Private companies have expressed their “deepest concerns” over the potential withdrawal of the Everything But Arms (EBA) preferential scheme. In a joint letter to the European Commission, they said the move will negatively impact the Kingdom.
The letter, signed by 40 of the Kingdom’s private companies, called on the EU and member countries in the bloc to continue their support of Cambodia’s development.
The letter reads: “As representatives of Cambodia’s private sector, workers and international civil society, we would like to express our deepest concerns with respect to the process of withdrawing the preferences offered to the Kingdom under the EBA arrangement."
“Withdrawal of the arrangement will jeopardise progress by directly harming the livelihoods of millions of workers and their families that rely on employment within the garment sector, placing them once again at risk of returning to poverty.”
The letter adds that the potential withdrawal is most concerning for Cambodia’s rural women, who make up 85 per cent of the 700,000 garment workers and therefore will likely suffer the most from the social and economic repercussions of changes to the status quo.
Ly Ly Food Industry Co Ltd president and owner Keo Mom said the withdrawal would impact both producers and consumers.
“Speaking for producers, I am very worried about the possibility of an EBA withdrawal, especially for large sectors such as garment and rice exports,” she said.
Mom said though Cambodia currently sees limited competition due to high production costs elsewhere, the withdrawal would heavily impact the Kingdom’s competition. “EBA withdrawal would make exporting to the EU more difficult,” she said.
Emerging Markets Consulting senior adviser Ngeth Chou said even though the government shows no concern about EBA withdrawal, the private sectors are concerned about losing the benefits of exporting goods to the EU.
“If the EU decides to withdraw EBA from Cambodia, the private sectors will lose benefits. However, the impact could be offset depending on the government’s actions,” he said.
Chou said the government can help promote private sectors by reducing production and transportation costs.
“The garment sector will be impacted negatively if the EU withdraws the status,” he said.
However, government officials played down the concern, saying it is normal for private sectors to express such issues.
Government spokesman Phay Siphan on Tuesday said the private sectors’ concerns were their duty because the withdrawal could result in revenue loss. The government is not concerned.
“The Royal Government of Cambodia is not worried because we have been preparing for more than a year to support the private sectors by strengthening diplomatic ties with many countries around the world to seek new markets, strengthen the legal sector, reduce production costs, and lower electricity costs, taxes and informal payments,” he said.
He said as far as the government is concerned, losing EBA is not a new thing because Cambodians’ income today goes beyond the ‘red line’, which is already beyond EBA’s target terms, so losing EBA is unavoidable.