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Logo of Phnom Penh Post newspaper Phnom Penh Post - Economist predicts recovery in garment sector by end of 2009

Economist predicts recovery in garment sector by end of 2009

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090504_14.jpg

One of country’s leading economists says that international organisations have been too pessimistic about Cambodia’s economic outlook for this year

Photo by: TRACEY SHELTON

A woman sells designer-label garments made in Cambodia Sunday at the Central Market.

 Garment expo set for Wednesday

A GARMENT machinery exhibition will be held at the Hotel Cambodiana on Wednesday to boost exports, said organisers. Tep Mona, director of the Garment Industry Productivity Centre (GIPC) which is running the event, said it will target small and medium enterprises (SMEs). “This is

the first exhibition of machinery used by our garment factories and small and medium enterprises,” she said. “Five garment and SME machinery companies will display their products.” She said the occasion was to show investors the machinery available and to push for export-focused production. NGUON SOVAN

AN independent economist has predicted Cambodia's beleaguered garment sector could recover as early as late 2009, noting that orders have stabilised since the early part of the year.

Kang Chandararot, president of the Cambodia Institute for Development Study, said Sunday that assessments by international institutions were too pessimistic, and they ignored the fact that new factories had opened in 2009.

The Economist Intelligence Unit and World Bank have projected that Cambodia's economy will contract this year, largely based on a huge drop in demand since the start of the global economic crisis.

"I think that [national] GDP growth will be about 5 percent higher than predictions by international institutions," Kaing Chandararot said, adding that the garment sector will recover this year. "Tax subsidies are one measure the government initiated to boost the garment industry because it can maintain economic stability by focusing on domestic markets," he said

"Our garment industry will improve this year because factories have received orders and new factories have opened this month," Kaing Monika, external affairs manager for the Garment Manufacturers' Association of Cambodian (GMAC), said Sunday.

But Kaing Monika said that the sector still faces downward price pressure and that more layoffs were possible. He said about 20 factories had closed this year and about 13,000 people were made jobless.

"I don't think working conditions in the sector are getting worse - they are still good compared to regional countries, according to the ILO (International Labour Organisation)," he said.

He said the government had suspended its 1 percent advance profit tax until 2012, and reduced employer contribution to social security to 0.05 percent of gross salary, from 0.08 percent, for 2009 and 2010.

The government has allocated US$6.5 million to vocational training for jobless garment workers.

Cambodian People's Party parliamentarian Cheam Yeap said the government has tried to offer agricultural training.

"The government has proposed ... to offer loans with lower interest rates to people to increase their farming capacity and offer more opportunities for people to work in agriculture," he said.

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