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Footwear sector to have ‘running room’

Footwear sector to have ‘running room’

Cambodia’s footwear industry has experienced significant growth over the past five years, with the number of factories doubling, according to data from the Ministry of Commerce. Meanwhile, the International Labour Organisation (ILO) has announced it will monitor and report on footwear factories.

As of November, 45 factories exported footwear with a combined value of $268.7 million, according to estimates of the Ministry of Commerce.

Nearly 50 per cent of the products were shipped to the European Union, the top export destination for footwear and garments since the Everything But Arms regulation that gives Cambodia duty-free and quota-free shipping to all EU countries. The second largest destination was Japan, which imported 34.7 per cent of Cambodian footwear, followed by the US at 27.03 per cent.

In 2012, most footwear factories were Taiwanese owned (26), while only six were Cambodian and five Chinese. Other manufacturers were Korean, Japanese, Thai, Canadian, Australian and from Hong Kong, according to ministry data.

Of the 69,184 workers in the footwear industry, more than 90 per cent are female.

ILO’s Better Factories Cambodia (BFC) program recently published a Footwear Pilot Program report, saying the Cambodian footwear industry is expected to grow gradually.

“Many factories [act] as remote production facilities for existing factories in Vietnam. Cambodia is considered too small to support a large footwear industry”, such as those that exist in China, Vietnam or Indonesia,  the report said.

It added: “Nonetheless, because of wage increases and labour shortages in Vietnam, factories are looking to produce in Cambodia.”

The vice-president for production of a US footwear brand, who asked not to be named, confirmed. “Given the pressure on labour costs in the region and the increasing difficulty of recruiting workers in the Ho Chi Minh City area, I do see more factories going to Cambodia. Some factories will opt to move to Northern Vietnam as well, but overall Cambodia still has some running room and I think footwear factories will take advantage of that.”

With that mind, the ILO has now expanded its monitoring and reporting on footwear factorys’ compliance with national law and international standards for the first time.

“Since assessment of working conditions in footwear factories is not mandatory as are BFC’s assessments of export garment factories, BFC worked with nine select factories on a pilot footwear factory assessment program between March and December 2012,” the organisation wrote, stating that it found safety and health challenges, especially chemical safety, in the industry.

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