Garment-makers eye Burma as production base

Manufacturers have to shoulder higher costs not only from rising production costs. They are also facing new problems after the flood devastated some production plants, particularly those in their supply chain.
Thai garment manufacturers are now looking at new investment areas to stay profitable and to ensure sufficient labour.
Sukij Kongpiyacharn, president of the association, said last week that local manufacturers are now eyeing countries in Asean such as Indonesia, Vietnam and Cambodia, where some of them have already invested.
However, some countries such as Burma still have great potential for expansion, as labour there is still cheap. In the beginning, the association’s trip will focus on Rangoon. About 200 garment plants have been set up in Burma by South Korea, Singapore and Japan.
“As confirmed by the government, manufacturers will face a rise in the minimum wage to Bt300 in April, which will push up our costs,” Sukij said. Thai manufacturers will face greater hardships after the severe flooding.
The minimum wage in neighbouring countries is still lower. In Cambodia it is US$60 (Bt1,900) per month, and in Vietnam $130. However, rising wages in China have prompted investors to consider more about their production costs there compared with Thailand.
Nearly 10 big manufacturers from Thailand have invested billions of baht in those countries. Those investors are among the top 10 producers in Thailand, including Hong Seng Knitting, Hi-tech Group, Thong Thai Textile, Nice Apparel, Liberty, Nan Yang Group, Oriental Garment and Gold Mine Garment.
Sukij is also the managing director of Hong Seng Knitting, which now operates plants in Vietnam and China. The new plant in Vietnam cost US$6-8 million and employs about 3,000 workers.
Last week, Vallop Vitanakorn, president of Hi-Tech Group, inked an agreement with the Po Niang Special Economic Zone in Cambodia to open its second garment plant outside Thailand. The $6-million plant with 10,000 square metres will employ 1,500 workers. Construction is scheduled to commence this month.
The group will also start work on a $12.8-million second plant in Vietnam this month that will employ more than 3,000 workers.
Thong Thai Textile is another leading garment-maker to sign an agreement with the Po Niang Special Economic Zone to set up a plant.
The company plans to have a plant of the same size as Hi-Tech Group’s.
Sukij said Thailand would be left as a base for head offices and trading rather than for manufacturing. However, Thailand will become the place to produce high-end products, not low-end goods anymore.