Duty-free agreements between regional competitors and foreign importers would put the Cambodian garment industry at risk, Commerce Minister Cham Prasidh said last week.
Speaking to reporters after a meeting, Prasidh warned that the Kingdom’s garment sector would not be able to maintain its competitive edge over the industries of neighbours such as Vietnam and Myanmar should those countries implement free-trade agreements with the US, EU and regional trade partners.
“The big risk for us is that I start to see Vietnam negotiating a free-trade area with the US, and Vietnam will push garment products entering the US to be duty-free, while Cambodian garment products are still charged,” Prasidh said.
“Investors in the Cambodian garment industry would move into Vietnam; it is a big risk and a big challenge.”
According to Prasidh, the EU and US have recently engaged in talks with the Myanmar government about instituting a trade agreement similar to the “Anything But Arms” initiative under which Cambodian imports to the EU are duty- and quota-free.
Myanmar’s garment industry is at an advantage to Cambodia’s, Prasidh said, as it enjoys cheaper electricity costs and encounters fewer strikes and protests.
Tran Tu, trade attaché for the Vietnam Trade Office in Cambodia, said that as far as he knows, Vietnam and the US have no plans to institute a bilateral free-trade area. “But Australia, Malaysia, Peru, the US and Vietnam are preparing to join the Trans-Pacific Strategic Economic Partnership Agreement,” he told the Post.
Van Sou Ieng, president of the Garment Manufactures Association in Cambodia, also claimed that Cambodia’s frequent strikes and protests were a risk to its garment industry.
“If Vietnam negotiated [with the US] successfully, investors will move to Vietnam because the Cambodian garment sector would lose its image,” he said.
But with Cambodia’s garment exports still on the rise – hitting $1.3 billion in the first quarter of the year, up 16 per cent from the corresponding period last year – Kang Chandararot, executive director of the Economics Unit of the Cambodia Institute of Development Study, said Cambodia needs to look at more long-term measures of the industry’s strength, including workers’ welfare, factory conditions and minimum wage.
“If Cambodia wants long-term investment, it needs to discuss the conditions. If some investors go out, others will come to discuss on the conditions,” he said.