US embassy cable - 04RANGOON1294

C O N F I D E N T I A L RANGOON 001294 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB 
COLOMBO FOR ECON MANLOWE 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA JEFF NEIL 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 09/29/2014 
TAGS: ETRD, ECON, KTEX, BM, Economy 
SUBJECT: BURMA'S GARMENT MAKERS FEAR 2005 
 
REF: RANGOON 912 AND PREVIOUS 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D) 
 
1. (C) Summary: After a few months of improved fortune for 
Burma's garment sector (reftel), things are turning gloomy as 
2005 nears.  Industry officials are hopeful but not 
optimistic that the troubled industry will survive the end of 
quotas in 2005.  If not, factory closures and layoffs will 
likely occur early next year, though we see little chance of 
social unrest as a result.  End summary. 
 
The End is Nigh 
 
2. (C) A top official in Burma's Garment Manufacturers 
Association (GMA) told us of his industry's increasing 
trepidation as the end of 2004, and the multi-fiber agreement 
(MFA), draw near.  He noted that some of the few foreign 
buyers remaining following the imposition of a U.S. import 
ban in August 2003 (before which the United States was the 
largest buyer of Burmese garments) were starting to shift 
their orders to China, and others were not committing to any 
new orders after November 2004.  For the official's own 
factories, prior to sanctions he did business with around 20 
buyers, dropping to five or six by mid-2004, and now he has 
only three or four. 
 
3. (C) Despite the increasingly gloomy scenario, the official 
claimed that neither he nor other members of the GMA were 
planning to close factories or lay off additional workers 
before the end of the year.  He said everyone was holding on 
just in case there was some dynamic that brought new orders 
to Burma.  One scenario he envisioned was that post-MFA 
Chinese producers would focus their attention on the huge 
orders coming from the United States, leaving the 
comparatively smaller European and Japanese orders to 
Southeast and South Asia. 
 
4. (C) The mood is not particularly optimistic, though.  The 
official said with certainty that he and other manufacturers 
would not wait for salvation very long into 2005.  If orders 
were not forthcoming within the first couple of months of the 
year, he said, most all manufacturers would likely cut their 
losses immediately, closing factories and firing workers en 
masse.  He noted that such sudden and large-scale lay-offs 
(he estimated around 50,000-60,000 workers still in the 
export-oriented garment sector) could cause economic and 
social problems as there was not much for these workers to 
do.  He said that no one was expecting the government to try 
and pre-empt this result or aid those who would lose their 
jobs. 
 
Comment: More Troubles 
 
5. (C) Unless there is some unforeseen twist of fate, and 
with a few exceptions, we don't see the industry surviving 
far into 2005.  However, we also don't see any serious social 
consequences from the likely fallout of the industry's 
collapse.  We saw no unrest when tens of thousands lost their 
jobs in the garment factories in the months following the 
imposition of the import ban.  Also, despite genuine concern 
from local INGOs, there is thus far little evidence that a 
notable percentage of those who lost their jobs has turned to 
sex work or illegal migration.  End summary. 
Martinez