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Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia's export growth falls

Cambodia's export growth falls

Increased labour strife in the garment sector and slumping Western economies contributed to a slow-down in Cambodia’s exports during the first six months of the year, with total growth dropping by about 74 per cent year on year.

Exports rose, to US$2.5 billion, up 12 per cent year on year, according to the Ministry of Commerce.

The figure is disappointing compared to about 45 per cent growth during the first half of 2011.

The value of agricultural exports dropped by about 10 per cent during the period.

Garment shipments, which accounted for about 84 per cent of the exports, faltered between January and June as slow growth in the United States and the debt crisis in Europe had dried up demand.

Domestically, garment industry insiders have said worker strikes over wage increases not only affected production, but discouraged investment in the sector that has long championed gross domestic product growth.

“If the strikes continue, the owners will definitely move from Cambodia. Now they are starting to look at Myanmar. They have stopped considering Cambodia as a place to put their investment and they want to see Myanmar," Van Sou Ieng, chairman of the Garment Manufacturers Association of Cambodia, told the Post.

The warning is a change in tune from only a few months earlier. At the ASEAN-EU Business Summit in April, Van Sou Ieng claimed a new garment or shoe factory opened in Cambodia about every 10 days.

Year-on-year growth for garment exports during the first half of the year slumped by about 90 per cent, data showed, deflating hopes that the sector could maintain its healthy recovery from the global financial crisis.

Value increased by 8 per cent during the same period in 2011, which saw a 77 per cent jump.

The problem with exports reached beyond garments. Agricultural shipments were worth $187.3 million during the first half of the year. That's 10 per cent below last year's output.

Efforts to sell Cambodia's milled rice abroad have floundered as other major exporters flooded the market with the grain and prices have fallen substantially.

The high cost of milling rice in Cambodia, coupled with increasing logistics prices, have rendered the product uncompetitive.

“We see this year that India has supplied around 5 million tonnes of milled rice since late 2011. That has caused [our exports] to slow down,” Lim Bun Heng, president of Loran Import-Export Co, said.

Slower growth in Cambodia is tied directly to demand from Europe, said Hiroshi Suzuki, chief executive and economist at the Business Research Institute for Cambodia.

Although the 12 per cent increase in export value this year was acceptable, outlook for the rest of the year was gloomier.

“I am afraid that this could seriously affect Cambodian exports in the second half of this year,” he said.

To contact the reporter on this story: May Kunmakara at kunmakara.may@phnompenhpost.com

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