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American market top for Cambodian-made garments

American market top for Cambodian-made garments

GMAC's Ken Loo.

THE secretary general of the Garment Manufacturer’s Association of Cambodia (GMAC) says the garment industry in Cambodia would hardly exist if not for the American market.

“The industry exists today because of the US market. The industry took off here in 2001, due in large part to the bilateral agreement that was signed between the two countries. The USA offered very generous quotas to Cambodia at the time when it was still under the quota regime,” said GMAC’s Ken Loo.

Loo, a Singaporean who heads an association that all export-oriented garment manufacturers in Cambodia are required by law to join, says the quota regime was abolished globally on December 31, 2004.

Loo says at this moment in time, Cambodia is the best place to manufacture garments.

“Cambodia now is without doubt I think the prime location for investors and buyers to source apparel. Amongst the countries that export apparel, Vietnam, Bangladesh, Indonesia, we have the best advantage in terms of cost, market access and stability.”

Another advantage is that Cambodian workers are “very trainable”, according to Loo.  “Cambodia does not have a history of industrialisation; they are very new to this concept, and they will take in whatever practices you instill in them,” he said.

The Cambodian Ministry of Commerce mandates that in order to quality for an export license, a garment factory has to satisfy certain conditions, one of which is being a member of GMAC.

“We are a private organisation and we are funded completely by membership fees,” Loo said.

“We will do a visual inspection because we just want to make sure we are not accepting shell companies or ghost factories. We want to make sure actual manufacturing goes on there.”

GMAC now has 278 members in Cambodia, all of which are exporting garment factories that make everything from caps to socks, shirts, T-shirts, trousers, jackets, sweaters, blouses, windbreakers, underwear and lingerie.

“Probably shirts are number one,” Loo said. “Currently shoe manufacturers are not our members.”

According to Loo, 85 percent of GMAC’s members have factory locations in and around Phnom Penh, with others located along National Route 4 to Sinhanoukville, with 17 factories in Sihanoukville itself. There are also factories in Kampong Speu and other places.

Loo is optimistic that Cambodia’s garment industry will thrive for at least the next 10 years.

“Garment manufacturing will be in Cambodia for the next 10 years at least. The reason for that is, historically garment manufacturing has been known as a very footloose industry, going from country to country, chasing after low-cost labour, and it has really moved from countries in the 1960s and then migrated from Western countries, and went to Taiwan, Hong Kong, and then in the ’80s moved onto Korea, Singapore, Thailand, and then in the ’90s Malaysia, Indonesia and China and then in the 21st century came to ‘CLMV’ (Cambodia, Laos, Myanmar, Vietnam).

There aren’t any countries left. The only thing left would be in Africa.”

As far as cheap labour goes, while Cambodia is not as cheap as Bangladesh, it is still very competitive, Loo says.

“Cambodia is not the cheapest labour in the world, but I would say that we are still competitive compared with most of the other garment producing countries of the world.

Cambodia’s primary competitors, besides Bangladesh, are Vietnam and Indonesia, Loo says.

“We can’t compete with China because China is huge and fully-integrated, with the entire infrastructure: upstream, downstream and with backward and forward linkages.”

Loo describes Cambodia at the moment as “purely a cut and sew destination” in the global garment trade.

Most of the orders for garments made in Cambodia, even though they are destined for the American market, come from Shanghai, Hong Kong or Singapore.

“Most of them have a sourcing office in Shanghai, which is known as a hub where garment orders are placed. It used to be Hong Kong and now it is Shanghai,” Loo said.

Ninety-five percent of the garment factories in Cambodia are here thanks to foreign investment, Loo says. “Taiwan is number one with 82 out of 278 factories. Number two are Hong Kong and China with about 50 factories each. Number three is Korea with about 40 factories, and then you have 15 Malaysian-owned factories, a dozen Singapore-owned factories and a couple of American-owned factories. One American-owned member is Royal Crowntex International, which makes bed sheets at a factory in Sihanoukville and is a franchisee for the Walt Disney Company, among others.


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