Cambodian garment exports drops to 2.6 bln USD in 2009

PHNOM PENH, Feb. 23, 2010 (Xinhua) -- The total value of garment, textiles and shoes exported last year dropped to 2.6 billion U.S. dollars compared with 3.1 billion U.S. dollars in 2008 as a result of global financial downturn, according to the figures of Commerce Ministry on Tuesday.

It said the total exports to the United States, which is Cambodia's biggest garment market, reached 1.5 billion U.S. dollars last year, down from 1.9 billion U.S. dollars in 2008.

The country's Garment Manufacturers Association of Cambodia ( GMAC) officials would not see the industry to pick up this year.

Kaing Monika, GMAC's spokesman, said "the international financial crisis has greatly impacted us, especially for our garment exports to the U.S. market."

"It is too early to say if exports of the products will increase for this year given the purchasing orders from overseas reserve for exports till June, not through out this year," he said.

The products exported to the EU also dropped to 718 million U.S. dollars last year from 786 million U.S. dollars in 2008, said the report.

The total value of exports to Canada also lowered to 190 million U.S. dollars in 2009 from 202 million U.S. dollars in 2008.

Exporting of the products to Japan and other Asian countries increased to 233 million U.S. dollars last year from 178 million U. S. dollars in 2008, it said.

Cambodia's Total Exports Drop 18 Percent in 2009 [-Hun Xen and Keat Chhon were lying about the economic crisis all along?]

2010-01-18
Xinhua

Cambodia total exports in 2009 declined 18.2 percent compared to a year earlier, a government data showed on Monday.

The exports of Cambodia's products to foreign markets in 2009 were worth 3,619 million U.S. dollars, a decline of 804.7 million U.S. dollars, or 18.2 percent compared to that in 2008, according to the data showed by National Bank of Cambodia.

Garment sector, Cambodia's biggest earner declined 716.2 million U.S. dollars and other products declined 88.4 million U.S. dollars.

While Cambodia's exports were down in 2009 compared to that in 2008, the total imports were also down.

The imports in 2009 were 5,208 million U.S. dollars, a decline of 1,063 million U.S. dollars or 17 percent compared to a year earlier.

Chea Chanto, governor of National Bank of Cambodia said the decline of Cambodia's exports to foreign markets was caused by the global economic crisis.

However, he argued against the predictions made by several international financial institutions about the impacts of the crisis to Cambodia's economy.

He said Cambodia's economic growth was 2.1 percent in 2009, down from 6.7 percent in 2008, and about 3 percent is projected for 2010.

Earlier, International Monetary Fund suggested Cambodia's economic growth was -2.7 percent in 2009, while World Bank suggested -2.5 percent, and Asian Development Bank predicted at -1.5 percent.

Cambodian garment exports depressed on back of global crisis

Tue, 13 Oct 2009
DPA

Phnom Penh - Garment exports from Cambodia were down almost a quarter in the first eight months of the year from the same period last year as the global economic crisis cast a shadow over the country's key export earner. Provisional figures released by the Ministry of Commerce showed total garment exports through August were worth 1.59 billion US dollars, down 22.6 per cent from last year, the Phnom Penh Post newspaper reported Tuesday.

A senior ministry official told the newspaper the reason for the drop was sharply lower spending by consumers in the United States, the largest export market for Cambodian garments.

"This year, because of the effect of the economic crisis, American people have spent less money on clothes than they did last year," said Aok Bung, secretary of state at the Ministry of Commerce.

However, in contrast with statements made earlier this year, the ministry said it believes the situation would improve in the fourth quarter and into next year.

Mean Sophea, the head of the ministry's trade preferences department, told the German Press Agency.

More Than 60,000 Out of Factory Work [-90% of them are women]

By Chun Sakada, VOA Khmer
Original report from Phnom Penh
07 October 2009

Factory woes in the wake of the global downturn have put 62,000 Cambodians out of work, World Bank President Robert Zoellick said Thursday.

Zoellick was addressing an annual meeting between World Bank and International Monetary Fund officials in Turkey. Nearly 50 factories have closed since the downturn began more than a year ago, in Cambodia’s chief export earner, he said.

An estimated 400,000 people are employed by the garment sector, which brings in nearly $2 billion in revenue annually.

“Ninety percent of the 62,000 workers losing their jobs are women,” Zoellick said, offering the example of a worker named Aoy Puon.

“Since the crisis hit, her monthly salary has been cut in half,” he said. “Today she can’t make enough to send money home to her family, who depend on her income. Aoy Puon is now worried that she will lose her job.”

The World Bank figures differed from estimates of the Ministry of Labor, which said 33,000 workers had lost their jobs.

Chea Mony, president of the Free Trade Union, said 87 factories had closed and 65,000 workers had lost their job from 2007.

“We’re worried about closing the garment factories, workers losing jobs and the fall of the garment exports,” said Kaing Monika, business development manager for the Garment Manufacturer Association of Cambodia. “According to figures, we’ve seen a fall of garment exports of 30 percent. It is quite a lot, and we think that the concerned people must unite to promote the garment sector.”

Um Mean, secretary of state for the Ministry of Labor, said the government had policies “to promote the garment sector through the strength of good working conditions, production and work quality.”

Cambodian garment workers face employment crisis

Wednesday, October 07, 2009
Anna Walker
ABC Radio Australia

The United Nations has warned that many of the Cambodians that have lost their jobs in the garment industry this year, might be forced into sex work.

The comments come after Cambodia's Labour Ministry found that between January and September this year, nearly 80 garment factories have closed, leading to more than 20,000 job losses.

