Global retailer giants Adidas AG and Hennes & Mauritz AB (H&M) have expressed their commitment to restructuring their production networks in the Kingdom, Minister of Commerce Pan Sorasak said on Tuesday.
The two companies will work more closely with the government to improve the garment industry’s situation, which has been affected adversely by the onset of the Covid-19 pandemic, he said.
He said this at a meeting with Adidas Sourcing Ltd Representative Office in Cambodia procurement director Matthew Armstrong and H&M production manager for Cambodia and Vietnam Christer Horn af Aminne, at the ministry.
The minister outlined the government’s drive to diversify the garment market through bilateral free trade agreements (FTAs) with many countries.
He noted that an FTA with China is set to be finalised later this year and that FTA negotiations with South Korea are scheduled to begin next month.
He said: “We would like to ask the companies to continue placing orders and join the government to support Cambodia’s garment sector post-Covid-19.”
Cambodia Chamber of Commerce vice-president Lim Heng expects orders of the Kingdom’s textile products to gradually pick up as the US and European markets reopen.
“We’ve observed the US and Europe open up certain regions and announce the reopening of the market where the Covid-19 situation has shown marked improvement. It would be boon for us if industry giants were to begin placing orders again,” he said.
Royal Academy of Cambodia economics researcher Ky Sereyvath said the garment sector would only revert to normal after a vaccine for Sars-CoV-2, the virus that causes Covid-19, is found.
He expects the sector to continue to reel from the fallout of the pandemic over the next three to five months.
“We believe that consumer spending on clothing products will continue to decrease during the period, no matter how much we try to push orders.”
However, he noted, Cambodia remained a leading exporter of garments, footwear and travel products to the US and EU markets during the pandemic period.
He said: “As the Covid-19 saga comes to a close, Cambodia will remain a valuable trade partner for the EU, more so now as Bangladesh, the largest producer of textiles, struggles with a larger number of Covid-19 infections than Cambodia.”
Garment Manufacturers Association in Cambodia secretary-general Ken Loo told The Post that he could not put a timeframe on when orders of garments, footwear and travel products would pick up steam.
“There will be orders again, but on a smaller scale after the US and the EU countries reopen,” he said.
A joint-statement between GMAC, the Cambodia Footwear Association (CFA) and European Chamber of Cambodia in Cambodia (EuroCham) that was submitted to the European Commission on June 2, said some 250 Cambodian apparel, footwear and travel goods factories have had to suspend operations, impacting more than 130,000 workers in the sector.
In the first quarter of the year, the letter said, many buyers had cancelled orders after they were completed or while they were in process. It is estimated that in the second quarter of the year, trade will likely fall by 50 to 60 per cent compared to last year.