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.”

MOST VIEWED

  • Rainsy stopped in Paris from boarding Thai flight

    Airline officials at Paris’ Charles de Gaulle airport on Thursday prevented Sam Rainsy from boarding his flight to Bangkok ahead of his announced return to Cambodia on Saturday. Prime Minister Hun Sen had earlier in the day assured Phnom Penh residents that there would be

  • Analyst: Rainsy blocked from boarding flight 'an excuse'

    THAI Airways not allowing Sam Rainsy on its route from Paris to Bangkok on Thursday is being used as an excuse to keep his standing among fellow coup plotters and his uninformed supporters as flights to non-Asean countries are available, an analyst said on Friday.

  • Rainsy lands in Malaysia

    Cambodian opposition figure Sam Rainsy arrived in Kuala Lumpur airport on Saturday afternoon after boarding a flight from Paris, where he has been living for more than four years. Ministry of Foreign Affairs and International Cooperation spokesperson Koy Kuong said on Saturday that Cambodia respected

  • Touch: Rainsy will never return

    Sam Rainsy, the “acting president” of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), has claimed it has achieved 70 per cent of its struggle to find a solution to the current political situation in the Kingdom. Just before boarding a plane at Charles de Gaulle

  • Sokha continues call for dropping of charge after bail conditions reduced

    Not satisfied with having his bail conditions reduced, allowing him to travel freely in Cambodia, Kem Sokha says he wants his charge totally dropped. “As an innocent man who has been in detention for two years even without being found guilty, I continue to demand

  • Prayut indicates no entry into Thailand for CNRP’s Rainsy

    Cambodian government officials on Wednesday welcomed the position of Thai Prime Minister Prayut Chan-o-cha after he indicated that Sam Rainsy would not be allowed to return to Cambodia through Thailand. “According to our commitment to Asean, we will not interfere in each other’s internal