Garment exports plummet 18pc over first half of year

Garment Manufacturers Association head Van Sou Ieng says industrial disputes like the one in this file photo are to blame for the garment-sector downturn, as new figures show first half exports fell 18pc. (Photo by: Tracey Shelton)

Monday, 17 August 2009
Chun Sophal
The Phnom Penh Post

It is difficult for us to estimate the total value for long-term exports of apparel in Cambodia ...

Commerce Ministry figures show a smaller drop than over the first quarter as manufacturers group head blames industrial unrest, not economic crisis

Exports of garments, footwear and other textile products dropped 18 percent year on year over the first half to US$1.27 billion, Ministry of Commerce figures released at the weekend show.

Exports to the United States, Cambodia's key market, were down 30 percent. Canada took 13 percent less by value, while European purchases were down 5 percent over the period.

The figures were released by the ministry's Trade Preferences Systems Department and account for all exports under the generalised system of preferences (GSP) and most favoured nation (MFN) programmes.

Cambodia exports almost all its garments, textiles and shoes through these schemes, which allow the world's least-developed nations to avoid quotas imposed by rich countries on exports from other developing countries.

Looking for a rebound

Department Director Mean Sophea said he expected a rebound would begin to be seen in September.

"It is difficult for us to estimate the total value for long-term exports of apparel in Cambodia because the situation of the world's economy has not recovered yet," he said.

Month-by-month data was not available at the weekend, but the figures suggest the rebound may have already started. In the first quarter of the year, garment exports fell 26.41 percent year on year across to $534.6 million, suggesting a better second quarter.

In March alone, exports were down 38.03 percent year on year to $164.3 million.

Commerce Minister Cham Prasidh told the Post in May that export orders for that month and June would provide a strong indicator of the sector's prospects for the rest of the year. The two months coincided with the start of the "hot season" in the US and Europe, he said.

Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia (GMAC), told the Post Sunday that the decrease in apparel exports could not be blamed entirely on the global economic crisis.

Cambodia's garment products are more expensive than those of China, Vietnam and Bangladesh, and the country was clearly losing to its more efficient competitors., he said.

"I believe at least 100 factories have been closed down and suspended so far because there has been no orders," Van Sou Ieng said.

Industrial unrest

He also revised a prediction he made in May that exports would fall 30 percent for 2009 on the previous year. He said Sunday he anticipates a 40 percent decline for the full year, claiming that buyers were being scared off by strikes and demonstrations.

Sector representatives have also blamed high electricity prices, customs inefficiencies and a poorly trained workforce for the garment industry's low competitiveness.

Ath Thun, president of the Cambodian Labour Confederation, admitted that factories were closing and that there is pressure on the sector, but said Sunday that GMAC exaggerated the number of closures to scare unions. Factory owners are using the global economic crisis as an excuse to close factories without paying workers' wages properly and to frighten workers from protesting or negotiating, he said.

"I think Cambodia's garment sector would have collapsed already if 100 factories were really closed because the country's total number of factories is only around 300," he said.