Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment factory data revised

Garment factory data revised

Garment factory workers sew together Armani jeans inside the Kin Tai garment factory in May of this year.
Garment factory workers sew together Armani jeans inside the Kin Tai garment factory in May of this year. Kimberley McCosker

Garment factory data revised

The Ministry of Commerce reclassified over 120 inactive garment and footwear factory entries as closed or suspended during the first quarter of 2016, the International Labour Organization (ILO) said yesterday, adding a new twist to the ongoing debate on whether there are signs that garment manufacturers are pulling out of Cambodia due to rising wages and a relatively unproductive, restive workforce.

“During the first quarter of 2016, the ministry became aware that a number of factories had been inactive for months, and in some cases had closed down, but had not provided official notice to the ministry and thus had not been recorded as such in the database. The ministry therefore reclassified 122 garment and footwear factories as being closed or in a temporary closure,” the ILO said in its latest Cambodian Garment and Footwear Sector Bulletin.

It said the ministry data showed that 12 new garment and footwear factories opened during the first quarter, indicating a net closure of 110 factories during the period, reducing the total number of registered exporting factories to 589 as of end-March 2016.

Ministry of Commerce officials could not be reached last night to comment on the validity of the ILO’s statements.

While the figures cited in the bulletin provided no indication of the cause or duration of factory inactivity, they would appear to support claims of a recent surge in factory closures.

On August 22, the Garment Manufacturers Association in Cambodia (GMAC) announced that based on its membership data a total of 70 garment and footwear factories had shut down so far this year, with only 20 new factories opening. The industry body attributed the rash of closures to political uncertainty, labour unrest and a lack of competitiveness, a reference to low productivity and higher costs resulting from a rise in factory worker wages.

GMAC secretary-general Ken Loo told the Post last week that the closures were further evidence that international garment and footwear manufacturers were relocating their production lines to more cost-effective investment destinations.

“We have been saying for many years that Cambodia is not competitive and that companies will divest,” he said of the factory closures. “There has been a decline in incoming investors, as well as our existing investors pulling out. I believe this is a trend that will continue for the rest of the year.”

However, the ILO bulletin presented a very different outlook for Cambodia’s $6 billion garment and footwear sector, arguing that the reclassification of the 120 factories was not representative of the industry’s health.

“This fall appears to be largely a statistical artefact arising from a correction of the record, rather than an increase in the rate of real closures,” the bulletin said. “Export figures and employment figures suggest ongoing growth in the industry.”

The bulletin noted that out of 37 new investment projects approved by the Cambodian Investment Board (CIB) during the first quarter, 22 were in the garment and footwear sector with a total investment of $86 million. While this represented a slight decline in new investment as a percentage of overall foreign direct investment (FDI) during the quarter, the sector still recorded 20 per cent growth compared to the same quarter in 2015.

The ILO interpreted this data as a sign the while the garment and footwear sector was growing rapidly, investment in other sectors was increasing even faster.

“Investment in the garment and footwear sector is growing at a solid pace, but investment in other sectors is growing even more rapidly, as FDI inflows to Cambodia diversify,” the bulletin said.

It added that total employment in the sector continued to increase during the first quarter of the year, reaching nearly 630,000 people, a 5.3 per cent increase over the same period in 2015.

MOST VIEWED

  • Two luxury hotels latest quarantine options for inbound travellers

    The Inter-Ministerial Committee to Combat Covid-19 has designated two luxury hotels as alternative quarantine options for travellers who wish to enter Cambodia through Phnom Penh International Airport – Sokha Phnom Penh Hotel & Residence and the Courtyard by Marriott Phnom Penh. In a notice detailing guidelines issued

  • Visa A holders get to quarantine at Himawari Hotel

    The Ministry of Health has permitted foreign diplomats, UN and International NGO officials to undergo quarantine at Himawari Hotel in the capital in case they do not have a separate place suitable for this purpose, but the government would not be responsible for the expenses.

  • Jabs for kids bring hope for school reopenings

    Cambodia is tentatively planning to reopen schools – at least at the secondary level – when the vaccination of children aged 12-17 is completed, even though daily transmissions and deaths in other age groups remain high. Schools across the country have been suspended since March 20, one month

  • China denies Mekong hacking

    As the US and its allies joined hands last week to expose what they allege to be China’s Ministry of State Security’s malicious cyber activities around the world, the attention also turned to Cambodia with the US Department of Justice claiming that four

  • Governor: Covid subsides in capital

    Phnom Penh municipal governor Khuong Sreng said the Covid-19 situation in the capital’s 14 districts has eased, with only two districts still recording a high number of infections. “Transmission cases in all districts are dropping, though they are relatively higher Meanchey and Por Sen Chey.

  • Hun Sen: Get 12-17 age group ready for Covid jabs

    Prime Minister Hun Sen has told parents of children aged 12-17 in Phnom Penh and the provinces of Kandal and Preah Sihanouk to get them ready for vaccinations soon. “There is a need to vaccinate children and youths aged 12 to 17. According to the statistics provided