Factories should target low-end market, PM says, but figures suggest
the industry faces a slowdown as demand for exports shrinks
THE garment sector will not be seriously impacted by the global financial crisis, Prime Minister Hun Sen said Wednesday at a summit of trade leaders from the world's poorest countries held in Siem Reap.
"Expensive clothes are rarely produced in our poor countries, but they are produced in other countries. So we may focus on cheaper garments," Hun Sen said, adding that garments made in Cambodia will continue to sell if they are marketed properly.
"At this point, I think that there has been no serious impact on the garment sector," he added.
The prime minister's comments come despite industry figures that suggest a general sector slowdown and expected lay-offs in coming months.
At least 20,000 workers have been laid off this year, say officials with the Garment Manufacturers Association of Cambodia, adding that 35 factories employing up to 5,000 workers each were facing closure.
GMAC chairman Van Sou Ieng said earlier this week that 30 factories have already been closed this year.
"They closed because there were no purchase orders," he said.
Clothing demand has fallen sharply in the US as economic woes force consumers to cut back on nonessential purchases.
According to the Ministry of Commerce, garment exports plummeted 46 percent in the fourth quarter of 2007, capping off a dismal year.
Export growth for all of 2007 stood at only 2.4 percent, representing US$2.9 billion.
Hun Sen said that Cambodia's export garment market is worth approximately $3.6 billion a year.
According to data from the US Department of Commerce, Cambodia garment exports to the US, the Kingdom's biggest textile market, totalled $1.8 billion in the first nine months of 2008, slightly down from the same period the previous year.
The sector is Cambodia's largest source of export income, providing 80 percent of its foreign exchange and employing more than 300,000 people.
ADDITIONAL REPORTING BY HOR HAB