PHNOM PENH, Cambodia — The streets of this riverside capital are thick with traffic, sport-utility vehicles favored by foreign aid workers as well as the more modest cars piloted by locals. Scaffolded construction sites dot the dusty downtown and locals spy Western investment bankers with the enthusiasm reserved elsewhere for celebrity sightings.
"It seems like a frontier town, with all of the excitement, all of the energy," says Nisha Agrawal, the World Bank's country manager.
The notion of a Cambodian boom may seem incongruous, if not slightly absurd. This remote corner of Southeast Asia, after all, remains best known for its "killing fields," where the genocidal Khmer Rouge slaughtered or starved at least 1.5 million of their countrymen.
But after a generation spent slumbering in the shadows of its fast-rising neighbors, Cambodia is on the move. The economy this year is expected to expand at a robust annual rate of 9.5% after three consecutive years of double-digit growth, the World Bank says.
U.S. brands fuel boom
Americans have fueled the boom with their purchases of Levi jeans, Gap (GPS) clothes and Nike (NKE) athletic shoes, all bearing made-in-Cambodia labels. Whether consumers will continue doing so, however, now depends on the complexities of U.S. trade law.
Cambodia's thriving garments industry has been protected since 2005 by U.S. restrictions on imports of clothing from China. But those limits expire by the end of 2008, potentially opening the door for China to seize market share at the expense of Cambodian producers.
China could grab 68% of the world apparel market, up from 50% today, says Roland Eng, the country's leading diplomat and a former Cambodian ambassador to the United States. "They will kill everybody," he says.
The government here is pinning its hopes on proposed U.S. legislation that would eliminate tariffs on products from the world's poorest countries, including Cambodia. This year, Cambodian clothing shipments to the USA are running at an annualized value of $2.6 billion, about twice the 2003 level, according to Commerce Department data. Without preferential access to the U.S. market, orders for Cambodian goods will plunge 35% as Chinese shipments soar, says Van Sou Ieng, chairman of the Garment Manufacturers' Association in Cambodia.
Factories here supply clothing to some of the USA's best-known brands, including Disney, (DIS) Sears (SHLD)and Wal-Mart. (WMT) They've been drawn to Cambodia, despite sky-high electricity costs, inadequate roads and pervasive corruption, because of an innovative program promoting good labor standards that began nine years ago with U.S. help.
The United States guaranteed Cambodia a specified amount of sales every year, encouraging the country's push to position itself as the sweatshop-free producer in a fiercely competitive global clothing market. "Cambodia is a special country," says Michael Kobori, vice president for global code of conduct at Levi Strauss, which buys its Signature model jeans from a Cambodian producer.
The San Francisco-based clothing company, which plans to continue relying on local suppliers after the limits on Chinese products are lifted, supports the tariff-elimination bill.
Prospects for approval of the measure, introduced by Rep. Jim McDermott, D-Wash., are cloudy. Rep. Charles Rangel, D-N.Y., the chairman of the House Ways and Means Committee, has endorsed the proposal, aimed at helping the world's poorest countries develop. But with public support for trade ebbing, and the economy weakening, lawmakers may shy in an election year from being seen as helping foreign workers.
The stakes for Cambodia's 14 million people in the coming U.S. debate are enormous. Even after the current boom, what the typical Cambodian earns in a year wouldn't buy a decent TV in the USA. (Per-capita income is just $550.) There are only 1,000 miles of paved roads in the entire country, which is roughly the size of Missouri, and only 10% of the population has access to electricity.
Scars remain from turmoil
Scars from the 1975-79 Khmer Rouge era remain vivid. Under radical leader Pol Pot, black-clad guerillas systematically murdered lawyers, doctors, teachers — sometimes even those wearing eyeglasses — in a demented bid to return Cambodia to a pristine, agricultural existence. The Khmer Rouge ultimately were ousted by a Vietnamese invasion.
Only in 1999 did the country enjoy its first entirely peaceful year in three decades. Today, a surge in tourism is clear evidence of the turnaround. For the first 10 months of this year, Cambodia recorded 1.6 million foreign visitors vs. 286,524 in 1998.
The stunning temples of Angkor Wat are the country's principal draw. On typical days, the extraordinary 12th-century monuments are packed shoulder to shoulder with hordes of South Korean, Japanese and American tourists.
Heart and soul of economy
While the country harbors long-term hopes of developing possible offshore oil deposits, the garments industry is the heart and soul of its economy. From virtually nothing in 1994, the industry has grown to an estimated $3 billion in exports and directly employs 355,000 workers. They in turn support an estimated 1.7 million people with regular payments to family members, who often live in poor rural villages with little economic activity, according to the International Finance Corp.
