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Logo of Phnom Penh Post newspaper Phnom Penh Post - Exports to US slump by 23.6pc

Exports to US slump by 23.6pc

Exports to US slump by 23.6pc

Garment woes behind fall in April exports to key market

CAMBODIAN exports to the United States continued to plummet in April, recording a 23.6 percent annualised drop to US$135.75 million, according to US trade figures reported late Monday, mostly caused by another huge decline in garment exports to the Kingdom's largest overseas market.

The decline was worse than in March, when total exports to the US dropped 22.2 percent, a suggestion that the worst may not be over, even if April's figures were not as severe as the 27 percent decrease posted in February.

But a 20.53 percent fall in total exports to the US in the first four months of the year to $646.8 million was not as steep as the declines experienced by other top exporters to the world's largest economy.

Japan saw its exports to the US plummet 43 percent, Malaysia was down 38 percent, and neighbouring Thailand saw a decline of 26 percent, according to figures released on the US International Trade Commission Web site.

Vietnam was the only country among the top 30 exporters to the US to report an increase up to April this year, recording a 3 percent rise compared with the same period last year.

The figures showed that the recent drop in US demand for garments - which account for 98 percent of the Kingdom's exports - was the major factor contributing to Cambodia's loss in export earnings.

The sector saw revenue from US sales fall from $801.3 million in the first four months of last year to $631 million up to April 2009. This 21.23 percent drop slightly outstripped the fall in total exports, suggesting that garments are suffering more than other Cambodian exports to the US, which are miniscule - just $15.8 million in the first four months of this year. The Kingdom sells more than half of its total export products to the US.

Overall, Cambodia's exports to the US fell back to levels

roughly equal to 2006 up to April, suggesting that forecasts on Cambodia's export industry for 2009 are largely accurate.

"Merchandise exports will fall in 2009, mainly owing to the poor outlook for overseas sales of garments, which account for over 70 percent of total export revenue," the London-based Economist Intelligence Unit (EIU) projected this month, citing low US demand.

On Friday, USAID sponsored a garment forum that noted a lack of competitiveness in the sector caused by infrastructure constraints - namely export clearance times and electricity costs in the Kingdom.

"In addition to the slump in US and global demand for garment imports, there are a number of structural challenges to ... sustained competitiveness," US Embassy spokesman John Johnson said Tuesday, also citing low productivity and bureaucracy as constraints.

Unless addressed, analysts warn that, even following a global recovery, Cambodia will see prolonged decline in its main export sector.

"Even after US growth recovers, Cambodia's garment manufacturers will continue to lose market share to more efficient producers, particularly in Vietnam," the EIU said.

Garment Manufacturers Association of Cambodia Secretary General Roger Tan suggested Tuesday that "it [exports to the US] will probably be down, too, in May and June".



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