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Grand Twins International CEO Liao Chung-te
Grand Twins International CEO Liao Chung-te talks to the Post in the company’s factory in Por Sen Chey district last week. Daniel Quinlan

After IPO comes trust building

Earlier this week, garment manufacturer Grand Twins International became just the second company to list on the Cambodia Securities Exchange (CSX) in its three-year history. After numerous delays and scepticism from local and international investors, the firm successfully completed the IPO process and commenced trading at $2.41 per share on Monday. CEO Liao Chung-te spoke with the Post’s Eddie Morton about the five-month leadup to Monday’s listing.

Why did GTI go public? Was it for the $20 million of increased capital or an effort to promote the company and the sector?
It’s our honour to be the first [private] IPO company. We were not only seeking the increase in capital but also recognition from the public. GTI had to build up its reputation and develop strong foundations in Cambodia to get to where it is and, with the garment industry continuing to expand yearly, hopefully the public can see and appreciate this.

Can you guarantee complete transparency now that the firm has gone public?
Absolutely, we can guarantee complete transparency to the public. This is the only way to gain trust from the public. That said, it might take a while to build this trust. But we will work hard and have more communication with the public, especially with the media.

What were the most difficult aspects of attracting investors to buy into GTI?
Cambodia does not have sufficient laws allowing foreign banking firms to purchase interests in local companies. The lack of these custodian laws has been the major concern of most of our investors. And some of the foreign investors were not familiar with the Cambodia market so we had to spend a lot of time to explain it to them.

GTI has a reputation as one of Cambodia’s better-run garment factories. Was it always that way?
It took time to build up such a reputation at GTI. We’ve been in Cambodia for almost 20 years and we have helped Cambodia’s government in economic development relating to the garment sector since the beginning. Also, with guaranteed orders from Adidas, we are able to improve our working environment. This, admittedly, isn’t easy for other garment factories to catch up with.

Was GTI impacted by the strikes at the beginning of the year?
We were only impacted by outside forces threatening our workers to stop work in order to facilitate their national strike plan. This caused us to shut down the operation for two days in order to guarantee our workers’ safety. Although all our workers were willing to work, they were not able to. We arranged overtime to catch up the two days’ lost capacity. We have a strike record of zero.

In your opinion, would further sector-wide wage rises endanger the industry’s longevity?
Even though the wages have risen to $100 per month, it is still relatively low compared with China and neighbouring Southeast Asia countries. Meanwhile, Cambodia also has the advantage of a 0 per cent import custom duties for European countries, so that makes the industry’s current and future prospects
more promising.

Sceptics say the wage dispute and a dependence on off-shore demand to fuel production make the industry too volatile for a promising share offering. What do you think?
To GTI, it is not volatile at all. What we worry about is how to expand and hire enough workers at the fastest pace to fulfill all our customers’ demand. As the global economy recovers, we had huge order increases from our existing customers and had lots of inquiries from new customers.

There are several firms waiting to be listed and some are garment companies. But yes, it would be good to have a financial firm be listed as well.

This interview has been edited for length and clarity.



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