Year-on-year exports in Cambodia’s garment sector declined during the third quarter, a slowdown the industry says is caused by ongoing tensions over the minimum wage.
Garment exports totalled $1.61 billion during the third quarter, down 4 per cent from $1.68 billion in the same period last year, the latest data from the Ministry of Commerce shows.
Overall, however, led by an increase from January to June exports increased 6 per cent during the first nine months of the year, reaching $4.2 billion.
Cheath Khemara, a senior officer at Garment Manufacturers Association in Cambodia, told the Post yesterday that the recent slump in export value was driven by a decline in buyer orders in the first six months of the year.
“The ongoing protest and strike have affected buyers’ confidence, so they hesitate to put in orders from Cambodia,” he said.
A nationwide strike of garment workers calling for the minimum wages to be increased to $160 came to a head on January 5 when five people were killed when security forces opened fire on protesters with live ammunition.
Since January, buyers have been steering away from Cambodia Khemara said.
“Buyers try to escape from risk, so that they just wait and see until the situation is better,” he added.
Thérèse Sundberg, press officer at retail giant H&M, said yesterday her company had not slowed down its orders.
"We see long-term on our commitment in Cambodia and we have not reduced our purchases," she said via email.
Sporting goods giant Adidas, another of Cambodia's major buyers, would not comment directly yesterday on whether the company had reduced orders.
Silvia Raccagni, sustainability communication manager at Adidas, said since the January protest, Adidas has been in a constant dialogue with the government to find a peaceful solution to labour unrest.
With an announcement on a new minimum wage expected soon, Raccagni re-stated her company’s call for a well-researched and evidence-based solution to be reached in the wage talks.
“In all our sourcing decisions we ensure that our workplace standards are met, she said in an email. “This implies that the prescribed minimum wage, or the wage that is usual in the sector (if the latter is higher than the prescribed minimum wage) must be paid,” she said.
A new minimum wage announcement is expected in November. Factories say that $110 a month is the most the industry can afford while unions have asked for a raise of up to $177.
The Post reported in June that Levi Strauss and Target had reduced orders this year following the January protest.
Ken Chhenglang, acting president of the National Independent Federation Textile Union of Cambodia, agreed that industry unrest had caused buyers to shy away from Cambodia. “What the major concern of buyers is that their product cannot be made and shipped on time,” she said.
A wage that provides workers a decent living, she added, would increase production and help stabilise the industry.
“Once the problem of labour wages is solved and all parties agree to accept it, orders will increase next year,” she said.
Despite the slowdown this quarter, Chan Sophal, spokesman of Cambodian Economic Association, told the Post that the outlook for the sector was still bright.
“The sector is expected to continue growing in 2014 and 2015, and beyond despite being disrupted by [labor] protests,” he said. “The slowdown should not be a concern.”