Factory owners seek to reassure worried Western investors

Originally appeared in Nikkei Asian Review

YANGON — Stung by international criticism of alleged “modern slavery” practices, Myanmar’s garment industry is trying to persuade potential Western customers that its factories are cleaning up their act.

In a notable first for the rapidly industrializing country, a code of conduct has just been ratified by the Myanmar Garment Manufacturers Association in an attempt to reassure Western companies about financial and labor standards.

The garment industry was badly damaged by U.S. and European Union sanctions aimed at Myanmar’s military rulers, which peaked in 2003. Most of the sanctions have been removed since 2011 in response to reforms by the country’s military-backed civilian government, spurring a recovery in garment exports, mainly on the back of orders from Japan, South Korea and the EU.

So far, Gap is the only visible major U.S. brand to publicly declare it has resumed buying from Myanmar, leaving industry leaders disappointed that more international brands, especially those from the U.S., have not returned following a wane in the consumer boycott campaigns that accompanied the sanctions.

Officials say the garment industry, which is Myanmar’s biggest industrial sector, is hampered by fears among Western companies that consumers might punish them for manufacturing in a country where labor standards are perceived to be well below international norms.

A number of inquiries have alleged exploitation of labor, including the damning report “Modern Slavery” published in November 2013 by the Burma Partnership, which lobbies for democracy and human rights. The group, which based its report on research by labor unions and activist groups, claimed that factories in Yangon’s industrial zones imposed “abysmal living and working conditions” on workers.

The garment industry’s new code combats these criticisms head on, requiring companies to uphold International Labor Organization standards, ensuring health and safety for workers and respecting workers’ rights to collective bargaining, among other commitments.

The code also says that companies “shall consider the economic, social and ecological conditions which are directly or indirectly influenced by their business action[s].” It adds: “The companies promote the principles of responsible management, such as transparency, accountability, sincerity and integrity.”

Critics said the code would make little difference. “This code of conduct, designed and adopted by the private sector, the MGMA, is only voluntary and there are no legal requirements to adopt better employment practices. It is quite simply not enough,” said Alex Moodie, political and human rights analyst at the Burma Partnership.

“What is needed is a structural shift, including stronger legislation and enforcement by the government that ensures good-faith bargaining. Otherwise, the worst offenders in the garment industry will simply carry on with their terrible employment practices and factory workers will continue to suffer,” said Moodie.

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