Several garment and shoe factories in Yangon plan to close this year amid a challenging global business environment and a lack of policy direction, according to industrial zone sources. A garment factory in the Hlaing Tharyar Industrial Zone with some 500 employees recently said it would shut down soon because of financial constraints. U Aye Thaung, Chairman of the management committee of Shwe Lin Pan Industrial Zone stated it won’t shut down immediately. It only plans to shut down and outlined how it will compensate employees.

As per the manufacturers, frequent changes in government policies, low productivity and declining purchase orders from foreign countries are making it difficult for garment and shoe factories to survive and Big investors like that need to make long-term plans. He further added that no new investments are coming into the industry, as existing local and foreign-backed factories are struggling.

A number of shoe factories are planning to close because Myanmar’s share of the world’s footwear market has declined, says U Aye Thaung. Leather shoes are mainly exported to Western countries and certain Asian countries like Japan and Korea. Nearly half of the 15 shoe factories currently operating in Myanmar are likely to shut down by the end of this year. Only factories that make sports shoes and ladies’ footwear are doing well.

Adidas has built a shoe factory in Hlaing Tharyar that will employ around 100,000 people. But it dare not move forward with the project, mainly because of frequent changes in government policies.

According to factory owners, complicated procedures regarding land acquisition and operation, unreliable electricity supply and the presence of squatters in factory compounds are among the major problems facing industrial zones.