Men work at a Myanmar-owned garment factory. Rising labour costs in China may lead to more Japanese companies opening here, although industry sources say enhancing border trade routes is also important. Pic: Aung Tun Win

RISING labour costs in China could see more Japanese factories setting up in Myanmar, according to the Yangon-based Japan External Trade Organisation (JETRO).

The organisation’s managing director, Tomohiro Ando, said the relatively low cost of labour in Myanmar compared with other Southeast Asian countries was making it an attractive option for Japanese firms operating in southern China’s coastal region, which are grappling with demands for higher wages that have accompanied sustained economic growth.

Garment factories in particular would likely be among the first to move, Mr Ando said.

According to figures released by the World Trade Atlas of Japan, Myanmar’s garment exports grew almost 70 percent from 2003 through to the end of 2005 from US$31 million to $52.6 million.

Footwear exports to Japan, another branch of the CMP (cutting, manufacturing, packaging) sector, rose from $27.8 million in 2004 to $35.7 million last year.

However, Myanmar-owned factories have seen little of the growth in exports, with Japanese importers mostly opting for garments and footwear produced in Japanese and some Korean-owned factories for quality reasons.

Of approximately 160 garment factories in Myanmar, 10 are owned by Japanese. Only about 20 are owned by Myanmar nationals.

Mr Ando said exports from the CMP sector could be strengthened if items were allowed to be transported across the Thai border, which would shorten the delivery time, instead of delivered to Japan via Singapore.

President of the Myanmar Garment Manufacturers’ Association U Myint Soe had previously said allowing imports through the same route would also be beneficial.

“If we can use this way (Thai border crossings), it would likely lead to an increase in garment orders from Japan because it would save time and money for the industry,” he said.