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

  • South Korea’s first lady brings hope to ill boy

    South Korea’s first lady Kim Keon-hee – wife of current president of the Republic of Korea, Yoon Suk Yeol – met with a 14-year-boy with congenital heart disease during her trip to the Kingdom for the ASEAN Summit. After their meeting it was announced that the

  • Hun Sen gets Covid, shuns G20, APEC summits

    Prime Minister Hun Sen said he has tested positive for Covid-19 in Indonesia, where he is slated to attend the G20 summit in his capacity of the ASEAN chair. In a social media post addressing the Cambodian public, he said: “Before leaving Cambodia, I always

  • Moody’s sets outlook rating to ‘negative’ for Cambodia

    US global rating agency Moody’s Investors Service Inc on November 15 announced that it downgraded Cambodia’s outlook from “stable” to “negative” and maintained its B2 local and foreign currency issuer ratings. “The negative outlook reflects a deteriorating external position as illustrated by the severe

  • Hun Sen’s Covid infection caused by ‘weakened antibody’ after summit

    Prime Minister Hun Sen said exhaustion from heavy workload before and during the recent ASEAN Summit may have led to him contracting Covid-19 due to his weakened immune system, while rejecting speculations that the infection was caused by leaders of some countries who did not

  • Korean first lady paves way for ill boy’s surgery

    A 14-year-old boy with congenital heart disease who was lucky enough to meet with South Korean first lady Kim Keon-hee may get the chance of a lifetime and receive surgery and treatment at Asan Medical Center in Seoul, South Korea. After seeing his plight, many

  • Kingdom’s rice crowned world’s No1

    Cambodia’s Phka Rumduol jasmine variety has been crowned the World’s Best Rice for the fifth time at the TRT (The Rice Trader) World Rice Conference in Phuket, Thailand on November 17, according to leaders of the Kingdom’s apex rice industry body. Phka Rumduol