Industry conference hears how Cambodia’s business climate is damaging the competitiveness of its biggest export industry

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Tracey Shelton

Cambodia’s garment industry, which has suffered a huge drop in demand for its products since the global economic crisis, needs to address persisiting problems to compete, the CSDC said.

GOVERNMENT bureaucracy and industrial unrest are crippling Cambodia's garment sector and have already cost the country at least one major investor, the chairman of the Cambodia Skills Development Centre (CSDC) told a major industry conference Friday.

David Van cited a recent decision by a major Japanese manufacturer to make a $50 million investment in Bangladesh rather than Cambodia as a "wakeup call for Cambodia's garment industries" and urged the government, private sector and unions to work together to ensure the sector's survival.

"Garment industries in Cambodia are in danger," he said. "Collaborative efforts are needed immediately."

He said a major reason for the Japanese company's decision was the frequency of strikes in Cambodia and the excessive time taken to clear shipments in Cambodia. "Excuse my frank words, but there is no strike [in Bangladesh]," he said. "Instead, they have access and competitive costs."

Import-export clearance in

Cambodia is still

painfully slow.

It took between three and four days to clear one shipment through customs in Cambodia, he said, compared with between half a day to a dayin Vietnam.

"Compared to other countries in the region, import-export clearance in Cambodia is still painfully slow," he said.

According to the World Bank, it takes 4.3 days on average in Cambodia to clear a shipment for export, and 5.1 days to clear an imported container, while informal charges are also common.

Van did not name the Japanese company. Van Sou Ieng, the president of the Garment Manufacturers Association of Cambodia (GMAC), also referred to the Japanese manufacturer in an interview with the Post on Thursday and again declined to give the company's name.

The conference, which was organised by the CSDC in association with GMAC and USAID's Micro, Small and Medium Enterprise/Business Enabling Environment project, was held against a backdrop of a 26.41 percent year-on-year decline in garment exports in the first quarter to US$534.64 million, according to Ministry of Commerce figures. Export figures for April and May are not yet available.

The quarterly contraction came after garment exports grew just 3.33 percent to $2.93 billion in 2008 after growing 28 percent per annum since 1998.

Garment manufacturing accounted for 12 percent of 2007 GDP and 72 percent of total merchandise exports.

Foreign investment has been the major driver of growth, with more than 90 percent of garment manufacturers in Cambodia owned by foreign investors, according to GMAC figures.