Logo of Phnom Penh Post newspaper Phnom Penh Post - Big rise in funds for travel goods manufacturing

Big rise in funds for travel goods manufacturing

Content image - Phnom Penh Post
A leather bag for sale in a shop in the capital Phnom Penh. POST PIX

Big rise in funds for travel goods manufacturing

Cambodia has seen investment in the manufacture of travel goods soar noticeably in early this year as the Council for the Development of Cambodia (CDC) figures reveal grants for bag manufacturers accounted for nearly half of all investment projects.

Industry insiders claim the spike is due to tariff privileges Cambodian-made travelling goods receive from the US under its Generalised System of Preferences (GSP) and the increasing trend of global manufacturing firms leaving China due to rising labour costs.

CDC has granted investment approval to a total of 45 projects from January to Tuesday, according to figures on its Facebook page, of which 21, almost half, were for bag manufacturing. The accumulated investment capital for the 21 projects is about $100 million, and if all projects materialise, 31,951 jobs will be created.

CDC reviews investment applications and grants incentives to investment projects meeting the requirements as laid out in Cambodian investment law.

CDC officials could not be reached for comment on Tuesday.

Garment Manufacturers Association in Cambodia (GMAC) deputy secretary-general Kaing Monika on Tuesday said there is an increasing trend in low value-added industries leaving China due to rising costs of labour and to avoid tariffs in response to the escalating trade war between the US and China.

He added that Cambodia is becoming more attractive to those companies, thanks to duty-free access to the US market since July 2016, when 28 travel-goods production lines operating in the Kingdom became eligible for the scheme.

“The main reasons behind attracting more bag manufacturers is the GSP that the US provides to Cambodia, the trend of manufactures leaving China due to the rising costs of labour there and a shortage of labour in low value-added industries,” he said.

He added that the threat of a US-China trade war was another factor contributing to the push in China for manufacturers of low value-added products to accelerate plans to relocate factories to other countries – including Cambodia.

US President Donald Trump late last year threatened to raise levies on $200 billion worth of Chinese goods from 10 to 25 per cent. The list of affected products included handbags, travel items and other accessories. Though Trump announced a delay in the tariff increase late last month, analysts still warn that it does not mean the trade war is officially over.

Travel goods manufacturers are not obliged to register as GMAC members but are encouraged to on a voluntary basis. There are currently more than 20 members voluntarily registered as GMAC members, up from around 10 in 2017.

According to Monika, the value of Cambodian travel goods exports amounted to about $500 million last year, of which $350 million was exported to the US market.

MOST VIEWED

  • Prince Norodom Ranariddh passes away at 77

    Prince Norodom Ranariddh, the second son of the late King Father Norodom Sihanouk and former First Prime Minister of Cambodia, has passed away in France at the age of 77. “Samdech Krom Preah Norodom Ranariddh has passed away this morning in France just after 9am Paris-time,”

  • Rise in planned flights lifts travel hopes

    Six airlines have applied to resume flights in December, while two others have put in for additional flights and routes, according to State Secretariat of Civil Aviation (SSCA) head Mao Havannall on November 29. These account for 43 new weekly domestic and international flights in December, up 16

  • General’s gun smuggling ring busted

    The Military Police sent six military officers to court on November 22 to face prosecution for possession of 105 illegal rifles and arms smuggling, while investigators say they are still hunting down additional accomplices. Sao Sokha, deputy commander of the Royal Cambodian Armed Forces and commander of

  • Cambodia, Thailand to discuss border reopening

    Cambodian authorities from provinces along the Cambodia-Thailand border will meet with Thai counterparts to discuss reopening border checkpoints to facilitate travel, transfer of products and cross-border trade between the two countries. Banteay Meanchey provincial deputy governor Ly Sary said on November 22 that the provincial administration

  • Hun Sen: Manet to be candidate for prime minister

    Prime Minister Hun Sen has reaffirmed that his oldest son Hun Manet will be his successor as Prime Minister if he is elected. Speaking during the inauguration of a new sewage treatment facility in Preah Sihanouk province on December 2, Hun Sen said Manet will be

  • More Cambodians studying in US

    The number of Cambodian students studying at US colleges and universities in 2020-21 increased by 14.3 per cent over the previous year despite the Covid-19 pandemic, according to a recent US government report. The 2021 Open Doors report on International Educational Exchange showed that 848 Cambodian students studied