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   Update on Cambodian Garment  and Textile Industry

Cambodia's garment industry is the country's biggest industrial employer, and is now struggling against stiffer global competition and slowing demand. Many Chinese and Korean companies have established a presence in Cambodia for years.  Now, more than 10 Chinese-owned factories have moved to cheaper markets, leaving hundreds of thousands of garment workers from the provinces facing destitution, reported Phnom Penh Times in early 2008.

The garment industry earns 80 percent of Cambodia's foreign exchange earnings and employs an estimated 350,000 people in more than 300 factories.

The industry began to grow after a the country passed a new labor laws encouraging labour unions and allowed the International Labour Organisation (ILO) to inspect factories and publish its findings. In turn, the United States agreed to cut tariffs on Cambodian garment exports, buying 70 percent of all of the country's textiles in the 1990s.  Cambodia maintained its higher working conditions after the deal expired in 2005, and garment-making has made the national economy one of the fastest growing in the region.

The World Bank reported that the industry grew only 8.0 percent in 2007 compared to the growth of up to 20 percent previously. The Cambodia Ministry of Commerce said that the apparel exports had declined since October 2007, mainly due to the US economic slowdown. Exports to the United States slipped 1.44 percent in the first quarter of 2008, compared with the same period in 2007.


Predicted Trend

The Cambodia's Free Trade Union (FTU) said that the factory owners are looking abroad for greater productivity and lower costs. Kaing Monika, Manager at the Garment Manufacturers Association of Cambodia, commented that many manufacturers could move to Vietnam, Bangladesh or India if they could get lower sosts. Production costs, oil and power, are high in Cambodia, and the demand for higher wages also put the country's garment industry in danger, he said.

Factory owners are also facing a proliferation of labor unions and illegal strikes. Experts predict that in 2009 Cambodia would even see more competition when US restrictions on Chinese textile exports are scheduled to end.  China and Vietnam are still Cambodia's direct competitors. Cambodia's labor ministry said that to counter this competition, Cambodia must increase productivity, quality and extend their reputation as having high labour standards.


See list of Cambodia's Garment factories on our website at:
Textile and Garment Companies in Cambodia




Other useful link on garment and textile industry:

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