Cambodia exported $8.630 billion worth of garments, footwear and other textile-related items in the first nine months of this year, despite heightened global uncertainty, marking a 23.79 per cent surge over the $6.971 billion registered in the same period last year, according to Customs.
The aforementioned category of items, corresponding to chapters 61-64 of the harmonised tariff schedule, accounted for just over 50.00 per cent of the value of the Kingdom’s total exports over the period, or $17.258 billion, statistics from the General Department of Customs and Excise of Cambodia (GDCE) statistics indicate.
Garment Manufacturers Association in Cambodia (GMAC) secretary-general Ken Loo told The Post that exports of these items were slowing in the second half of this year, whereas the January-June figure had represented a year-on-year jump of nearly two-fifths.
Loo’s claim is backed by GDCE data, which put the year-on-year increases for the January-June period, July and August respectively at 37.34 per cent, 19.96 per cent and 2.71 per cent, and indicated that last month saw a 7.55 per cent drop against September 2021. Similarly, August and September witnessed month-on-month dips of 24.50 per cent and 13.72 per cent, following July’s 28.94 per cent rise.
“The situation will get worse in the fourth quarter of 2022 and into 2023. There’s no clear picture in sight due to the volatile global situation,” he rued.
Ky Sereyvath, an economic researcher at the Royal Academy of Cambodia, commented that the overall increase in these exports seen over the year underscore the robust growth of the Cambodian economy.
“The sharp overall rise in exports to the US in recent years augurs quite well for economic relations between the two countries, particularly now that we chair ASEAN. But, at the same time, there’s been a slowdown in exports to Europe due to the Ukraine conflict’s impact on demand there,” he said.
GMAC’s Loo largely blamed the recent downturn in Cambodia’s overseas sales of Chapter 61-64 items on deteriorating economic conditions in the US, EU and other top export markets, noting that the crisis in Ukraine has exacerbated inflation.
“Many buyers now have a lot of inventory on hand and thus they are placing [fewer orders]. The expiry of the US’ GSP [Generalised System of Preferences] also means our travel goods sector does not enjoy duty free [privileges] for now and some orders [are] moving back to China temporarily,” he said.
The GSP mentioned by Loo provides non-reciprocal, duty-free tariff treatment for certain products imported to the US from designated beneficiary developing countries and territories, which includes Cambodia. However, the scheme lapsed on December 31, 2020 and has yet to be renewed.
And according to the GDCE, the export of travel goods and related products – corresponding to Chapter 42 of the harmonised tariff schedule – have also slowed in the second half, after mushrooming by 55.71 per cent year-on-year in the first half.
Although July saw a 15.57 per cent month-on-month jump in Chapter 42 exports, August and September recorded 37.71 per cent and 1.70 per cent declines. Similarly, the July figure rose by 24.59 per cent year-on-year, whereas the numbers for August and September were 3.50 per cent and 17.06 per cent lower on a yearly basis.
Loo said that a number of factories have partially suspended operations since mid-August, following approval from the Ministry of Labour and Vocational Training.
Speaking at a press conference at the Council of Ministers, or Cabinet, on October 12, labour ministry spokesman Heng Sour also predicted that exports of garments and textile-related items will decline in the fourth quarter, due to pressure on orders stemming from the prolongation of the Ukraine crisis.
Late last month, the World Bank raised its 2022 growth forecast for Cambodia’s real gross domestic product (GDP) to 4.8 per cent, from 4.5 per cent in April, as a rise in the export of garments, footwear and travel goods (GTF), bicycles and agricultural items continue to underpin post-Covid-19 economic recovery.
“In the second quarter of 2022, the economic recovery gained momentum as investment and trade expanded. Approved FDI [foreign direct investment] project value reached $315 million in the second quarter of 2022,” the Washington-based development lender said in its latest Macro Poverty Outlook (MPO).
The MPO added that non-gold merchandise exports “accelerated further, expanding at 33.0 per cent year-on-year during the first seven months of 2022, driven mainly by a recovery of [GTF] exports.
“GTF exports to the US, Cambodia’s largest exports market, remained robust, growing at 39.1 per cent year-on-year during the first seven months of 2022. The services sector, especially the travel and tourism sector also improved.
“Driven by rising food and fuel prices, consumer price inflation surged. However, inflation eased to 5.4 per cent in July 2022, down from 7.8 per cent in June 2022. The exchange rate continued to be stable at 4,100 riel per US dollar,” it added.