Malaysian-owned Global Apparels Limited, a garment factory in Phnom Penh, announced that the factory would close by October of this year, a company staff member confirmed yesterday.

This followed a formal announcement issued on May 30 that cited a lack of orders – causing the company to operate at a loss – was the primary reason for the closure.

The staff member, who declined to be named as he is not allowed to speak to the press, said the factory had faced losses for the last 12 months and that orders had dried up.

“If [the company] continued to operate, [it would] have no ability to pay for the worker’s wages. So the company decided to close the factory,” he said.

Another reason, according to him, was that the factory was facing tense regional competition that had higher levels of productivity at lower costs.

“The competition is very fierce, especially the competition with Vietnam and Bangladesh,” he said. “Regarding the productivity, if we compare our productivity to other countries, we are lower than them.”

According to the announcement, if the factory continued to operate past October, it lacked the financial resources to pay the worker’s short-term and long-term contracts.

However, Suth Cheth, an official from Collective Union of Movement of Workers, said he did not fully believe the company’s claims.

He said that many companies that close down do so to avoid fulfilling back pay and tax obligations, and simply move to new locations.

“The company might have a new name or want to change its location. Although that is not the easy way,” he said.

The staff worker said that the company was trying to work with the trade unions to find a solution to wages and seniority pay.

According to him, the factory currently employs around 2,000 workers and primarily exports to US, Europe and Japan.