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Logo of Phnom Penh Post newspaper Phnom Penh Post - New exports vital to aid sluggish garment sector

New exports vital to aid sluggish garment sector

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As increased competition and a shortage of workers continue to affect

garment exports, some see diversity of trade as key to economic growth

Tracey Shelton

Cashew farmers weigh their crop in Ratanakkiri province in this file photo.

TEXTILE TURMOIL

Garment

exports dropped 46 percent in the fourth quarter of 2007, capping off a

dismal year in a key sector, according to figures from the Ministry of

Commerce, which is pushing the US, Cambodia’s largest customer, to

lower import tariffs.

Cambodia must diversify its exports to

compensate for an ailing garment sector ravaged by competition from

Vietnam and China, Sok Hach, president and research director of the

Economic Institute of Cambodia (EIC), told the Post last week.

"As we see greater competition in the region, products such as organic

rice, cashew nuts, rubber and tourism will be vital to generating

alternative employment for affected garment workers," Sok Hach said.

"We want to promote these products as a means of diversifying Cambodian exports," he added.

Robust foreign trade will play a critical role in Cambodia's economic

growth in coming years, Sok Hach said, adding that trade already

comprises some 50 percent of current fiscal expansion.

Mao Thora, undersecretary of state at the Ministry of Commerce, agreed

that the agriculture and tourism sectors should be a priority for

diversification, but denied the garment sector was weak.

"It is still strong and continues to rank fourth or fifth in the US

market," she said. "But we are facing a shortage of nearly 20,000

workers as agricultural profits continue to rise. Some workers are

choosing to grow crops rather than remain in the garment industry."

Cambodia's garment industry is the country's largest source of income,

generating 80 percent of all foreign exchange earnings and employing an

estimated 350,000 workers.

However, Cambodia exported US$1.16 billion in garments to the United

States in the first quarter of 2008, an increase of 2.2 percent over

the same period last year.

Moreover, garment exports for all of 2007 showed an annual rise of only

2.2 percent, representing $2.9 billion in trade revenue, compared with

previous averages of around 20 percent.

Targeting new markets

Ricarda Rieger, deputy country director of the UN Development Program,

told a group of about 50 trade specialists from Cambodia, Bangladesh,

Laos and Nepal at a workshop last week that the country has the

potential to boost economic growth by targeting new international

markets.

"Cambodia has a vast assortment of natural resources that can be used to support a diversified export economy," she said.

"Oil and gas holds considerable potential, the mining industry is on

the rise and forestry and agriculture are also interesting sectors,"

she said.

However, sustaining trade development in Cambodia will require strict adherence to government standards, Sok Hach said.

"The rules and regulations must be respected and promoted," he said.

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