Around a third have found work in other factories, but spokesman for the United Nations Inter-Agency Project on Human Trafficking, Lim Pith says many will have no choice but to go into the entertainment or sex industries.

"The first place they go is to the entertainment industry, which I think would be increased from 20% to maybe up to 30% of them have got a job in the entertainment industry," he said.

"In addition to that some of them will go to work in the restaurants and beer gardens."

Earlier this year, the UN released research findings showing Cambodia's garment sector had been the hardest hit by the global economic crisis, and that newly unemployed women in particular were seeking work in brothels, karaoke bars and massage parlours.

Mr Pith says the large number of Cambodians out of work has also driven wages down.

"Probably because [employers] have more people who want jobs, [employees] have to work longer hours in order to get money and also we see that the wage they receive from their work has decreased."

Shrinking economy

The International Monetary Fund has predicted Cambodia's economy will shrink by 2.75 per cent this year.

The Garment Manufacturers Association of Cambodia agrees with the IMF's figures.

The Association's Secretary General Ken Loo says the industry's shrunk by around 25 percent since the middle of last year.

He says garment factories have relied too heavily on the United States market and are now having to look elsewhere.

"Approximately three quarters or 70% of our exports go to the USA...now if you look at countries like Vietnam or Bangladesh they have a good mix - it's about fifty fifty between Europe and the USA,

So I think our factories here are starting to look to other areas, newer markets. Europe, Japan, Canada, China would be another alternative that we are looking at," he said.

Stiff competition

Mr Loo says stiff competition from abroad is contributing to Cambodia's garment industry crisis.

"For example, our costs are relatively high as compared to our competitors like Vietnam and Bangladesh," he said.

"We have too many unions within each factory which result in many walkouts and strikes and leads to confusion to management who don't know who to negotiate with."

"We also have infrastructure gaps whereby for example the price of electricity is double that of our neighbours. "

Mr Loo says the industry is well aware of the problems it faces, but says the economy is something over which Cambodians have no control over.

"I don't think that there's anything the government can do per se...we just have to wait for the economy to recover and hopefully then these people can come back and reopen their factories."

The garment industry is Cambodia's largest source of income, providing 80 percent of its foreign exchange earnings and employing an estimated 350,000 people last year.

Cambodia's economy hit hard by U.S. slowdown - IMF

PHNOM PENH, Sept 23 (Reuters) - Cambodia's economy, one of the fastest growing in Southeast Asia just two years ago, will probably contract by about 2.75 percent this year, hit hard by the slowdown in the United States, the IMF said on Wednesday. "The global economic crisis is having a larger impact on Cambodia's economy than previously anticipated," David Cowen, deputy division chief for the International Monetary Fund's Asia and Pacific Department, told a news conference.

However, the economy will rebound next year with growth of 4.25 percent, added Cowen, who led a team that recently met with local finance officials as part of an IMF mission to Cambodia.

After decades of war and upheaval, including the Khmer Rouge "killing fields", Cambodia witnessed an unprecedented boom before the global financial crisis struck, its economy expanding at around 10 percent annually in the five years leading up to 2008.

The growth, fuelled mainly by garment manufacturing, tourism and real-estate development, came to an abrupt halt during the global recession. Garment export volumes are likely to fall by 15 percent this year, hit by the weak U.S. economy, Cowen said.

Tourist arrivals have fallen by double digits, Cowen said, noting that recent signs of improvement may reflect day-tripping arrivals from across the border rather than wealthier tourists from other parts of the world whose spending lifts the economy.

"Exports are contracting. So we are likely to see negative export growth in Cambodia in 2009. Imports are contracting at an even faster rate," he added, noting that some of that reflected falls in fuel prices.

"The overall level of petroleum imports will be down quite significantly this year," he said.

He expected annual inflation of more than 5 percent near the end of 2009, rising further to about 6 percent next year.

Even though the economy remains one of Asia's smallest, with gross domestic product of around $8.9 billion, international investment had been rising sharply, flowing heavily into the hotel sector, before reversing course in the financial crisis.

Foreign direct investment probably nearly halved to an estimated $490 million this year from $815 million in 2008, with the drop led mainly by construction investment, Cowen said.

Large construction projects have slowed, new project approvals are sharply lower and imports of construction materials are down significantly from last year, he added.
"There's negative growth in construction imports and negative growth in consumer imports."

Bank lending for property was also down, he said, following a real-estate boom that turned the once-sleepy capital into a building site.

But Cambodia's vast agricultural sector, which makes up about 34 percent of the economy, has held up well, with a good harvest expected this year.

And there's ample liquidity in the banking system.

"There has been healthy deposit growth in the system as a whole this year, in part due to very attractive term deposit rates that banks are paying in Cambodia. We have expressed some concern that these high deposit rates could have some impact on bank profitability going forward."

(Writing by Jason Szep; Editing by Alan Raybould)

IMF economic outlook for Cambodia is bleaker than that of the ADB: 2.75% GDP contraction

IMF says Cambodia's economy will contract 2.75 per cent this year

Sep 23, 2009
DPA

Phnom Penh - The International Monetary Fund revised down its forecast for Cambodia's economy Wednesday, predicting that gross domestic product (GDP) would contract 2.75 per cent in 2009.

That is sharply lower than its previous forecast of a 0.5-per-cent drop.

The IMF figures follow the release of numbers Tuesday by the Asian Development Bank, which foresees Cambodia's economy contracting 1.5 per cent this year.

