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Garment exports up, margins down

Garment factory workers check clothing for defects at a factory in Phnom Penh’s Sen Sok district
Garment factory workers check clothing for defects at a factory in Phnom Penh’s Sen Sok district last month. Hong Menea

Garment exports up, margins down

Despite concerns that political uncertainty would be a drag on the economy, Cambodia’s garment exports continued on an upward trend in the first nine months of the year, the latest data show.

Though volume increased, factory profit margins were squeezed due to labour disputes and demands for higher wages, according to the Garment Manufacturers Association in Cambodia (GMAC).

Cambodia’s garment and footwear exports were worth $4.1 billion in the first nine months this year, a rise of 22 per cent from the $3.44 billion amount in the nine months through September 2012, the Ministry of Commerce said yesterday.

The numbers came as something of a surprise following months of election-related tension.

After Cambodia’s disputed poll in July, many garment workers were scared to return to factories because of rumours that the country was on the brink of violence. But the tense atmosphere did not keep workers away long enough to make a dent.

The real impact, GMAC says, came in the form of labour demonstrations over unpaid wages, and gripes with management.

An ongoing strike at one of the biggest factories in the country, SL Garment Processing (Cambodia), had cost the company more than $1 million since the latest round of demonstrations began on August 12, according to the management.

International brands H&M and Gap reduced their orders, and Levi’s stopped buying from SL in August.

But Ath Thorn, president of the Coalition of Cambodian Apparel Workers Democratic Union, dismissed GMAC’s suggestion that workers were responsible for lower profits, and said labour demonstrations were too few and far between to have a serious impact.

Thorn attributed any income increase to workers having to do more overtime, and says that a raise in exports can be attributed to enhanced worker output.

“The amount they [employer] pay to worker is increased, and at the same time they get higher quantity too,” he said.

According to GMAC, the US is the biggest market for Cambodian garments and textile products, with imports worth about $1.21 billion in the first nine months, or about 30 per cent of market share. The US is followed by Europe, Canada and Japan.

Hing Thoraxy, senior researcher at the Cambodia Institute for Cooperation and Peace, said that the increasing number of garment exports reflects improved economic conditions in Cambodia and in its
export markets.

Thoraxy added that while output is strong, more is needed to diversify and enhance production levels.

“We need to shift from simple T-shirts to produce more complicated products such as coats and shirts with embroidery, to add value to the product,” he said.

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