the MGMA voluntary Code of Conduct for the garment industry of Myanmar. The demand for the SMEs is there: after presenting the results achieved, all participants requested in-factory support to improve the working conditions in their factories as well.

From its side, the internal capacity of the SMART project team has meanwhile also been strengthened by their direct participation to the activities and site-visits of the Academy. This paves the way for the long-term development of local capacity in this specialised field of SCP services which is key as the local industry needs experts in this area but currently lacks any kind of service offer.

With regard to the work initiated in the field of labour law, although revisions to current legislation are viewed necessary by some international experts, more importantly all stakeholders involved in improving the working conditions in the garment sector agreed to the need of strengthening enforcement of the current laws.

DSC03375For this reason, SMART is now developing a special Compliance Academy targeting the government authorities that are responsible to enforce the current labour law and the soon to be published new OHS law. This training will target the factory inspectors of the Ministry of Labor to get a better understanding on how to assess the current compliance level in the factories, what can improve the current compliance level and to give them the understanding that compliance is a process that cannot be reached from one day to the next. Monitoring tools to help them assess the current situation and the progress will be given to them from May onwards.

The whole garment sector will benefit from this because this would translate into a predictable and fair inspection process beneficial for the workers and doable for the factories.

 Product type needs:
– woven lightwear
– woven outdoor
– denim
– heavy knit
– jersey
Capabilities need:
– basic
– semi-fancy

Trade mission to Myanmar

trade mission to MyanmarEuropean Garment companies explore new business opportunities in Myanmar
From March 23rd – March 27th, the Confederation of the German Textile and Fashion Industry (t+m) in cooperation with GermanFashion and Gesamtmasche (the German Association for knit and body wear) and supported by the Delegation of German Industry and Commerce in Myanmar, organized the “Trade Mission to Myanmar”.

With the recent reinstatement of the GSP + trade preferences for imports to the EU, the surge of interest from European companies to invest in and trade with Myanmar is steadily rising. The objective of the “Trade Mission to Myanmar” was to provide European fashion producers, brands and retailers with a thorough overview of the Myanmar garment sector, while at the same time raising awareness for the need of sustainable development in the Myanmar garment industry with a view to avoid mistakes that have been made in neighbouring countries. The Trade Mission was embedded in the framework of the EU-funded project SMART Myanmar which actively supports 16 local factories to comply with social minimum standards in the production of garment “made in Myanmar” while at the same time fostering know-how transfer and the improvement of quality and productivity. Since 2013 t+m supports SMART Myanmar with technical assistance focussing on B2B, market access and corporate social responsibility. Amongst others, t+m has supported the Myanmar Garment Manufacturers Association (MGMA) in drafting the industry’s first Code of Conduct launched earlier this year. The Code outlines a strong commitment of MGMA’s member companies to social compliance and has been very positively perceived by the international community and by international brands.

The Trade Mission’s delegation was composed of 17 European companies of textile and fashion industry, brands and retail representing a broad product range, amongst others ladies’ and men’s wear, outdoor, swim wear, lingerie, home- and lounge wear, sportswear, but also bed linen. Whilst German companies were most strongly represented, there were also companies from Denmark, the Netherlands, UK, Sweden and some multinationals. The 4-day program of the Mission focussed on individually organized factory visits. A kick-off sector briefing, a networking dinner at ANITA Asia Ltd. and the EU roundtable “Comply to Compete” on social compliance and actions for implementation of the MGMA Code of Conduct formed the framework program. This report will include the results of a subsequent survey amongst the participants.

Juliane Schroeder
CSR expert of t+m German Confederation of the German Textile and Fashion Industry

Trade mission to Myanmar

SMART Myanmar provides “on-site” consultancy on social compliance issues at three local garment factories and a complicance academy for 10 Myanmar factories

4. second mission of  systain _ photo1More Myanmar garment companies are starting to realise that the quality of garments alone is not the only priority in the fast changing global market but also the working conditions and environment of the factories where the products were produced. A compliance academy has been conducted with 10 local garment factories in September by SMART Myanmar where it has been clearly demonstrated that socially responsible business practices are a major necessity and requirement for those who would like to do business with European customers. In addition, SMART Myanmar trained 10 young engineers on a Train the Trainer type of training (ToT) on these important compliance issues.

SMART Myanmar selected 3 factories from among the 10 local factories who participated in previous compliance academy on set-criteria to provide on-site consultancy visits. These on-site consultancy visits were conducted by SMART Myanmar togehter with International Compliance Expert, Nancy Feng of Systain Shanghai in November 2015. The aim of the compliance academy combined with factory consultancies is to help improve factory policies and social compliance according to both local laws and ILO standards. Simone Lehmann, Project Director of SMART Myanmar says: “The focus is to enpower the local factories to come up with their own policies and procedures regarding working conditions because only in that case the working conditions and environmental standards can be improved and sustained in the long run.”