Speaking to reporters in Phnom Penh, IMF official David Cowen said the global economic crisis was having a more significant impact than previously expected on the kingdom's economy, which suffers from a narrow production base.

Cambodia's economy rests on four key pillars - agriculture, tourism, construction and garments. The last three have all been badly hit by the crisis.

The IMF noted in its press statement that agricultural production was 'a bright spot with a good harvest expected' this year.

'Investment in rural roads and irrigation systems should raise productivity and reduce operating costs in the period ahead,' the IMF stated.

But the three remaining pillars have performed worse than expected. Garment exports, for example, are expected to decline 15 per cent, a drop Cowen blamed in part on weak retail demand in the key US market, the destination for most Cambodian garments.

But he said the country also remains less competitive than other garment exporters in the region, and as a result has lost some market share to countries such as Bangladesh and Vietnam.

Tourism too has been disappointing if measured by spending rather than actual visitor numbers. The IMF said arrivals by air - typically indicating higher-spending tourists - had fallen 'by double digits' due to the global economic crisis affecting visitor nations.

'As a consequence, overall tourism spending is sharply lower, despite the increase in same-day and land arrivals from neighbouring countries,' the IMF said.

The remaining pillar - construction - has been hit hard with many projects shelved or put on hold following a property boom that ended abruptly last year.

'New project approvals are sharply lower, and imports of construction materials are down significantly compared to 2008, with bank lending to the property [sector] also down,' the IMF noted.

Foreign direct investment is also expected to end the year sharply down, the IMF said, and is projected at 490 million US dollars this year versus an estimated 815 million US dollars last year.

The IMF expects a turnaround next year, with growth predicted at 4.25 per cent amid signs that the global downturn is bottoming out. However, it cautioned that the risks for Cambodia remain 'tilted to the downside,' a sharp reversal after a decade in which the nation regularly enjoyed annual double-digit growth.

Recession threatens families [-There's a recession in Cambodia after all?]

Fourteen-year-old bookseller Vichet waits for customers along the riverside on Tuesday. (Photo by: Sovan Philong)

Wednesday, 26 August 2009
The Phnom Penh Post Staff

Layoffs among parents augur a rise in child labour: experts.

A STEEP decline in Cambodia's garment exports for the month of July has forced officials to reassess the strength of the global economic downturn and its impact on the country, as child welfare experts warn that the Kingdom's most vulnerable citizens - its children - may have the most to lose.

Official figures released Tuesday showed a 26.4 percent plunge in garment exports for July compared with a year ago and a 17.5 percent slide from June, - the latest in a series of grim economic indicators that prompted an admission by the head of the Cambodian Economic Association that the worst of the crisis could still be ahead.

Standing in the path of that slide, says Bill Salter, head of the International Labour Organisation's subregional office in East Asia, are Cambodia's children.

"The trend threatens to push 200,000 people back into poverty and erect new financial obstacles in front of children trying to access education," Salter said Tuesday during the launch of a national workshop studying the impact of the global economic crisis on child labour.

An estimated 40 percent of children aged between 7 and 17 years are currently engaged in some form of child labour, the group ChildFund Australia said in June.

Child labour rising

ILO officials said earlier this year that the number of children working in hard-labour conditions in Cambodia had grown from an estimated 250,000 in 2002 to about 300,000 this year.

The government has acknowledged the risks facing children, especially as families dependent on the garment sector - the Kingdom's largest industrial employer - suffer job losses or salary cuts that could prompt them to pull children out of school and into the workforce.

Cambodia's garment sector, which accounts for about 90 percent of the Kingdom's total exports, has borne the brunt of an economic downturn that can be linked directly to the rising numbers of children being forced into work, the ILO's Salter said, as cash-strapped families increasingly view education as a financial burden.

Veng Heang, director of the Department of Child Labour within the Ministry of Labour, said the link between the global crisis and child labour was no surprise.

"We knew that the economic crisis would impact children," he said Tuesday, adding that a rise in instances of child begging, scavenging and domestic labour would not be unexpected.

Warnings over deteriorating child welfare came amid protests by thousands in the garment sector over slashed pay.

More than 70,000 garment workers have been laid off since the crisis began, industry analysts say, with another 100,000 under threat in the next two years.

Nearly 3,000 employees at the Sky High Garment Factory in Daun Penh district went on strike on Monday to protest drops in their salaries, inadequate working conditions and unexpected work stoppages.

Exports fall 26.4pc in July as crisis in Kingdom continues [-Is there anything to worry about yet?]

The garment sector, responsible for about 90 percent of Cambodia's exports, has been severely hit this year. (Photo by: TRACEY SHELTON)

Wednesday, 26 August 2009
Chun Sophal
The Phnom Penh Post

Exports slide 2009

• January down 14.62pc
• February down 18.35pc
• March down 35.24pc
• April down 18.08pc
• May down 12.13pc
• June down 17.5pc
• July down 26.4pc

Source: Camcontrol

Latest government figures show deterioration on export data from June, when total exports fell an annualised 17.5 percent

If this situation continues, the economic crisis ... will get unavoidably worse.

FIGURES released Tuesday by the Kingdom's import-export inspection body showed July exports plummeted an annualised 26.4 percent, a larger decrease than in June, suggesting the worst of the economic crisis is not yet over for Cambodia.

After showing a fall of 17.5 percent in June, Camcontrol figures indicated that exports fell to US$249.94 million last month from $339.43 million in the same period last year, meaning that the garment industry, which is responsible for about 90 percent of Cambodia's total exports, had not yet overcome the worst of the drop in global demand, particularly in key markets the United States and Europe.

