The Garment Manufacturers Association in Cambodia (GMAC) claims falling productivity levels and rising infrastructure costs in the Kingdom’s garment sector could put the country at a disadvantage with its neighbouring competitors.
In a statement released on Tuesday, the association said labour productivity in the garment and footwear sector fell 14 per cent between 2011 and 2014, according to March data from the International Labour Organization. GMAC then claimed the decline appeared to have continued into 2016.
When asked how GMAC reached that conclusion, secretary-general Ken Loo said: “We don’t see any improvements or significant changes in the industry.” But he acknowledged there was no data yet to show a continuation of the decline.
In the statement, GMAC said it has been in talks with the Ministry of Labour and Vocational Training to launch a campaign to improve labour productivity in the sector, which employs roughly 700,000 workers.
“Everyone has to do their part in order to keep our industry as healthy as it can be in the current global competitive environment,” Loo said in the statement.
Miguel Chanco, lead ASEAN analyst for the Economist Intelligence Unit, said Cambodia losing business to its low-cost competitors was a threat.
“Margins are generally low in the garment industry and manufacturers often quickly jump from one country to another, searching for the lowest-cost environment,” he said via email.
GMAC in its statement also said the sector continued to battle “with rising infrastructure costs, such as electricity and transportation, forcing factories to look elsewhere”.
“Labour costs in Cambodia’s garment sector have certainly risen significantly over the past four years or so, and they are much higher now compared with other big garment-exporting countries, such as Bangladesh,” Chanco said.
Moeun Tola, the executive director of labour rights group Central, said one way to reduce production costs was by having the government train farmers to grow cotton so the sector did not have to import it from other countries.
Growing it domestically, would result in a decrease in costs and an increase in jobs and incomes, he said.
“We import raw material from India and China,” he said. “Why doesn’t the government train farmers to grow cotton?”