More capital for plants

Workers protest outside the H&L Apparel (Cambodia) Co factory in Phnom Penh’s Por Sen Chey district last year. Photograph: Pha Lina/Phnom Penh Post

13 March 2013
By May Kunmakara
The Phnom Penh Post

The government approved 103 factories with a combined investment of $660 million last year — a big increase from the previous year’s 52 factories valued at $230 million, according to data from the Council for the Development of Cambodia.

Industry representatives and economists said the sharp rise was a result of minimum-wage increases in some other countries in the region.

Companies were relocating manufacturing to Cambodia, with its low labour costs and export incentives, they said.

According to Council for the Development of Cambodia data, 82 garment factories with a capital investment of $499 million were approved, as were 13 shoe factories with $116 million investment, two sock factories supported with $25 million, four textile manufacturers with $9 million and two glove factories with $10 million invested.

In 2011, investments in 45 garment factories were worth $205 million, and $25 million was invested in seven shoe factories.

Ken Loo, secretary-general of the Garment Manufacturers Association of Cambodia (GMAC), said higher minimum wages in other countries would force manufacturers to move to the Kingdom.

“We got [most of the companies] from China because it increased the minimum wage. [Factories] move here because we have low labour costs and more market access — these are the main things,” Loo said.

But he predicted there were many more factory owners wanting to enter the country. “If we didn’t have so many strikes, the number would be much higher,” he said.

Hiroshi Suzuki, head of the Business Research Institute for Cambodia, agreed.

“The drastic increase of labour costs in neighbouring countries such as China, Thailand and Vietnam is to the advantage of Cambodia, where labour costs have also seen a slight increase. The investment in labour-intensive industry in Cambodia will continue to increase,” he said.

Cambodia’s garment workers, and some unions, have demanded an increase in the minimum wage from the present $61 a month. Many meetings between GMAC, unions and government officials have failed to reach a consensus.

On March 11, unions and GMAC failed to reach agreement on a minimum wage.

Unions are demanding the minimum wage be increased from $61 to $100.

Cambodia Federation of Unions president Rong Chhun said the recent demands by garment workers would not affect the industry.

“I don’t think the workers’ demands are affecting investors. They consider the high unofficial expenses, not workers’ demands,” Chhun said.

He said that, for a factory with 4,000 workers, manufacturers had “unofficial expenses” of around $80,000 a month to pay to officials.

Chhun said he would try to reach a deal on the $100 minimum wage this month.

“I hope that everything will be finished by this month. If not, we will have a big strike,” he said