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Logo of Phnom Penh Post newspaper Phnom Penh Post - Garments got $400m subsidies, says govt

Garments got $400m subsidies, says govt

THE government on Thursday said that it had spent around US$400 million last year on helping Cambodia's struggling garment and apparel industries survive the global financial crisis.

Minister of Economy and Finance Keat Chhon told the National Assembly that the government provided $490 million in tax and VAT subsidies to all sectors in 2008. Around $400 million in subsidies went to the garment sector.

He also said that the government has not imposed customs duty or VAT on imports and exports of garments since 2005, so buyers should not claim that Cambodia's clothes are overtaxed.

"We spend large amounts of money on supporting the garment industry, so the Garment Manufacturers Association of Cambodia (GMAC) should inform the public of this," said Keat Chhon, who added that the government currently waives tax on clothing imports and exports to encourage factories to compete overseas.

The government will also waive its 1 percent per month advanced profit tax during 2010 and 2011 and help pay 0.3 percent of occupational-risk funds for garment workers in 2009 and 2010, said Keat Chhon.

According to a GMAC report, the garment industry imported $1 billion in raw materials, and exported about $2.9 billion in 2008.

Kaing Monika, external affairs manager at GMAC, said Thursday that it is difficult to assess the exact amount of financial assistance provided to the industry because import tax is calculated by the government.

He also said that GMAC acknowledges that the government has made efforts to help the sector, including providing tax breaks for three to four years to new businesses.

"I think it is the government's calculation," said Kaing Monika. "GMAC is not sure about this issue."

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