Despite an overall increase in orders during January and February, the first few
months of 2005 have seen 12 garment factories close and 24 suspend their operations,
said an industry leader.
While 30,000 jobs were initially lost, another 13 factories opened between January
and mid-March, salvaging around 10,000 of those jobs, said Ken Loo, secretary general
of the Garment Manufacturers Association of Cambodia (GMAC).
"It is difficult to say for sure if these closures are a direct result of the
ending of [the Multi-Fiber Agreement on January 1], but my guess would be yes,"
"The expiration of the MFA has resulted in a drastic drop in the prices of garments
all over the world and those factories that are uncompetitive will have to close,"
Since the expiration of the MFA quota system, which guaranteed Cambodia access to
American markets, the worldwide garment sector has been flooded with cheap Chinese
While the influx of Chinese garments caused a dip in Cambodia's market share, talk
of imposing restrictions on China to safeguard domestic US and EU manufacturers has
caused buyers to return to the Kingdom, said Van Sou Ieng, president of GMAC.
The volume of Cambodian sales to the United States in January increased by 20.4 percent
compared to last year, but average prices dropped 11 percent, said Roland Eng, former
Cambodian Ambassador to the United States.
"The competitive pressure is real," said Eng, who has lobbied for duty-free
access to US markets.
Loo confirmed the figures quoted by Eng, adding that while orders had slowed in March,
business was again picking up.
However, the trend of more orders and lower prices is hurting "piece rate"
workers who receive a salary based on how many garments they complete, said Chhorn
Sokha, vice president of the Coalition of Cambodian Apparel Workers Democratic Union.
Some employers have lowered the amount they pay per item to piece-rate workers, Sokha
Though many predicted Cambodia's reputation for high labor standards would continue
to attract image-conscious buyers, union leaders have reported a crackdown on labor
activities since January.
"They tell workers not to ask for their rights or the factories will close,"
Ieng used a May 5 economic conference to ask workers to refrain from industrial protests,
saying he feared for the sector's competitiveness.
"Don't do too much manifestations or strikes - too many strikes, and [the buyers]
won't trust us. ... they will reduce the volume of orders."
Buyers "are concerned about price," Ieng said. "They don't care whether
you have good labor standards."
The garment sector accounts for 80 percent of Cambodia's exports, employing an estimated
260,000 workers, mostly young women.