Myanmar Synergy, one of the 3 factories to have been provided with on-site consultancy, recently formed a Social Compliance team with 3 staff members to handle relevant issues and to target their approach with an aim to expand such practices. Dr. Ricky Maung, the Managing Director of Myanmar Synergy, stated that he is hoping to get the support from SMART Myanmar on improvement of their OHS system & procedures to be able to access to EU markets very soon.

All 3 of the selected factories have a strong will to implement the necessary policies and procedures. They are already doing changes to improve their working condition. Maple Trading Company, for instance, has installed a new water-cooling system in the ironing department to control the reasonable temperature for workers to work in.

Daw Shwe Zin, HR Manager from Shwe Sakar garment factory said, “This 2nd mission on Social Compliance Expert has been very useful for us because we genuinely like to improve the working conditions, and it will also be helpful to accommodate new EU buyers”. Shwe Sakar also has some practices that are already quite advanced and they also have a strong Industrial Engineering team for proper documentation on production data which is very helpful for bonus systems. The bonus system allows Shwe Sakar to introduce a performance based additional payment which they will pay to the workers in additon to the wages they currently pay.

The SMART Myanmar compliance on-site consultancy provides assessments on social compliance through factory tours and detailed document checks. Factories were advised on OHS, human resources practices and payment systems and further supported to develop corrective action plans, including practical and useful remedies & methods. The 3rd visit of the International Compliance Expert of Systain will be in early January 2015 and will focus on follow-up of the progress on the corrective action plan (CAP).

EU SMART project launches CSR tools for garment industry

Smart Myanmar photoThe European Union-funded SMART project for the garment sector launched corporate responsibility tools at a press conference and panel discussion at the Sule Shangri-La Hotel in Yangon on October 30.

The CSR tools project involves distributing books, videos and posters to more than 3,000 Myanmar businesses, said project manager Daw Su Tayar Lin, part of an awareness programme for a more sustainable and socially responsible garment industry, one that currently employs tens of thousands of workers in factories across Myanmar.

The discussion brought together representatives of the Union of Myanmar Federation of Chambers of Commerce and Industry or UMFCCI, Yoma Bank Group, the International Labour Organization and the Association of Development Financing Institutions in Asia and Pacific to discuss how corporate social responsibility or CSR is beneficial to businesses and encourage small and medium-sized enterprises or SMEs to embrace it.

The opening speech was given by Dr. Pwint San, deputy Minister of Commerce who stressed the importance of the meeting and said that CSR provided a win-win situation for society, the environment and business. Mr. U Win Aung, chairman of UMFCCI President encouraged all business people to practice CSR activities to help businesses and the industry as a whole.

The SMART (SMEs for Environmental, Accountability, Responsibility and Transparency) Myanmar project promotes and supports sustainable production of garments ‘made in Myanmar’ to increase its international competitiveness. ADFIAP represented the SMART Myanmar project’s lead-implementor Sequa of Germany and its co-partners namely, the United Kingdom’s Sheffield Chamber of Commerce & Industry, the Confederation of the German Textile & Fashion Industry, the Republic of the Union of Myanmar Federation of Chambers of Commerce in Myanmar Business (UMFCCI), the Myanmar Garment Manufacturers Association (MGMA) as well as project associates, GIZ of Germany and the Netherlands’ Centre for the Promotion of Imports from Developing Countries (CBI).

SMART Myanmar and the Myanmar Garment Manufacturers Association organize first-ever factory networking & awards event

Award_WIMG_2679 for B2BOver 130 factory owners and managers, representing three dozen of Myanmar’s garment factories, gathered together on Sunday, October 5th with representatives from several international brands & retailers for a networking and business awards dinner at Padonmar Restaurant in downtown Yangon.

The Myanmar Garment Manufacturers Association (MGMA) organized the event with guidance and sponsorship from the EU funded SMART Myanmar project. This outstandingly successful event provided an opportunity for industry networking. Awards were also presented for factory cleanliness & tidiness, highlighting some of the best practices for clean, tidy and safe workplaces. Winning factories included Anita Asia, for best foreign-owned factory and UMH for best locally owned factory.

These were the first-ever factory awards to be presented by a business member organization in Myanmar. The awarded factories were chosen by a committee of judges, after an open nominations process, to the factory in each category. Each of the nominated factories was visited for a technical evaluation by MGMA staff, accompanied by industrial engineers from the SMART Myanmar project. The winning factories represent excellence in factory cleanliness & tidiness in Myanmar.