Sokla Sem, 29, came to the capital to find factory work 11 years ago after the death of her father. Working for a Chinese-owned shirt factory, she and her sister made a combined monthly salary of $150. Of that amount, they sent two-thirds to their mother to pay for the education of an older brother. Sem, like many young women here, has only a fourth-grade education.
After being fired in a dispute over pay, she became a labor activist. But she hasn't forgotten the economic imperative that drives the country's leading industry.
"It was very difficult for me when I started working in the factory," she says. "But I didn't care about the difficulty; I cared about making money that I could send home."
"It seems like a frontier town, with all of the excitement, all of the energy," says Nisha Agrawal, the World Bank's country manager.
The notion of a Cambodian boom may seem incongruous, if not slightly absurd. This remote corner of Southeast Asia, after all, remains best known for its "killing fields," where the genocidal Khmer Rouge slaughtered or starved at least 1.5 million of their countrymen.
But after a generation spent slumbering in the shadows of its fast-rising neighbors, Cambodia is on the move. The economy this year is expected to expand at a robust annual rate of 9.5% after three consecutive years of double-digit growth, the World Bank says.
U.S. brands fuel boom
Americans have fueled the boom with their purchases of Levi jeans, Gap (GPS) clothes and Nike (NKE) athletic shoes, all bearing made-in-Cambodia labels. Whether consumers will continue doing so, however, now depends on the complexities of U.S. trade law.
Cambodia's thriving garments industry has been protected since 2005 by U.S. restrictions on imports of clothing from China. But those limits expire by the end of 2008, potentially opening the door for China to seize market share at the expense of Cambodian producers.
China could grab 68% of the world apparel market, up from 50% today, says Roland Eng, the country's leading diplomat and a former Cambodian ambassador to the United States. "They will kill everybody," he says.
The government here is pinning its hopes on proposed U.S. legislation that would eliminate tariffs on products from the world's poorest countries, including Cambodia. This year, Cambodian clothing shipments to the USA are running at an annualized value of $2.6 billion, about twice the 2003 level, according to Commerce Department data. Without preferential access to the U.S. market, orders for Cambodian goods will plunge 35% as Chinese shipments soar, says Van Sou Ieng, chairman of the Garment Manufacturers' Association in Cambodia.
Factories here supply clothing to some of the USA's best-known brands, including Disney, (DIS) Sears (SHLD)and Wal-Mart. (WMT) They've been drawn to Cambodia, despite sky-high electricity costs, inadequate roads and pervasive corruption, because of an innovative program promoting good labor standards that began nine years ago with U.S. help.
The United States guaranteed Cambodia a specified amount of sales every year, encouraging the country's push to position itself as the sweatshop-free producer in a fiercely competitive global clothing market. "Cambodia is a special country," says Michael Kobori, vice president for global code of conduct at Levi Strauss, which buys its Signature model jeans from a Cambodian producer.
The San Francisco-based clothing company, which plans to continue relying on local suppliers after the limits on Chinese products are lifted, supports the tariff-elimination bill.
Prospects for approval of the measure, introduced by Rep. Jim McDermott, D-Wash., are cloudy. Rep. Charles Rangel, D-N.Y., the chairman of the House Ways and Means Committee, has endorsed the proposal, aimed at helping the world's poorest countries develop. But with public support for trade ebbing, and the economy weakening, lawmakers may shy in an election year from being seen as helping foreign workers.
The stakes for Cambodia's 14 million people in the coming U.S. debate are enormous. Even after the current boom, what the typical Cambodian earns in a year wouldn't buy a decent TV in the USA. (Per-capita income is just $550.) There are only 1,000 miles of paved roads in the entire country, which is roughly the size of Missouri, and only 10% of the population has access to electricity.
Scars remain from turmoil
Scars from the 1975-79 Khmer Rouge era remain vivid. Under radical leader Pol Pot, black-clad guerillas systematically murdered lawyers, doctors, teachers — sometimes even those wearing eyeglasses — in a demented bid to return Cambodia to a pristine, agricultural existence. The Khmer Rouge ultimately were ousted by a Vietnamese invasion.
Only in 1999 did the country enjoy its first entirely peaceful year in three decades. Today, a surge in tourism is clear evidence of the turnaround. For the first 10 months of this year, Cambodia recorded 1.6 million foreign visitors vs. 286,524 in 1998.
The stunning temples of Angkor Wat are the country's principal draw. On typical days, the extraordinary 12th-century monuments are packed shoulder to shoulder with hordes of South Korean, Japanese and American tourists.
Heart and soul of economy
While the country harbors long-term hopes of developing possible offshore oil deposits, the garments industry is the heart and soul of its economy. From virtually nothing in 1994, the industry has grown to an estimated $3 billion in exports and directly employs 355,000 workers. They in turn support an estimated 1.7 million people with regular payments to family members, who often live in poor rural villages with little economic activity, according to the International Finance Corp.
