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Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment factories worry about slumping sales

Garment factories worry about slumping sales

Garment factories worry about slumping sales

Garment factories employ more than 350,000 workers, most of whom are unionised.

T rade officials and economists say the garment sector is threatened with a slowdown over coming months if productivity does not increase.

For the first three months of 2008, garment exports plummeted to US$1 billion from $1.99 billion at this time in 2007 and $1.9 billion in 2006.

“The garment sector is slower than in past years, we fear that additional costs would lead factory owners move to other places,” said Cheat Khemara, senior labour officer for the Garment Manufacturers Association of Cambodia (GMAC).

“The most valuable [garment] exports and textiles went to China, while Cambodia gained only workers’ salaries and factory rental fees,” he said, adding that factory managers have become increasingly concerned over rising operating costs.

“Once the Ministry of Labour implements the salary tax, factory owners will have to pay US$0.80 for each worker. This is a new cost for garment factory operators,” he said.

“They have suffered with highly electricity costs, low productivity and too many strikes.”

Some 326 factories operate in Cambodia after 10 closed last year, employing 360,000 workers.

A slowdown in the sector would be devastating for countless families depending on the monthly wages of workers.

“I would encourage our workers to work hard to compete with China. In Vietnam and China, people want to work, because they want to make money,” said Free Trade Union President Chea Mony, who blames factory owners for the strikes which have hit hard productivity.

Others, however, blame the numerous unions for falling productivity, and the loss of business to neighbouring countries.

“It would be nice if the ministry allows only three unions,” said Nguon Meng Tech, Director General of the Cambodian Chamber of Commerce, warning that the sector could collapse if it does not pick up the pace.

“Look at China, there are no unions. People love working hard to make money,” he said.

Economist Sok Sina agreed that better productivity was needed to ward off competition from China and Vietnam, especially since US safeguards against some Chinese textiles are set to expire at the end of the year.

“Buyers need Cambodian goods to arrive at the market on time. If goods do not arrive on time, buyers will stop ordering from Cambodia,” he said.

But he added that imminent collapse was not likely.

“I think our garment sector for first half year of 2008 is not too bad, because besides the US market, we have exports to the EU market as well,” said Sok Sina.

Thon Virak, deputy director general for the Foreign Trade Department at the Ministry of Commerce, told the Post on Wednesday that diversification was key to the garment sector’s survival.

“I think our garment sector is doing fine because we have expanded into the EU and Canadian market,” said Thon Virak. “It is a bit slow, but not too bad.”

But even a slight slowdown could be enough to scare factories out of Cambodia, said GMAC’S Cheat Khemara.

“If production process slows, buyers would stop ordering from factories here, but looking for other places,” he said.

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