Logo of Phnom Penh Post newspaper Phnom Penh Post - GMAC says orders are down due to wage hike

GMAC says orders are down due to wage hike

GMAC says orders are down due to wage hike

Reports that buyer orders in Cambodia’s garment sector slowed to a crawl toward the end of 2014 have triggered mixed reasoning from industry representatives.

Bloomberg reported on February 2 that for the first 11 months of 2014, orders for the Kingdom’s garment and footwear factories increased just 1 per cent year-on-year.

Ken Loo, secretary-general at the Garment Manufacturers Association of Cambodia (GMAC) told the news agency that the slowdown was due to rapid wage hikes, frequent strikes, political instability, and negative media coverage that have “damaged the competitiveness of Cambodian factories”.

Loo confirmed the 11-month buyer orders figure of 1 per cent but declined the Post’s request for comment.

“This should not be to everybody’s surprise given what has happened in the past 18 months,” GMAC deputy secretary-general, Kaing Monika said. “The industry is heading downward definitely. The Bloomberg report appears to be correct with exports to the US suffering from quite a severe drop [in 2014].”

Cambodia’s garment exports doubled from 2009 to the end of 2013, recording average year-on-year growth of 20.5 per cent, GMAC data show.

Cambodia’s minimum wage has increased twice following the nationwide strikes of garment workers in January 2014, which resulted in five people being killed after security forces opened fire on protesters with live rounds. In February 2014, the minimum wage rose from $80 per month to $100, and on January 1, 2015, wages again rose to $128 per month.

Signs of an industry-wide order slump surfaced at the end of 2014’s third quarter, when garment exports slipped to $1.61 billion, down 4 per cent from $1.68 billion during the third quarter in 2013.

Dave Welsh, country director for labour-rights group Solidarity Centre, contested GMAC’s reasoning that the downturn is due largely to the wage hikes and the early 2014 protests.

“The major calculation in this downturn is the horrendous press and the government’s response that ensued after the early 2014 protests,” Welsh said.

“Furthermore, given that current export figures are based on orders made well before the minimum wage announcement, it’s absurd to make any correlation between the two.”

Walsh said the Cambodian government’s response and lack of an investigation into the January 2014 protests and the yet-to-be resolved trade union law were also key issues impacting buyer orders.

MOST VIEWED

  • Chinese ‘prank’ threat video is no joke for Cambodia

    ‘Preah Sihanouk province, in the next three years, whether safe or chaotic, will be under my control,” declared a Chinese man in a white T-shirt, as another 19 men stood behind him shirtless, in a video that went viral on social media last month. After the

  • Woman detained for murder of hairdresser over unpaid $1K debt

    A woman has been held in connection with the murder of a 40-year-old widow. The victim’s daughter claims the motive was the suspect’s unpaid four million riel ($1,000) debt to her mother. The 17-year-old girl, Pich Sievmey, said her mother, Koem Yaneang, a hairdresser

  • ABA reports $71.8M net profit

    ABA Bank, a member of the National Bank of Canada group, recorded a net profit of $71.8 million last year, up 55 per cent from $46.2 million in 2017, its annual report released on Monday stated. A rise in the bank’s loan portfolio and the expansion of stated

  • ‘Life goes on’ if Cambodia loses Everything But Arms

    Cambodia's business sector is exploring ways to mitigate any fallout from a possible loss of access to the EU’s Everything But Arms (EBA) agreement as talks continue before the 28-member bloc makes a final decision. The EU monitoring process is set to conclude in