Cambodia's garment manufacturers might sell fabrics from unfinished clothing orders worth millions of dollars to factories offshore in a last-ditch attempt to meet looming buyer deadlines.
The Garment Manufacturers Association in Cambodia (GMAC) issued a letter to the Cambodian government yesterday requesting it to “facilitate” exports of unfinished orders to other countries amid continued garment-worker strike action.
The letter calls on the Ministry of Economy and Finance to clarify and advise factory owners on “re-exporting” procedures.
This means that stockpiles of whole fabric and cut fabric pieces, as well as accessories, semi-finished and unpacked finished products would be shipped out to a buyer’s other manufacturing operations in the region.
“In order to reduce losses, the factories have no choice other than to transfer the orders to their buyer’s partners in other countries,” the letter states.
Ken Loo, secretary general of GMAC, said in a text message that the plan was “to facilitate by simplifying the whole process to allow such re-export”.
Hundreds of garment factories that ceased operations on December 25 due to a mass strike over minimum wages are struggling to find ways to follow through on orders in an industry that ground to a halt last week.
Nam-Shik Kang, managing director of Phnom Penh-based Injae Garment Co, which employs 3,500, said that despite the new plan, he stood to lose out on profits.
“Our factory currently has a full capacity of orders to fill by February, most of it being material equating to about three million garment pieces. We will send to partners in either Indonesia or Vietnam . . . This is a huge quantity and a very big disaster for us and for others,” said Kang, whose South Korean factory supplies Wal-Mart and JC Penny.
“Even if we ship part of our shipment, about one million pieces, we will incur shipping costs of about $200,000 or even $300,000. And it will not even solve the problem.”
An official at the Ministry of Economy and Finance said he was unaware of the letter and declined to comment.