The Kingdom exported “footwear, gaiters and the like; parts of such articles” to the tune of $558.542 million in the first five months of 2023, down 20.44 per cent year-on-year from $702.060 million and down 23.11 per cent half-on-half (compared to July-November 2022) from $726.4 million, according to Customs (GDCE).
On the plus side, the amount for May alone ($121.632M) was the second highest monthly total year-to-date, up 8.88 per cent from the $111.708 million average, albeit 0.24 per cent lower than the record value of $121.927 million in March, as indicated by provisional GDCE data compiled in “International Merchandise Trade Statistics” bulletins.
This category of items, equivalent to Chapter 64 of the Harmonised System (HS) of Tariff Nomenclature, accounted for 6.082 per cent of the $9.183 billion value of Cambodia’s total merchandise exports over the five-month period – compared to 7.459 per cent and $9.412 billion in January-May 2022, as well as 8.00 per cent and $9.079 billion in July-November 2022.
Cambodia Footwear Association president Ly Kunthai attributed the drop in overseas sales of Chapter 64 items to the financial hardships of everyday consumers in the Kingdom’s export destinations, which he linked to persisting Covid-19 conditions, geopolitical unrest, and other worldwide headwinds.
Nevertheless, exports are tipped to recover as global economic growth picks up, particularly if the Russo-Ukrainian conflict were to end, Kunthai commented to The Post on June 12.
“A confluence of global crises has led people to cut back on spending. Due to tighter household budgets, people who once needed four or five new pairs of shoes every year may only wear two or three pairs now. This explains why Cambodian exports are declining,” he said.
Even though production has been scaled back to accommodate demand, the Kingdom’s total installed capacity has not fallen, he affirmed.
According to Kunthai, the US, Europe, Canada, the UK, and regional nations are among the top importers of footwear and related goods made in Cambodia. Buyers include well-known international brands such as Adidas, Clarks and Timberland.
He emphasised the significance of the textile-related sectors – including footwear – to the creation of jobs and income for Cambodians.
In May alone, the Kingdom exported $121.632 million worth of “footwear, gaiters and the like”, down nearly 7.45 per cent from $131.420 million in May 2022 (year-on-year) and down 4.67 per cent from $127.593 million in November 2022 (half-on-half), but up 32.10 per cent from $92.075 million in February 2023 (quarter-on-quarter) and up 7.49 per cent from $113.154 million in April 2023 (month-on-month), according to the GDCE.
The May 2023 figure was down 38.8 per cent from the record $198.599 million registered in July 2022, as indicated by GDCE statistics for the 2015-2023 period. The next highest values for the aforementioned timeframe are $165.880 million (December 2021), $164.053 million (December 2022), $150.438 million (January 2020) and $149.198 million (April 2022).
In May 2023, Chapter 64 items made up 6.240 per cent of the Kingdom’s overall exports, which totalled $1.949 billion. For comparison, here are the corresponding figures for: May 2022 (7.277%; $1.806B), July 2022 (8.307%; $2.391B), November 2022 (7.461%; $1.710B), February 2023 (5.361%; $1.717B) and April 2023 (6.143%; $1.842B).
Royal Academy of Cambodia economist Hong Vanak concurred with Kunthai’s assertion that the footwear sector is a significant source of national income and job opportunities for Cambodians.
There has been a steady infusion of investment money coming into the Cambodian footwear sector, Vanak said, noting that the bulk of the industry’s exports are shipped to developed economies like the US and those in Europe.
“Because the aforementioned goods are mainly made to meet international demand, our income falls when an export destination’s economy weakens,” Vanak said.
In 2022, Chapter 64 items represented $1.737 billion or 7.726 per cent of the Kingdom’s total $22.483 billion in exports for that year, respectively marking 24.77 per cent and 16.44 per cent jumps from $1.392 billion and $19.309 billion in 2021, according to the GDCE.
Last year’s Chapter 64 exports also surged by 170.98 per cent against the $641.049 million registered in 2015 – equivalent to a compound annual growth rate (CAGR) of 15.30 per cent for the seven-year period.
According to the most recent Trading Economics data, the US, with $498.98 million, took the lion’s share of the Kingdom’s $1.39 billion in Chapter 64 exports in 2021, followed by Germany ($102.69M), Japan ($90.02M), the Netherlands ($86.79M), Canada ($86.71M) and the UK ($66.73M).