Sokla Sem, 29, came to the capital to find factory work 11 years ago after the death of her father. Working for a Chinese-owned shirt factory, she and her sister made a combined monthly salary of $150. Of that amount, they sent two-thirds to their mother to pay for the education of an older brother. Sem, like many young women here, has only a fourth-grade education.
After being fired in a dispute over pay, she became a labor activist. But she hasn't forgotten the economic imperative that drives the country's leading industry.
"It was very difficult for me when I started working in the factory," she says. "But I didn't care about the difficulty; I cared about making money that I could send home."
4 comments:
Tell the damm Chinese to get lost at Tibet. Their new railways' business over there could generate enough money more than they ever need and beyond. Tell them to stop being greedy and tell them to concentrate on thier tourist attraction business instead of taking everybody else's business. They don't need the garment business! what they need is getting everybody to see Mount Everest and getting everyboby to experience their fastest and coolest high altitude railways. They need to get lost over there!!!!! and out!!!!!
Uncle SAM is the United Nations and the United Nations is Uncle SAM! And because of United Nations that is why Cambodia receive international aids and development and now Mr. Hun Sen want to kick the United Nations out? Kick the United Nations out so that Cambodia will have nothing to eat and so that Uncle SAM will not invest in Cambodia? Please just look at North Korea and you don’t see Uncle SAM goes there and of course you don’t the United Nations either!
Mr. Hun Sen thinks that the world owed him money or something! It is not Khmer culture to spend other people money result from their blood and sweat!
Please no more foreign aid to Cambodia and Mr. Hun Sen need to stop the culture of spending other people because it will only make Cambodian people less than human!
By the way what is the salary of Mr. Hun Sen from his so called job as the prime minister? I heard he owned more than a million dollar mansion and own many properties in Cambodia…It seems that he also spend dirt poor Cambodian people money too!
Guess who owns a big house in USA
Bull Shit
The whole matter of free trade and globalization insofar as imports by developed countries from
developing and undeveloped countries is just bull shit. It is real bull shit. Bull Shit
Let me tell you why.
The company that I work is a foreign owned garment manufacturing company based in Cambodia.
The importers are from Germany, France, Italy and USA.
Factories are attracted to Cambodia because of 2 main factors, namely cheap labour and incentives offered by developed countries for exports from the undeveloped country.(like Cambodia)
For ease of reference I will call the countries rich country and poor country.
Whenever an export is made, the rich country requires a Certificate of Origin, which certifies that the goods are from the origin of the poor country in order that the goods are not dutied; thus giving a preferential treatment to the poor country.
My contention here is not about the preferential treatment given to the poor country, but is about the manner of implementation. The complicated implementation process nullifies the preferential treatment given to the poor country.
The certificate of origin required by the rich country is so complicated to complete with so many categories of garments with so many tariff codes and the Certificate certified by the Ministry of Trade of the poor country that for the factory to get one Certificate costs so much money, that ultimately it defeats the preferential treatment to the poor country.
What is worse is that if a small mistake is made on the certificate of origin (typing mistake) the customs department of the rich country rejects the Certificate of origin and requires an immediate replacement, and it is so costly to the exporter (replacement cost) and urgency cost, that there is no profit to the exporter.
The whole complicated process of the certificate of Origin has totally nullified the preferential treatment accorded to the poor country.
Surely the rich country do not have to be so detailed and meticulous in the scrutiny of the items, categories, grades, tariffs, codes, and many fine details in this paper called certificate of origin.
Where is the free trade. ? Where is the globalization that is being promoted so aggressively by the rich nations?
I have even come across a request from the importer of the rich country passing over to me a letter from the rich country Customs Department addressed to the poor country requiring that the Government of the poor country to further certify to the customs department of the rich country that the Certificate that was issued is genuine.
I understand that there may be cases of false certificates of origin, but is it really necessary. Here we are talking of garments, which is a cheap item.
Can’t the Customs of the rich country accept the document in good faith, unless there has been tempering on the document.
I have come across a situation whereby a whole container load of garments is delayed by the Customs of the rich country just because one of the many (maybe one out of 50 certificates of origin) that the container holds, has a small mistake.
The cost of the demurrage has to be borne by the supplier factory. Where is the free trade, I ask?
It is outright bullying.
Furthermore, the rule imposed by the rich nation is that one invoice must have one certificate of Origin is stupid. Surely one Certificate of Origin can represent many invoices.
Many a times, (for the garment industry) the orders are between US$4000 to US$6,000 per invoice. It costs US$200 for each certificate of origin. You calculate the percentage cost of this document.
When manufacturers cannot make a profit, the have to close and more Cambodians will be added to the unemployed labour force.
Has the rich country helped the poor country?
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