"The decline in exports has affected Cambodia's economy since the beginning of the year and is not something new," said Chan Sophal, president of the Cambodia Economic Association.

"If this situation continues, the economic crisis in our country will get unavoidably worse and worse."
Aside from garments, the Kingdom's next largest export is agricultural products such as corn, beans and rubber.

Last week, the Ministry of Commerce said that garment exports had fallen 18 percent in the first half of the year to $1.27 billion, compared with $1.54 billion in the same period in 2008.

The Garment Manufacturers Association of Cambodia (GMAC) said Tuesday that it did not have the latest figures for garment exports. Business Development Manager Kaing Monika warned that although some markets, including Asia and Europe, had picked up in recent months, the United States - Cambodia's biggest export market by trade value - was showing relatively few signs of recovery.

"Whether it will get worse or improve, I am not sure yet because the impact of the global economic crisis is still continuing," he said in an interview Tuesday.

Though Cambodia's export figures continue to decline, a number of other export-dependent economies in the region have seen recent improvements, including China, Singapore and Taiwan.

Hong Kong, however, saw its exports worsen in July, down 19.9 percent year on year compared to with 5.4 percent in June, government figures said Tuesday.

Cambodia's total trade also declined last month compared to June.

The Kingdom recorded $574.52 million in total trade volume in July, down 24.2 percent on the same month last year. In June, the annualised total trade figure fell 16 percent, according to Camcontrol figures.

Despite the depressing figures, Khuon Savuth at Camcontrol's General Directorate said Tuesday that Cambodia's trade volumes regularly fluctuate, and that this year's total export volumes will not be severely affected, despite the effects of the global economic crisis.

"I think that the decrease in value of Cambodia's exports and imports may be about just 18 percent compared to last year," he said.

Official figures showed that July imports fell 22.4 percent year on year to $324.58 million from $418.4 million in the same month last year. Last month imports were down an annualised 14.5 percent to $360.1 million.

Much of Cambodia's imports are raw materials for the beleaguered garment industry such as cloth and thread, as well as foods and construction materials.

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.

During my trip last week to Cambodia, I saw firsthand just how hard hit the country is -- worse than anything I had seen reported

Cambodia: Collaboration is Needed

August 11, 2009
By Eve Blossom, Founder, Lulan Artisans
The Huffington Post

Since last December, I have been following the impact of the economic downturn in the Southeast Asian countries where I have worked for almost two decades. The deep recession quickly affected developing countries, even countries such as Laos and Cambodia, who are less tied to the financial sectors of the economy.

During my trip last week to Cambodia, I saw firsthand just how hard hit the country is -- worse than anything I had seen reported. Since the mid-1990s, Cambodia has had many apparel factories open and a substantial number of jobs created, with more than 90% of Cambodia's exports from the garment sector. But due to the recent decrease in consumer buying worldwide, there is a fall in the demand for goods. Garment factory after garment factory in Cambodia have closed, and many others have greatly downsized. It is estimated that 70,000 jobs have recently been lost. Most of these workers are women between the ages of 18-26; and without these jobs, they are in serious trouble. Majority of these women come from villages and are the primary earner for the family, sending money back every month for their families and communities.

These rural communities rely on family members working at urban factories for their food, housing, education and health care. With a lack of employment in the villages, women are forced to look for alternative work in the city. The problem is that there is no other work.
Economic options for these women are bleak. Many end up in the sex trade or migrating illegally, where some fall prey to human trafficking. Official reports of migration are approximately 200,000 but many believe that the actual number is higher. According to the World Bank, more than 200,000 people in Cambodia may drop back into poverty this year alone due to the economic crisis, with the potential of hundreds of thousands more if the downturn continues.

The good news is that many groups, including large international brand-name apparel companies, non-profit organizations and international institutions, such as the International Labor Organization, are already in Cambodia. They are all concerned and interested in helping with this situation and what is needed is a collaborative effort. If all these organizations could come together and agree on what roles to play, the best initiatives to create and to act quickly, we could possibly stop the job losses and hopefully regain some of the 70,000 jobs lost.

The long-term outlook for Cambodia in regards to the apparel industry is good. Its competitiveness and past performances make it a sound investment for a collaborative initiative. Nonprofits could assist in education and health care. Apparel companies, in partnership with other organizations, could cover minimum salaries and training programs for future skills. And since bank lending has tightened, trade finance groups could help with cash flow for garment companies.

But the time is now. Every month a woman is out of work and has no salary, she is pushed into a more difficult economic situation. And once entering the sex trade industry, few women leave. Service programs to help sex workers rehabilitate and train for other work currently fail at very high rates.

Many see the results of human trafficking and want to get involved; but more importantly, the focus should be on empowering the mechanisms to prevent it. It may seem obvious but supporting and training women for vocational work is not just an economic engine for the country but a deterrent from the cultural and community destruction that trafficking creates. And prevention and sustainable jobs is the key.

19 New Garment Factories Open in Cambodia in Q1 [-How many are closed during that period?]

2009-05-27
Xinhua

Nineteen new garment factories opened in Cambodia in the first quarter this year, creating job opportunities for workers who lost employment due to the world financial crisis, local media reported on Wednesday.

These new factories, on the outskirts of the capital Phnom Penh, will employ 6,069 people, helping to offset the closing of 46 garment factories that led to the loss of 21,400 jobs in the first three months of this year, according to official data from the Ministry of Labor.

"We welcome newly opened factories, because they help create jobs for workers who lost employment when previous factories closed," Oum Mean, secretary of state at the ministry, was quoted by the Phnom Penh Post as saying.

