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Gap to Be First American Retailer to Enter Myanmar Market

Gap Inc. announced plans to source garments in Myanmar and will be the first American retailer to do so since the country began transitioning to a democracy three years ago, according to The Associated Press.

Two factories in Yangon, the country’s commercial capital, are said to be producing products for the company’s Old Navy and Banana Republic brands, and the goods are expected to be available for sale in the U.S. this June.

U.S. and European retailers have only recently begun establishing a presence in Myanmar owed to the easing of sanctions imposed on the country during its military rule. The country’s abundant and affordable labor force is a draw for international companies.

Debbie Mesloh, senior director of government and public affairs at Gap, said, “Certainly we know that there are challenges within the country and significant hurdles, [but] working with our vendors we made a commitment. It is in our best interest to see the industry grow up in a positive way,” The Myanmar Times reported.

According to The Myanmar Times, while Gap is not investing directly in the country but sourcing from South Korean-owned factories, the retailer’s move is still expected to lead the charge in revamping Myanmar’s manufacturing industry.

Mesloh said that Gap’s Old Navy and Banana Republic orders have already led to 700 new jobs in the sector.

The garment sector was one of Myanmar’s fastest growing at its peak in the 90s and early 2000s, with exports reaching over $800 million in 2001, but growing human rights concerns put American brands under pressure, several fled and exports faltered.

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Although Gap’s announcement is expected to spark increased interest in Myanmar as a sourcing locale, concerns over labor conditions still remain.

Garment workers in the country have been striking over wages, and last Monday 600 workers at a textile factory in the Shwe Pyi Thar Industrial Zone 2 walked off the job demanding higher wages, The Myanmar Times reported. Workers have been striking at a number of other textile and garment factories across Yangon in recent months.

Up until March 2013, Myanmar had no country-wide mandate on minimum wage, but the nation’s Ministry of Labour, Employment and Social Security enacted a law stipulating that bodies in each state or region would be responsible for researching the labor market and recommending a minimum wage to then be set by the national body. On average, a garment worker in Myanmar makes $75 to $150 per month based on skill levels.

Both Myanmar’s recent reforms and rising labor costs in neighboring nations like China and Thailand have already allowed for growth in the country’s garment sector.

The U.S. imported $1.96 million worth of apparel products from Myanmar in 2013, according to data from the Office for Textiles and Apparel (OTEXA), and for the first four months of this year, apparel imports reached $3.76 million.

Garment factories in the country have also increased, with 200 new factories being set up in 2013 bringing the count to roughly 400 factories, employing 200,000 workers, IndustriALL Global Union reported.

Mesloh told The Myanmar Times that Gap is eager to enter the country and could be a leader in the manufacturing industry as it develops.