Subscribe Search

Search form

Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment exports surge up EU list

Garment exports surge up EU list

Content image - Phnom Penh Post
Workers stitch garments at a factory in Phnom Penh’s Por Sen Chey district in 2014. Vireak Mai

Garment exports surge up EU list

Cambodia's garment manufacturing industry has eclipsed rival Vietnam as a supplier of products to the European Union and is on course to overtake India, a visiting industry insider said yesterday.

“In the space of five years, Cambodia has climbed from being the tenth-largest supplier of clothing to the European Union to become the fifth-ranked supplier, behind China, Bangladesh, Turkey and India,” said Michael Scherpe, CEO of Messe Frankfurt France, a German-based firm that organises worldwide trade fairs for the garment sector.

He cited European Union figures that showed Cambodia’s garment exports to the EU grew by 14 percent in 2016 to reach €3.8 billion ($3.8 billion), putting the country ahead of Vietnam. Given the industry’s pace of growth, he added, “it is now probable that Cambodia will overtake India within two years”.

Trade figures for 2016 from the EU Directorate-General of Trade, an annual bulletin, show that Vietnam exported a total €3.2 billion ($3.6 billion) worth of garments, at a growth rate of 6.8 percent. Meanwhile, India exported a total of €5.6 billion ($6.3 billion) worth of garments last year with a negative growth rate of -0.7 percent.

“Cambodia has become a major supplier of clothing to the European markets, while advancing much faster than most of its rivals,” Scherpe said. “And I think it worthwhile to emphasise that Europe today takes up 43 percent of the Cambodian sector’s exports as opposed to 29 percent taken by the US market.”

He warned, however, that Cambodia’s push into the EU market was largely the result of preferential treatment under the “Everything But Arms” agreement, which allows its garment products to enter the EU market duty-free. That preference is expected to end as Cambodia graduates out of Least Developed Country (LDC) status.

“If, as seems likely, this new ranking is confirmed by the United Nations, Cambodia will lose its status as LDC and, what is more, will be excluded from preferential treatment,” he said.

“Needless to say, Cambodia will be allowed a grace period of about three years in order to adjust to its new status.”

Competition from Vietnam
Another looming threat to the Kingdom’s garment sector, he said, was the implementation of the free trade agreement between the EU and Vietnam that is set to come into force by the end of this year, and which gradually reduces the current 12 percent import tariff to zero.

He added that with Vietnam actively preparing to take full advantage of the falling tariffs, Cambodia must find ways to remain competitive.“I cannot advise you strongly enough to increase your efforts to improve competitiveness and international marketing,” he said.

Ok Boung, secretary of state of the Ministry of Commerce, said that while preferential treatment of Cambodian exports played a crucial role in developing the Kingdom’s garment industry, improved customs procedures and the online issuance of certificates of origin had increased its competitiveness.

“We have eliminated the difficulties and made shipping easier,” he said. “With our online system, an export can now get approval in as fast as 24 hours while Camcontrol only inspects 2 percent of outbound shipments.”

While Boung downplayed concerns over Vietnamese competition and the potential loss of Everything But Arms privileges, he raised concerns over the impact of Britain’s from the EU, which puts approximately $800 million worth of annual Cambodian garment exports in tariff limbo.

“However, we are not scared anymore because we are expanding the market to Japan, South America and Eastern Europe,” he said, adding that this, plus growing Asean trade, could offset losses.

Van Sou Ieng, chairman of the Garment Manufacturers Association in Cambodia, said garment manufacturers need to create higher value-added products to continue to benefit from preferential treatment.

“What we need to do his create better products at a higher value for the EU market,” he said. “And this comes from displaying our products internationally and being able to source raw materials domestically.”


  • Kak Channthy, Cambodian Space Project frontwoman, killed in crash at 38 [Updated]

    Updated 5:05pm, Tuesday, March 20, 2018 Kak Channthy, frontwoman of popular The Cambodian Space Project, was killed Tuesday morning in a traffic accident in Phnom Penh. She was 38. Channthy, the internationally recognised singer-songwriter also known as “Srey Thy”, was reportedly travelling in a tuk-tuk on the city's

  • Australian police investigating death threat against Kem Ley's widow

    Updated: 10:17am, Friday March 23, 2018 Australian authorities on Thursday confirmed they have launched an investigation into a crudely written death threat sent tothe family of slain political analyst Kem Ley and Victoria state MP Hong Lim. The typed letter, reported to Victoria police last week, is

  • Apparel groups including H&M and Gap urge Cambodia garment industry reform, seek meeting with Hun Sen

    A group representing some of the largest apparel brands in the US and Europe – including Gap, H&M and ASOS – expressed “growing concern” on Tuesday over several controversial labour laws and ongoing court cases against unionists described as restrictive and unjust. In an open letter

  • Hun Sen says Montagnards don’t exist in Cambodia

    Prime Minister Hun Sen once again attacked ex-opposition leader Sam Rainsy for pledging “autonomy” to Montagnards, claiming – seemingly incorrectly – the ethnic minority does not exist in Cambodia. “We respect all minorities such as Jarai, Steang, Phnong, but we have never had Montagnards,” the premier said