Bun Var, general manager of Jit Textile, one of the factories that reopened, said that he will provide 1,600 jobs this year, but adding that the future of the sector was generally unknowable given current uncertainty. "No one can predict the business lifespan of a new factory," he said.

Meantime, Cheath Khemara, a labor affairs official for the Garment Manufacturers Association of Cambodia (GMAC) predicted that the garment sector's woes would continue indefinitely. "It will be difficult to attract new factories to Cambodia given the current situation," he said, blaming labor strikes for scaring off investors.

Cambodia's garment exports dropped 35 percent in the first quarter of 2009. Exports to the United States were worst hit, down 47 percent compared with same period last year, while those to the European Union (EU) fell 22 percent, according to the earlier figures obtained from the Ministry of Commerce.

Garment exports plummet 35 percent in first quarter

Tuesday, 19 May 2009
Written by George Mcleod and Nguon Sovan
The Phnom Penh Post

GMAC to host forum to address decline
THE garment industry is planning a joint forum with the government and leading manufacturers on May 27 at Phnom Penh's Raffles Hotel Le Royal. "Eighteen out of 274 owners and senior management from garment factories in Cambodia will attend," said Kaing Monika, external affairs manager of the Garment Manufacturers' Association of Cambodia (GMAC), the country's largest garment industry association and organiser of the forum. Kaing Monika said that Minister of Commerce Cham Prasidh would preside over the event. "It will be a platform for investors to voice their concerns and discuss the challenges they are facing as the sector faces a decline [in production orders]," he said. "It is also a chance for buyers to express their concerns and to try and strategise on ways of working with the industry."
-NGUON SOVAN

Latest official figures show month-on-month declines worsening from January to March, but garment sector sources point to signs of recovery.

FIGURES obtained Monday from the Ministry of Commerce show garment exports plummeted 35 percent in the first quarter of 2009.

Exports to the United States were worst hit, down 47 percent compared with the first quarter of 2008, while those to the European Union fell 22 percent, and to Canada 21 percent.

Cambodia exported garments worth US$279 million to the US in the first quarter, with the EU and Canada purchasing US$124 million and US$39 million respectively. Exports fell every month in the quarter compared with 2008: down 19 percent in January, 23 percent in February, and a shocking 60 percent in March, suggesting that the industry had yet to reach a turning point by the end of March.

There was some good news. Exports to Japan were up 14 percent and those to other markets - a category which includes the Middle East and Russia - increased 61 percent, a sign that the Kingdom had managed to seek out new markets in the face of plummetting world demand.

Local garment producers have been working to diversify beyond the US and European markets, but those rises have come off low volumes.

Despite the drop in exports to key markets, industry insiders say the country's garment sector may have already hit bottom although figures for April are not yet available.

Signs of life are emerging, with US retail sales (excluding automobiles) expected to show a slight increase in April. A Bloomberg survey predicts a 0.2 percent increase, following a 1 percent decrease in March.

Domestic garment-makers said that the Kingdom continues to benefit from lower costs, luring factories away from Vietnam and China.

The Garment Manufacturers Association of Cambodia (GMAC) told the Post that the number of factories registered with the industry trade body increased from 260 at the beginning of the year up to 274 currently, and said more factories could open this year.

GMAC's External Affairs Manager Kaing Monika said that some factories may have started operations before the beginning of the year.

"Three months ago the situation was very bad.... Things are a bit better right now," Kaing Monika said. "We expect to see more orders by June, but the situation is not entirely clear."

Signs of economic life
The owner of the Injae garment factory in Phnom Penh said last week that lower costs and an improving business climate were encouraging more factories to set up shop here.

"Factories are moving from China to Cambodia and Laos," said Nam-Shik Kang, Injae's managing director. "In China, the garment sector is competing for labour with industries like shipbuilding and automobiles, which is making it more expensive. In Cambodia, garments are the only industry."

Nam-Shik Kang expects an industry turnaround will materialise by September provided US demand picks up.

Vanessa Rossi, an emerging markets expert at the UK research body Chatham House, said the garment sector might see a slight recovery this year.

"Investors may start to build up their inventories in the near future, but we should be extremely careful because this is not necessarily a sign of underlying growth," she said.

Garments were expected to make up just over 70 percent of Cambodia's total export revenue for 2009, the London-based Economist Intelligence Unit said last month.

Global downturn threatens Cambodian garment success

March 28, 2009
By EK MADRA

Phnom Penh, March 28 (Reuters) - Mon Moeun, one of thousands of Cambodians pulled out of poverty by a job in the garment trade since foreign investors arrived in the 1990s, may be back rearing pigs soon after a collapse in demand from Western countries.

Many garment factories in Cambodia are closing as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis.

Garments are Cambodia’s biggest export earner and its economy may shrink this year due to the drop in demand.

Moeun and his wife have suffered a double blow. They used to earn $80 a month each as garment workers, sending half of it back to support their 8-year-old son living with Moeun’s parents in the southern province of Takeo.

Then, three months ago, their factories shut without notice.

"We see hard times ahead when we get back to the countryside, raising pigs and planting vegetables to make a living," said Moeun, 39, chatting with friends under a tree near a shuttered factory on the outskirts of the capital, Phnom Penh.

More than 1,000 workers were owed pay when South Korean-owned Da Joo (Cambodia) Ltd. closed. It has become an all too familiar story.

At its peak, Cambodia’s garment sector boasted almost 300 factories employing 340,000 workers, many of them women from the countryside.