“We are proud to have a chance to support the excellent achievements of these garment factories in Myanmar. A clean & tidy workplace is essential for factories as they also improve their occupational health and safety environment, too. Many factories in Myanmar set a great example for others to follow, and the MGMA wanted to highlight, indeed, to champion & celebrate – these achievements in industry.” said Ms. Khine Khine Nwe, MGMA General Secretary.

Besides MGMA factory members and industry affiliates, a surprise appearance by the Myanmar Minister of Labour, Mr. Aye Myint, added to the energy and excitement of the event. Minister Aye Myint offered an impromptu speech on the issues and strategies factories can take to develop a healthy and productive relationship with their workforce.

MGMA is among Myanmar’s largest business member organizations, serving as a support & services organization for approximately 300 factories, designers and industry affiliate companies. Collectively, the members of MGMA employ over 200,000 individuals. In 2014, MGMA is experiencing rapid growth, as one new garment factory per week opens its doors in Myanmar. As this occurs, the SMART Myanmar team works as a close partner to ensure that MGMA develops the capacity it needs to promote not simply the growth of the industry, but also its responsible development.

Another EU buyer benefits from SMART Myanmar’s business matchmaking activities

Business matchmakingForeign investors and international companies are increasingly looking at Myanmar’s garment factories as an attractive location for sourcing garments. The EU’s inclusion of Myanmar in its Generalised Scheme of Preferences in 2013 also allows Myanmar garment producers preferential access to the world’s 2nd largest consumer market.
One of the several objectives of the SMART Myanmar project is to offer free-of-charge business matching between Myanmar’s garment producers and European buyers to promote “Made in Myanmar” products.

SMART Myanmar is working with 16 factories to help them increase their performance and productivity as well as their compliance with international social and environmental standards. “This general increase in competitiveness is a necessary first step to improve social compliance, it is rather a precondition for any further action”, said Project Director Simone Lehmann. Out of those 16 factories, the project team selected the ten best ones to be trained on social and environmental compliance standards. These factories are also being supported by SMART to increase their compliance standards by direct consultancies for the factory management on-site in the factories. “Sustainable changes in working conditions can only be maintained if the management develops its own policies and processes. SMART supports the factories in their own efforts.” says Simone Lehmann.

Through its matchmaking services, designed in response to a high industry demand, SMART Myanmar provides prospective European buyers with sectorial information, selects suitable factories, accompanies buyers to visit them, offers translation services, discusses with them their contribution to improve the factories compliance, and conducts follow-up services for both buyers and factories on a case by case basis. The project is now working on a service package to be marketed by the Myanmar Garment Manufacturers Association. SMART Myanmar has collected around 100 company profiles with detailed information on their production. These were then encoded in a database that serves as a basis for selecting the suitable factories for each buyer.

In a later stage, the project plans to put this matchmaking service online to facilitate access and exchange of information joining forces with a British government financed program called Pyoe Pin. Pyoe Pin is currently finalizing this e matchmaking tool.
In line with this, SMART was pleased to recently host another EU buyer interested in Myanmar’s sourcing potential. Mr. Harald Ludwig Springer, Manager of Production, Engineering and Social Compliance from JCK Holding from Germany recently visited garment factories in Myanmar. JCK Holding is a multifaceted group of companies that engages in business operations all over the world. During his one week stay in Myanmar, he visited some factories in Yangon and Pathein, a city located a four hour drive west of the capital and that has recently witnessed a boom in garment factory construction.

The SMART Myanmar project team accompanied Mr Springer and jointly visited several factories and demonstrated the strengths and challenges of the industry. “Myanmar’s garment sector has many strengths” – explained Jacob Clere, Project Manager SCP at the Myanmar Garment Manufacturers Association – “among them its competitive labor costs, relatively high product quality standards, and its attractiveness as a new option for diversifying sourcing risk. However, the sector also has weaknesses: infrastructure issues – particularly insufficient electricity during the dry season – poor road networks outside of Yangon and a current dearth of deep sea ports. In addition, Myanmar has immature industrial relations and insufficient knowledge of European and American social and environmental compliance expectations. SMART is working with the industry and with the main industry association, the Myanmar Garment Manufacturers Association, to address several of these issues.”

The main objective of Mr Springer’s visit was to assess thoroughly how Myanmar garment factories are running and the current compliance status of the factories. The buyer was pleased about the current compliance level which will be further improved as a result of the buyers visit. The holding will place orders in at least two factories out of those visited.