Garment industry stokes Cambodia’s political growth

Son Chhay, a prominent SRP member of parliament, argues that the new combination of parties will give the government "a real scare this time," and could get as many as 50 seats. That may be optimistic, but at least the election will be worth watching.

30 Sept 2012
The Economist

Lately, however, the rules of the game have been changing, as economically empowered citizens have begun to push for more social and political rights. This year many garment factories have been hit by strikes and protests about working conditions and pay.

Under dazzling white strip-lights, a production line of young Cambodians stitch, iron and fold their way to the day’s target of 820 two-piece children’s pajamas. These garments are destined for the shelves of Los Angeles, shop price $9.97. The workers, mostly women, start at 7:30 a.m. and could knock off at 4 p.m., but almost all stay for two hours’ overtime. There are about 1,300 workers at the Gawon Apparel factory on the outskirts of Phnom Penh, the capital of Cambodia, and they can produce as many as 20,000 items of clothing a day, or 7.3 million a year.

The factory is South Korean-owned, and is one of about 375 across the country with an export permit. Garment-making is the country’s most important and dynamic industry. Together with 45 footwear companies and hundreds of subcontractors, the industry employs almost 500,000 workers, out of a population of barely 14 million people. The shirts, blouses and sneakers churned out by these factories account for 80 percent of the country’s exports and earn $4 billion of foreign exchange in a country with a GDP of only $13 billion.

The success of the garment industry is an encouraging sign of newfound economic vitality in a country that only 20 years ago emerged from decades of Khmer Rouge terror, foreign invasion and civil war.

Mercedes Cha, the gregarious South Korean owner of Gawon Apparel, is a devout Presbyterian. She says that she was told by God to move her three factories to Cambodia. Other employers come to Phnom Penh for more worldly reasons: the low wages and no-quota access into the European and American markets. Cambodia has become the country of the moment for low-cost assembly work in the region, undercutting not only China but also Indonesia, Vietnam and others.

All this has done wonders for the country’s balance sheet and also for the fortunes of long-serving Prime Minister Hun Sen and his ruling Cambodian People’s Party. A former guerrilla fighter who helped to sweep out the Khmer Rouge in 1979 with the help of the Vietnamese, Hun Sen has long been criticized by Western governments and many foreign aid groups.

They may grumble about the country’s human-rights record and its lack of democracy, though, but they put up with Hun Sen for overseeing growth. His main backer is China.

Lately, however, the rules of the game have been changing, as economically empowered citizens have begun to push for more social and political rights. This year many garment factories have been hit by strikes and protests about working conditions and pay.

Another sensitive issue is land rights. During the past 10 years, about 300,000 people have been forcibly displaced from their homes and villages as the government has sold land concessions, often to Chinese developers. The clearance of homes around a lake in the middle of the capital to make way for blocks of apartment towers and shopping malls was particularly controversial, provoking a string of protests.

For a long time Hun Sen was able to ignore — or to suppress — such protests, because the economy was growing. Now, though, even he has started to make concessions. In May the government suspended the allocation of all new land concessions. In September it ordered employers to pay an extra $10 a month in allowances to every worker. And, to appease foreign aid groups, Hun Sen’s government has quietly shelved a bill that would have restricted their activities in the country.

The concessions may be linked to a general election due next year. The CPP, with deep pockets, control of the media and strong grass-roots organization, does not normally have to worry about election results. Now, however, it is facing a united opposition for the first time in several years: The Human Rights Party, with three of the 123 seats in the national assembly, and the Sam Rainsy Party, with 26 seats, have joined to form the Cambodian National Rescue Party. The two parties also hold thousands of local council seats.

Son Chhay, a prominent SRP member of parliament, argues that the new combination of parties will give the government "a real scare this time," and could get as many as 50 seats. That may be optimistic, but at least the election will be worth watching.