Foreign companies started to move into the impoverished Southeast Asian country after UN-sponsored elections in 1993, fuelling an economic revival after 30 years of civil war and the horrors of the Khmer Rouge ‘’killing fields’’ in the 1970s.

The monitoring of work conditions by the International Labour Organisation helped lure brands such as Adidas, Nike and Gap, keen to avoid bad publicity from sweatshops. Cambodia’s membership of the World Trade Organisation from 2004 provided another boost.

Factories sprang up where once there were green rice fields around the capital and garments became Cambodia’s biggest export earner. They brought in $2.78 billion in 2008, but that may drop about 30 percent this year, said Kaing Monika, spokesman of the Garment Manufacturers Association in Cambodia (GMAC).

Exports of garments to the US market dropped nearly 40 percent in January compared with a year earlier. Some 70 percent of the clothes go to the United States, 25 percent to Europe and the rest mainly to South Korea and Japan.

Global downturn threatens Cambodian garment success

By Ek Madra

"The massive layoffs of workers could lead to social unrest, with more armed robberies or drug smuggling" - Kang Chandararot, Cambodian Institute of Development Study (CIDS)

PHNOM PENH, March 23 (Reuters) - Mon Moeun, one of thousands of Cambodians pulled out of poverty by a job in the garment trade since foreign investors arrived in the 1990s, may be back rearing pigs soon after a collapse in demand from Western countries.

Many garment factories in Cambodia are closing as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis.

Garments are Cambodia's biggest export earner and its economy may shrink this year due to the drop in demand.

Moeun and his wife have suffered a double blow. They used to earn $80 a month each as garment workers, sending half of it back to support their 8-year-old son living with Moeun's parents in the southern province of Takeo.

Then, three months ago, their factories shut without notice.

"We see hard times ahead when we get back to the countryside, raising pigs and planting vegetables to make a living," said Moeun, 39, chatting with friends under a tree near a shuttered factory on the outskirts of the capital, Phnom Penh.

More than 1,000 workers were owed pay when South Korean-owned Da Joo (Cambodia) Ltd. closed. It has become an all too familiar story.

At its peak, Cambodia's garment sector boasted almost 300 factories employing 340,000 workers, many of them women from the countryside.

Foreign companies started to move into the impoverished Southeast Asian country after U.N.-sponsored elections in 1993, fuelling an economic revival after 30 years of civil war and the horrors of the Khmer Rouge "killing fields" in the 1970s.

The monitoring of work conditions by the International Labour Organisation helped lure brands such as Adidas, Nike and Gap, keen to avoid bad publicity from sweatshops. Cambodia's membership of the World Trade Organisation from 2004 provided another boost.

Factories sprang up where once there were green rice fields around the capital and garments became Cambodia's biggest export earner. They brought in $2.78 billion in 2008, but that may drop about 30 percent this year, said Kaing Monika, spokesman of the Garment Manufacturers Association in Cambodia (GMAC).

Exports of garments to the U.S. market dropped nearly 40 percent in January compared with a year earlier. Some 70 percent of the clothes go to the United States, 25 percent to Europe and the rest mainly to South Korea and Japan.

So far about 20 out of 291 factories, owned mostly by Taiwanese, Chinese, South Koreans and Malaysians, have closed their doors, Monika said. Other factories, at best, were running at 70 percent of capacity now. Some had no orders at all.

Some 70,000 workers have been laid off since last year and another 100,000 jobs are under threat over the next two years, according to the country's leading labour union, Chea Mony.

Another laid-off worker, 28-year-old Sar Bunthoeun, said his mother would suffer now he can no longer send back $40 a month. "I'll return to my old job as a barber. It's my fate," he said.

ECONOMIC SLUMP

The sector represents about 16 percent of Cambodia's GDP, so the factory closures will hurt, with a ripple effect in the countryside as the money sent home by garment workers dries up.

The International Monetary Fund says the economy could shrink 0.5 percent in 2009 and the garment trade slump is a big factor.

But Kang Chandararot, director of the Cambodian Institute of Development Study (CIDS), said even if the double-digit growth of recent years was out of reach, 4 or 5 percent may be possible thanks to a bountiful rice crop in 2008/09 and the record $950 million in aid pledged by international donors for 2009.

"Cambodia could use the aid of nearly $1 billon to invest in infrastructures to stimulate its economy," Chandararot said.

People surviving on less than $1 a day are deemed to be living in poverty. Garment workers earn on average $2.7 a day so the loss of these jobs will hurt.

"More people will be pushed into poverty," said Huot Chea of the World Bank in Cambodia.

Historical data is lacking in Cambodia, but the World Bank says 45 to 50 percent of the people lived in poverty in 1994. Prime Minister Hun Sen says that was cut to 30 percent by 2008 thanks to the garment sector, tourism and agriculture.

Analysts doubt the job losses will undermine the grip on power of Hun Sen, who has run the country for 23 years, but some are worried about social problems.

"The massive layoffs of workers could lead to social unrest, with more armed robberies or drug smuggling," Chandararot of the CIDS said.

And he foresaw land disputes as people returned to the countryside. "What is most likely is that they will fight over the land needed to make a living in the future," he said.

Hun Sen called on aid donors at a meeting on March 12 to join with the government to provide a social safety net to help workers who had been laid off. He also said the government would try to find new export markets in the Middle East and elsewhere.

Opposition leader Sam Rainsy has urged the government to make foreign-owned factories deposit funds with the Treasury so that workers can get what they are owed in the event of bankruptcy.

