Cambodia, Myanmar, Vietnam to gain most from apparel shifts: Fitch

A garment factory stitching apparel in a factory in Hanoi. Photo: AFP. Sketched by the Pan Pacific Agency.

SINGAPORE, Jul 20, 2020, BT. Cambodia, Myanmar, and Vietnam are among the Asian countries poised to gain most from shifts in apparel manufacturing, according to a Fitch Solutions July 13 report. As China reduces its apparel manufacturing operations and seeks to move up the value chain, such neighbouring countries have high growth potential in this area, supported by their large and growing populations, as well as low labour costs, said the report, The Business Times reported.

Those countries, as well as Bangladesh, are likely to expand their presence as suppliers to China, and grow their market share in North America and Europe at China’s expense.

Vietnam has already been the main beneficiary from shifting apparel manufacturing supply chains, aided by growing participation in free trade agreements and cemented during the trade war between the United States and China.

During the trade war, Vietnam’s apparel exports jumped 30 per cent and raised its global apparel exports share to 8.7 per cent in 2019, up from 6.8 per cent in 2018, according to Fitch Solutions’ estimates.

But as Vietnam in turn moves up the value chain and sees rising costs, other neighbours could benefit.

While Cambodia accounted for only 1.4 per cent of the global apparel export market in 2019, its apparel manufacturing sector has grown at a compound annual growth rate of 13 per cent over the last decade, with relatively low labour costs and favourable investment policies — including allowing full foreign equity ownership in the textile sector — expected to continue supporting this.

Being able to use Vietnamese shipping ports also helps Cambodia with transport and import of raw materials from China.

Myanmar is also expected to continue seeing strong growth, “largely in low-value and lower-quality basic garments”, with numerous seaports that facilitate shipping at one of the cheapest rates in the region.

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