Affected by the COVID-19 epidemic, clothing retailers in many countries around the world have been affected, with physical stores closed and sales declining sharply. In Southeast Asia, the garment production and export industries of Vietnam, Cambodia, Myanmar and other countries are facing huge difficulties as a result. The apparel industry is crucial to Southeast Asia’s economic development. According to statistics, there are more than 2.8 million people working in Vietnam’s textile and garment industry, and Vietnam’s garment exports account for 5.7% of the global market. For Cambodia, the garment manufacturing industry generates 16% of GDP and 80% of export earnings. There are about 500 garment manufacturing factories in Myanmar, and 65-70% of their products are exported to the EU.
The spread of the epidemic in Europe and the United States has caused many international clothing brands with Southeast Asia as their production base to postpone or cancel orders. Some European and American clothing buyers have proposed deferred payment or requested discounted prices for goods that have not been paid and are in transit due to their own financial difficulties. Due to shrinking demand in the global apparel market, many apparel manufacturing companies in Southeast Asia have been suspended. According to Vietnamese official estimates, the garment industry’s exports to the European market will drop by 8% or more in the first and second quarters of this year. In countries such as Cambodia and Myanmar, employment pressure in garment-related industries has generally increased.
In response to the impact, Southeast Asian countries have actively launched self-rescue operations. Cambodia implements a living subsidy policy for unemployed workers, in which the government pays US$40 per month and the factory pays US$30. In addition, the government also stipulates that some garment manufacturing companies can enjoy a “tax holiday” of six months to one year. The specific period will be determined based on the degree of impact on the company and the actual situation of the factory evaluated by the Ministry of Finance of Cambodia. Cambodian Prime Minister Hun Sen said that the government has prepared a budget of US$2 billion to offset the impact of the epidemic on the domestic economy.
The Myanmar government announced last month the establishment of a 100 billion kyat (approximately 500 million yuan) new crown epidemic response fund, giving priority to providing support to industries such as clothing processing and manufacturing. . The fund’s loan term is one year and the interest rate is only 1%. The Myanmar government also announced that eligible companies can defer the payment of quarterly income tax and monthly commercial tax until the end of this fiscal year (September 30). Before the end of this fiscal year, the export industry will no longer need to pay the 2% export prepaid income tax. Myanmar has also established a Central Coordination Committee to respond to the new coronavirus epidemic, which will develop vocational training plans for workers affected by factory closures and provide new employment opportunities. Myanmar’s Permanent Secretary of the Ministry of Labour, Immigration and Population, Second Aung, said that the government is working closely with businesses and labor to tide over the crisis.