There have been reports of looting of machinery but, in some instances at least, it's more a question of workers and management trying to find ways to pay wages.

Chhen Mey, 30, was a supervisor at a factory of Malaysian-owned L.A (Cambodia) Garment Pte. Ltd, which closed in late 2008 with the loss of 2,180 jobs.

A Reuters reporter saw L.A workers carrying sewing machines onto trucks, heading for auction. "If we don't sell the machines, we'll have no money to pay the unpaid workers," Mey said.

Albert Teoh is the director of a Malaysian-based company with three factories that used to export goods worth over $160 million a year under the 'Target' brand and employed 12,000 workers.

He is worried that in the next few months most of the subcontractors for the factories will have folded.

"There's no way to make profits. How to survive the crisis is our main priority, really," Teoh said.

(Reporting by Ek Madra; Editing by Alan Raybould and Megan Goldin)

Cambodia’s Garment Exports Fall as Demand Drops in U.S., Europe [-Isn't that contrary to what Dr Hun Xen predicted?]

By Daniel Ten Kate and Carole Zimmer

“Just look at the factories ... They’re closing. The living standards get worse and worse” - Sary Muong, factory worker

March 18 (Bloomberg) -- Cambodia’s garment exports are declining as a global recession crimps demand in the U.S. and Europe, cutting into an industry that supports a 10th of the Southeast Asian country’s population.

In January, garment exports plunged 25 percent from a year earlier to $185 million, said Mean Sophea, who heads the Commerce Ministry’s Trade Preferences System Department. Over the past decade, they grew at an average pace of 28 percent per year, according to the World Bank.

“I’ve never seen garment exports drop this much,” Mean Sophea said by phone from Phnom Penh, the capital. “The government is trying to reduce expenses for exporters, but we have seen a lack of demand from the U.S. and Europe.”

The U.S. and Europe take more than 90 percent of clothes made in Cambodia. Southeast Asia’s second-smallest economy may shrink 0.5 percent in 2009, the International Monetary Fund said March 6, revising down its 4.8 percent growth projection made a month earlier.

The proportion of garment shipments to total exports is higher in Cambodia than any country except Bangladesh and Haiti, according to World Trade Organization data. Some 70 percent of the country’s clothes were shipped to the U.S., where it was the eighth-largest supplier in 2007, the World Bank has said.

Lost Jobs

About 30,000 Cambodian garment workers, or a 10th of the total, lost their jobs in the past year as factories closed, the World Bank said in a March 8 report. The industry accounted for 17 percent of Cambodia’s gross domestic product in 2007.

The garment industry took off 10 years ago after Cambodia signed a trade deal with the U.S. that linked market access with improved labor standards in its factories. Exports went from almost nothing in 1994 to $2.7 billion two years ago.

The money earned every month by those who sew and stitch jeans and T-shirts for retailers such as Gap Inc. and Stockholm-based Hennes & Mauritz AB supports as many as 1.5 million Cambodians, said Douglas Broderick, resident representative of the United Nations Development Fund in Phnom Penh.

“There’s a whole community around the garment sector, little vendors, landlords, food stalls,” he said. “All those people will get hit.”

Sary Muong, a Cambodian garment worker earning less than $2 per day, has struggled to provide her family basic goods like food and clothing. The 34-year-old single mother makes a monthly salary of $55 that supports her parents and 8-year-old daughter.

“Just look at the factories,” Sary Muong said from a one-room shack with no running water or toilet in Phnom Penh where she lives with her sister. “They’re closing. The living standards get worse and worse.”

Labor Standards

Cambodia’s garment industry has built a reputation for good labor standards over the past decade that the Commerce Ministry says contributed to its growth. In 2001, the government, garment factories, labor unions and the International Labor Organization, a UN agency, agreed to set up a monitoring agency called Better Factories Cambodia.

It files semi-annual reports on working conditions in factories that go to buyers like Nike Inc., Wal-Mart Stores Inc. and Adidas AG. Still, the higher labor standards haven’t stopped retailers from demanding ever lower prices, said Roger Tan, a factory manager and secretary-general of the Garment Manufacturers’ Association of Cambodia.

“Every factory is cutting costs now whether they like it or not,” he said. “The whole world is in deep trouble. Nothing should surprise anyone now.”

The government, reliant on overseas aid to finance a quarter of the national budget, has said it will extend tax breaks for clothing manufacturers to help reduce costs. Even so, Cambodia remains “increasingly affected” by the global slowdown, the IMF said, adding that its 2009 growth forecast may be revised again.

The world economy will shrink this year in a slump that is the worst “in most of our lifetimes,” Dominique Strauss-Kahn, the IMF’s managing director, said March 10. The World Bank, which also expects a contraction, said two days earlier that global trade would decline by the most in 80 years.

To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Carole Zimmer in New York at czimmer2@bloomberg.net.

Cambodia expects garment sector to recover in 2nd quarter [-Let's hope so!]

PHNOM PENH, March 16 (Xinhua) -- Garment, the foremost pillar industry of Cambodia, is expected to recover from the attack of the global financial crisis in the second quarter of this year, the Chinese-language newspaper the Jian Hua Daily reported on Monday.

"I think in the second quarter we will be able to maintain orders at the current level if we make factories more competitive," the newspaper quoted Van Sou Ieng, the just re-elected chairman of the Garment Manufactures' Association of Cambodia (GMAC), as saying.

Garment orders were down by 40 percent in the first two months this year, compared with the same period of last year, due to much less demand from the traditional markets, namely U.S. and Europe, he said at the annual meeting of GMAC on Sunday.

