Manufacturers in Southeast Asia are experiencing major disruption as the spread of coronavirus, named COVID-19, continues to roil vast segments of China’s supply chains.
More than 1,000 workers have been laid off from a garment factory in Myanmar that shuttered as a result of a shortage of raw materials from China, local media reported over the weekend.
The unnamed Chinese-owned facility, located in Kangyidaunt Township in the Ayeyarwady Region, announced its closure on Feb. 28. Workers received one month in wages, plus other entitlements, according to Eleven Myanmar.
”Workers will have to return their uniforms and staff ID cards when they withdraw their salaries,” Ma Su Pone Chit, a labor head, told the publication. “ Workers don’t want compensations. They want half of their salaries when the factory is closed. They want to return to work when the factory receives raw materials.”
Myanmar’s textile industry, which generates more than $4 billion in annual exports, is the country’s top export earner after gas and oil. It employs roughly 700,000 people.
In Cambodia, authorities announced last week that roughly 200 predominantly apparel factories will likely suspend or slow operations next month due the the lack of supplies from China.
Ten facilities employing around 3,000 workers have already notified the labor ministry that they will partially freeze operations, spokesman Heng Sour told reporters.
“From predictions as well as an actual survey about the impact of coronavirus, we know that in March nearly 200 factories will face a lack of raw materials and it will affect about 110,000 workers,” he said.
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Prime Minister Hun Sen has promised to help companies pay 60 percent of lost wages to workers if production comes to a standstill. Hun Sen has also urged Wang Wentian, the Chinese ambassador to Cambodia, to help facilitate the delivery of more raw materials by ship and plane to prevent further job losses in the country.
Cambodia’s 600 garment factories—which employ 700,000 workers, most of them young women—contribute to 40 percent of the country’s gross domestic product. Nearly half of Cambodia’s exports are to the European Union, which recently stripped the nation of some of its trade privileges because of human-rights concerns.
“We are now coordinating ways to find the solution that allows raw materials to be transported to factories in Cambodia and reduce the negative consequences. Please…do not worry,” the Khmer Times reported Wang as saying.
Vietnam’s garment industry, the nation’s third-largest export earner, after smartphones and electronics, is similarly on the ropes because of supply interruptions.
“Domestic firms have sufficient materials for production until the end of the first quarter, but many of them will face severe shortage of materials from the second quarter because they have trouble importing materials from key suppliers in China, Japan and South Korea,” Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, told Reuters last week.
There is one bright spot in the crisis, however. Indonesian textile companies are seeing a boost to their bottom lines by filling orders caused by delayed Chinese shipments.
As factories scramble to hunt down replacement materials, domestic and export orders to Indonesia’s textile industry have climbed by roughly 10 percent this year, Anne Patricia Sutanto, chairman of international relations at the Indonesian Textile Association, told Reuters. The nation’s textile industry, which employs 2 million people, relies largely on domestic supply chains and has not been hobbled by the outbreak so far.
Garment manufacturer PT Pan Brothers, where Sutanto also serves as vice chief executive, has seen demand for the second and third quarters increase 20 percent over expectations, she said.
“Our textile industry is benefitting from the coronavirus outbreak,” Sherlina Kawilarang, president commissioner of yarn maker PT Excellence Qualities Yarn, told Reuters. “This has created opportunities and also created our own local supply chain.”
Indonesia exported nearly $13 billion worth of textile products in 2019, primarily to the American and Middle Eastern markets.