Logo of Phnom Penh Post newspaper Phnom Penh Post - GMAC issues dire warning, raises concerns over exports

GMAC issues dire warning, raises concerns over exports

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Cambodian garment exports amounted to $2.32 billion in the first four months of this year, down 3.4 per cent year-on-year, while footwear exports – $412 million – jumped by 18.06 per cent. POST STAFF

GMAC issues dire warning, raises concerns over exports

The Kingdom exported $3.13 billion worth of garment, textile and footwear products in the first four months of this year, up 1.67 per cent compared to the same period last year, despite supply chain disruptions due to the Covid-19 pandemic, said a report from the General Department of Customs and Excise.

The data breakdown shows that Cambodian garment exports amounted to $2.32 billion during the period, down 3.4 per cent year-on-year, while footwear exports – $412 million – jumped by 18.06 per cent.

At the same time, more than $388 million worth of travel goods were exported, an increase of 22.06 per cent.

However, Garment Manufacturers Association in Cambodia (GMAC) president Van Sou Ieng told The Post that the increase was buoyed by buyer orders made prior to the virus outbreak.

He acknowledged that export figures would drop in the coming months as major buyers in the US and the EU have suspended orders from Cambodia.

“There will be a drop in garment exports in the coming months. I believe that footwear exports will sink, while travel bags may either remain stable or fall. So far, there are no orders for the garment sector confirmed.

“The Covid-19 virus has resulted in major disruptions to human lives as well as the business environment and the global supply chain,” said Sou Ieng.

Last month, the Ministry of Commerce appealed to buyers of garments, footwear and travel goods from Cambodia to stay committed to all the produced products which are already under contract.

In a statement, it said: “We appeal to our partners – garment, footwear and travel goods buyers sourcing from Cambodia – to stay committed to Cambodia and especially to our workers.

“We would like you to abide by your contracts and not to cancel orders that have been placed on goods that have already been produced or are currently in production.

“You have contributed to the social development of millions of Cambodians who are depending on these sectors for their livelihoods,” it said.

Sou Ieng added: “GMAC would like to appeal to our government to look at medium-term strategy and protect our garment, footwear and travel goods production structure so that Cambodia can be ready for business when the pandemic eases.”

He said this requires the government to make hard choices and difficult compromises in its policy to increase the sector’s competitive edge against Vietnam, Bangladesh and Myanmar.

“The most important thing is costs – wages, raw materials and supplies – we must all contribute to resolving the crisis, including workers.

“That is why GMAC asked to reduce the minimum wage by 30 per cent for two years or suspend any minimum wage policy for two years – to allow factories to compete, retain existing jobs and generate new jobs paid for by the free market.

“This would be comparable to other sectors – agriculture, hotel, restaurant, et cetera – that have no minimum wage. They will survive, and maintain and create jobs when the pandemic is over,” said Sou Ieng.

He said he advocates cost reduction, suspension of the National Social Security Fund (NSSF) until the end of next year, tax breaks, as well as unconditionally and automatically waiving the one per cent advance profit tax for exporters to remain competitive in the international market.

“To keep the free flow of trade and to facilitate the movement of goods, we must further reduce bureaucracy in import and export processes.

“We need to import raw materials, so we must keep trade open. If we can encourage more investment in Cambodia, that would be very helpful,” he said.

More than 180 factories in Cambodia have suspended operations while another 60 are at risk of closure. The situation impacts 200,000 garment workers directly and two million others indirectly, a GMAC letter released on Friday said.

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