With the global economic downturn hitting textile demand, producers from around Asean say it’s time to buy more regionally and less from China

Photo by: SOVANN PHILONG

Asean garment sector delegates met in Phnom Penh this week to work out strategies for coping with the global economic slowdown.

REGIONAL garment producers pressed for free trade and cooperation to address an alarming drop in demand during a conference Wednesday in Phnom Penh.

Delegates at the Wednesday meeting of the Association of Southeast Asian Nations' Federation of Textiles and Apparel proposed a number of crisis-fighting measures, including a move to source raw materials locally instead of from China.

Ok Boung, a secretary of state at the Ministry of Commerce, urged representatives to compete with China rather than each other.

"I want to remind all of you that Asean countries are not competitors. The real competitor of Asean countries is China," he told delegates.

The conference included representatives from Cambodia, Vietnam, Laos, Thailand, Malaysia, Indonesia and Singapore.  

"As everyone knows, even small moves towards integration could benefit the region greatly through increased intra-Asean trade," said Ok Boung.

He urged regional producers to source raw materials from Asean rather than China.

With the economic downturn hitting the high-end and mid-range markets hardest, Minister of Commerce Cham Prasidh urged garment makers to target the lower-end market.

"How are we to survive the current [economic] situation? To survive, we need to find a strategy and fight," Cham Prasidh said. "But we must not fight with each other or compete among member states."

How are we to

survive the current situation? ... We need to find a strategy.

Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia, said the lack of locally-produced fabric has driven up manufacturing costs by forcing factories to import raw materials.

He said importing from regional neighbours instead of China would cut transportation costs.

"We could sell our garments at more competitive prices and improve the efficiency of processing purchase orders and exporting goods," Van Sou Ieng said.

He added that agreements have been reached with some developed countries to ease tariff restrictions.

"Developing countries have been given some incentives, with the European Union, Canada and Japan allowing us to export garments duty-free," he said.

Van Sou Ieng said some progress had also been made easing regional trade barriers.

"In the past, fabric purchased in Thailand required a 15 percent duty. Now, Cambodia pays no duty. Our buyers also require no customs permit for purchases," he said.

Stronger trade links with Vietnam have also eased the slowdown in Cambodia, Van Sou Ieng said, with as many as 300 cargo containers passing through border checkpoints each day without permits.

The number of cross-border cargo containers had been restricted to 40 per day until a bilateral trade agreement was reached in December.

Van Sou Ieng said similar agreements with Thailand and Laos could be reached within the next five years. But he acknowledged the impact of the global economic crisis on Cambodia's garment makers, saying some 60 facilities have closed or suspended operations in 2008, leaving an estimated 25,000 workers unemployed.

Factories that remain open have received orders that will see production continue unaffected for up to three years, he added.

Indonesia, one of the region's top garment makers by workforce, has also seen layoffs of up to 30,000 workers and production cuts of up to 30 percent, said Ade Sudradjat, vice chairman of Indonesian Textile Association.

He said Indonesia employs 1.3 million garment workers and earned US$10.3 billion from garment exports in 2007, but that 2009 would hit Indonesia's economy hard. "We must deal directly with our Asean friends to enhance trade and help each other become more competitive in the world market," he said.

Le Quoc An, chairman of Asean's textile federation and head of the Vietnam Textile Industry, said global market instability had forced Vietnam's garment sector to reduce costs and look for new markets and additional products.