Demand for Cambodian garments, footwear to further push exports

Demand for Cambodian garments, footwear to further push exports

Export of textiles, garments, footwear and travel products have registered, in fact, bounced back to the annual growth of an average of approximately 10 percent over the past 10 years thus becoming the key sector for the Cambodian economy.

After just one year of a minor decline in growth due to Covid-19 in 2020, the garment industry bounced back last year to its pre-pandemic trajectory. Members and guests at the 15th annual general meeting of the Garment Manufacturers Association Cambodia (GMAC) expressed optimism saying it is able to mark 2021 as yet another year of strong growth for the sector in Cambodia, continuing the trend of the previous 10 years which saw an average growth of 10 percent annually.

Based on the successes of the past year, the meeting was an occasion to reflect on the industry’s prospects for 2022. The out-going president Oknha Van Sou Ieng was made an honorary chairman by the Executive Committee and the former deputy chairman Oknha Kong Sang was welcomed in as the newly elected President.

Among the figures present at the AGM, held at the Association’s premises in the Phnom Penh Special Economic Zone, was also the Minister of Labour and Vocational Training, Ith Sam Heng who said that the export of textiles, garments, footwear and travel products and bags sector is the key sector for the Cambodian economy and remains as the country’s most important export sector.

Collectively these products of the garment industry represent by far Cambodia’s number one export which is estimated to have totalled almost $10 billion in 2021, or about 63 percent of the country’s total export value and employing close to 1 million people.

The industry’s products generally come under three categories with knitted and non-knitted clothes topping the exports at the moment, followed by footwear and travel products such as suitcases. In the first ten months of last year, garment exports totalled $6.538 billion, an increase of 6 percent over the previous year, footwear exports were recorded at $1.113 billion, an increase of 20 percent while exports of travel products were valued at $1.179 billion, an increase of 49 percent.

There are several factors behind last year’s 2021 performance including a recovery in world trade, but also regional ones such as the impact of Covid-19 on countries with competing garment industries, notably Bangladesh and Myanmar.

“You’ve seen the exports in the apparel and travel sector grow in 2021 and a big reason is certainly the Covid situation in Bangladesh and Myanmar, as well as the political situation in Myanmar. Some investors have moved to Cambodia because of the problems that they face in these respective countries,” Secretary-General of GMAC Ken Loo told Khmer Times.

Looking to the future on how the industry in Cambodia can continue its success, Loo pointed to two aspects that he sees contributing to the strong growth. “Hopefully the new Law on Investment will attract more investors to Cambodia providing them more generous benefits, and hopefully the tax incentives are on a more broader scale than before,” he said. The second aspect would be the evolution of the industry and its shift towards higher quality products in the future. “We will still very much be doing mass production retail, however, we hope to be moving on to more medium and higher-end retail in the future.”

GMAC has been a chief protagonist in the garment industry’s rise to prominence in Cambodia. It has been in operation for the past 25 years, acting as a unified voice of investors, protecting and promoting the legitimate rights and interests of all investors in the sector, and establishing a forum for consultation and social dialogues with all stakeholders on issues that have a potential impact on the overall investment climate. Its goals are to create a favourable environment for export growth.

Sam Heng praised the past work and cooperation of GMAC with the Ministry of Labour and Vocational Training to successfully implement strategic rectangular policies such as the National Employment Policy, national policy on technical and vocational education, national policy on industrial development and national social protection policy framework.

GMAC has also been a responsible participant in the implementation of the obligations set out in the Labour Law, the Law on Trade Unions and the Law on Social Security for those who fall under the provisions of the Labour Law, the Minimum Wage Law, and other legal standards related to the field of employment.

Cambodia achieved full peace thanks to the win-win policy of the Prime Minister, and then after 1999, when the government signed a trade agreement with the United States, sealing trade with international labour standards.

By the end of 2021, the number of officially registered factories in the sector had increased to more than 1,200, providing systematic employment to nearly one million with an estimated two million people, or more, indirectly benefiting from this sector. Khmer Times