GMAC, which represents the majority of the kingdom's garment factories, plans to meet with buyers from Hong Kong on March 26 to press for orders.

"I will encourage buyers to increase orders of textiles from Cambodia, because they have already recognized the reputation of our country for respecting labor standards," said Van Sou Ieng.

"We must help garment factories increase quality so that they are able to compete with other countries. That means improving transportation and reducing bureaucracy," added the chairman.

About 70 garment factories have closed since the global financial crisis occurred in August, and more than 51,000 workers have lost their jobs or seen their contracts suspended, according to GMAC.

Last week, Commerce Minister Cham Prasidh told a press conference that garment exports produced revenues of only 70 million U.S. dollars in January, compared with 250 million U.S. dollars in the same month in 2008.

Garment used to generate about 70 percent of the country's annual export volumes and employ some 300,000 people.

Cambodian garment exports drop by half [-Uh oh, looks like Dr Hun Xen is wrong again!]

Friday, March 13, 2009
ABC Radio Australia

Cambodia's Commerce Minister has revealed that the value of garment exports has dropped by half because of the global economic dowturn.

Cham Prasidh says more than a dozen factories have closed since the start of the year, as exports to the United States, Cambodia's biggest market for textiles, have plummeted.

He's told a conference in Phnom Penh on the impact of the economic crisis, that Cambodia used to export around $US 200 million worth of garments month, but in February it was half that.

Cambodia's garment industry is the country's largest source of income, providing 80 percent of its foreign exchange earnings and employing an estimated 350,000 people last year.

Meanwhile, the Cambodian Free Trade Union, the country's largest workers' group, says more than 40,000 garment factory workers have lost their jobs since last year.

Cambodian garment exports fall 27 per cent

Mar 12, 2009
DPA

Bangkok - The value of Cambodia's garment exports in January was 27 per cent lower than in the same period last year as demand in the United States and Europe slumped, national media reported Thursday.

Garment exports were worth about 246 million US dollars in January 2008 but had dropped to about 177 million in the first month of this year, according to figures released by the Ministry of Commerce.

Exports to the United States dropped by about 35 per cent while exports to Europe were down by about 10 per cent.

Garment manufacturing, Cambodia's only significant export industry, has been the hardest hit sector in the developing country's economy during the global financial downturn, with more than 30 factories closing so far this year.

More than 30,000 garment factory workers lost their jobs in the past 12 months, according to a World Bank report released Sunday.

Garment industry unravels

WEDNESDAY, 11 MARCH 2009
Written by Chun Sophal and Hor Hab
The Phnom Penh Post

January garment revenues down $180m from last year.

Garment exports - the country's chief source of foreign exchange - contracted in January to less than a third of their value compared with the same period last year, the Ministry of Commerce announced Tuesday.

Ministry officials added that January tourist arrivals also dropped 2.19 percent compared with the number of foreign visitors coming to Cambodia 12 months earlier, in a sign that another key economic driver was flagging in the face of the global financial crisis.

Speaking at a charity golf event in Phnom Penh, Minister of Commerce Cham Prasidh said that garment exports generated revenue of only US$70 million in January, compared with $250 million in January 2008, a situation the Ministry of Finance acknowledged was a troubling signal of tough times ahead.

"We recognise that the garment and tourism sectors have been affected to some extent," said Ouk Rabun, a secretary of state at the Ministry of Finance.

Last week the International Monetary Fund (IMF) projected that, after years of growth, Cambodia's gross domestic product would shrink by 0.5 percent this year in the most negative assessment yet of the Kingdom's economic health.

This contraction comes largely due to falling demand for Cambodian garments, the IMF said.

"Garment exports are under pressure due to sharply lower retail demand in the United States and the European Union," the IMF said, adding that the highly uncertain outlook for 2010 was tied to regional and global growth.

Cambodian garments to the US generated 62 percent of total revenue for the sector in 2008, while the EU was the next-largest market at 20 percent of revenue.

Cham Prasidh held out hope that consumers would begin spending money again by the end of the first quarter.

"I hope that garment exports will recover in March because consumers - facing constraints due to the crisis - could resolve their problems and start purchasing again," he said.

However, most analysts have projected a prolonged drop in global demand, a view backed by the Kingdom's garment industry, which is facing increasing uncertainty from buyers.

Officials with the Garment Manufacturers Association of Cambodia [GMAC], which holds accounts with large Western brands - including Gap, Nike and Adidas - said that in previous years orders were placed in October for the 12 months ahead.

But given the downturn, these companies are now placing orders on a monthly basis, GMAC officials said, predicting that things will get worse before they get better.

"We don't know about the purchase orders for the year," said GMAC labour officer Cheath Khemara. "Purchase orders have not dropped to an alarming rate at the moment, but it will be even more serious come June because the effects of the economic downturn will likely have spread by then."

He acknowledged that the big international brands had decreased their orders, but refused to give figures. "I am very worried about this decline in purchase orders," he said.

The Free Trade Union of Cambodia said Monday that more than 20,000 garment workers have already lost their jobs this year, with another 10,000 at risk of becoming unemployed as more garment factories face closure.

Tourism, another pillar of Cambodia's economy, also appears to have had a rough start as fewer people travel, the IMF said, citing "cuts in discretionary spending".

Some 218,691 tourists arrived in Cambodia in January, down from 223,581 visitors during the same period in 2008, Tourism Minister Thong Khon said Tuesday.

"We will track this decline in tourism numbers and will try to prevent a prolonged downturn. We will try to attract short-haul tourists to balance out the decline," Thong Khon said.