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Flourishing China-propelled garment sector a boon to national economy

Content image - Phnom Penh Post
The labour-intensive garment industry hires about 800,000 workers.

Flourishing China-propelled garment sector a boon to national economy

Foreign direct investment started flowing into Cambodia after its first general election in 1993. The garment manufacturing industry was the first to enter the Kingdom and offer jobs to the fledging economy, thanks to Chinese investors.

Today, more than half the Garment Manufacturers Association of Cambodia’s (GMAC) members are from China.

That said, it is also true that foreign direct investment and international trade through better market access granted by the United States, European Union and other developed countries have tremendously contributed to the social and economic development and prosperity of Cambodia in the last 20 years.

The garment, footwear and travel goods sectors remain the important economic pillars until today.

The seven per cent average annual growth rate has lifted millions of Cambodians out of poverty. And it will allow the Kingdom to be elevated from Least Developed Country to a high middle income one by 2030 and high income country by 2050.

Key to achieving this, of course, is the political and social stability that must be maintained together with constant reforms to business processes and the investment environment.

The garment, footwear and travel goods sectors have created 800,000 jobs and generated some $9 billion in exports in 2018. About $2 billion is paid in wages to workers every year.

The sector has grown along with a high level of labour and social compliance. Better Factories Cambodia’s latest report suggests that factories in the Kingdom have achieved an average compliance level of 90 per cent to Cambodian labour laws and core international labour standards.

Content image - Phnom Penh Post
The sector has contributed immensely to the domestic economy.

Building on this success, we have been able to attract more foreign direct investments to grow our economy and create additional jobs for our young people, especially those entering the working age.

Development of the sector has also laid a solid foundation and eco-system for other export industries to grow. This includes the legal framework, social and environmental standard and compliance, wage setting mechanism, skills development and an environment that’s suitable for trade facilitation.

The sheer size of formal employment in the sector allowed the government to start its National Social Security Fund which is a very important public policy beneficial to our citizens.

As China is in the process of economic transformation, Cambodia can expect more investments from that country, particularly in the low and higher value added sectors.

The Cambodia case study on the impact of Chinese investments in the Kingdom found that the overall impact on the macro-economy is considerably positive.

Chinese investments have been one of the main contributors to Cambodia’s economic growth, according to a report by the Center for Policy Study.

Besides investments in textiles and garments, China has also invested substantially in other important sectors. Cambodia looks forward to cooperating more closely with it in all fields.

From Garment Manufacturers Association in Cambodia

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