Labour Minister Ith Sam Heng said on Sunday that Cambodia’s garment sector, a key driver of economic growth, currently had 1,087 garment and footwear factories, spending a combined $1 billion on wages per year.
“In addition, the garment and footwear industries generate about 2 million indirect jobs, such as house rentals, food sales and transportation,” Sam Heng was reported as saying by news agency Xinhua.
Sam Heng’s statement, made at a conference in Phnom Penh, reiterated the importance of garments to the Kingdom’s economy, with $5.7 billion of garments being exported last year. Footwear exports added another $33.84 million, with the total making up around 80 per cent of the country’s exports.
Ken Loo, secretary general of the Garment Manufacturers Association of Cambodia, said estimating the total number of garment factories was difficult due to high turnover in the sector.
He said factories did not always inform GMAC when they closed down nor were they upfront about the reasons why they had left.
“Similarly, when factories close they don’t necessarily inform the Ministry of Labour,” he said.
According to Loo, GMAC currently has 565 garment factories and 38 footwear factories, all of whom are exporters, while the Ministry of Labour’s numbers are higher as they include non-exporting factories as well.
Signs of a slowdown in the sector are becoming apparent, Loo added, with only 13 new garment factories exporting during the first quarter of 2015, compared to 40 factories during the same period in 2014.
“There are less factories opening this year compared to last year . . . the new minimum wage would surely be one of the reasons,” he said.
Economist Hiroshi Suzuki, president of the Business Research Institute of Cambodia, said the Cambodian garment sector could still rely on increasing growth in the US and Japan, although challenges remained ahead.
“The risk is the slowdown in [the] EU and strengthening US dollar against Euro and Japanese Yen,” he said.
“It is necessary for Cambodia to improve the investment climate to attract FDI for the diversification of industry, export items and export destinations.”
Heng Sour, spokesman for the Ministry of Labour, did not return a request for comment.