Garment orders plunge 40 percent

Employees leave a garment factory in Phnom Penh on Thursday. (Photo by: AFP)

Monday, 16 March 2009
Written by Chun Sophal
The Phnom Penh Post

PRODUCTION DECLINE

• 40pc decline in garment production orders for the first two months of 2009
• Drop by more than two thirds in January exports, from $250m to $70m, said Commerce Minister Cham Prasidh
• More than 50,000 laid off since the downturn began last year
• About 70 factories closed since crisis began

Industry says that falling overseas orders could lead to more factory closures and layoffs, but hope remains for second-quarter recovery.

GARMENT orders were down 40 percent in the first two months of 2009 compared to the same period last year, Van Sou Ieng said Sunday after re-election as president of the Garment Manufacturers Association of Cambodia.

The latest figures suggest more layoffs and factory closures could be on the way for the already battered sector even if they paint a more positive figure than government data. Last week Minister of Commerce Cham Prasidh said exports had declined from US$250 million in January 2007 to just $70 million in the same period in 2008.

About 70 factories have shut their doors since the economic crisis started to hit Cambodia last August, and more than 51,000 workers have lost their jobs or seen their contracts suspended, say industry officials.

"We have received only 60 percent as many orders as last year, and that figure may continue to decrease without urgent measures," said Van Sou Ieng.

"I will encourage buyers to increase orders of textiles from Cambodia because they have already recognised the reputation of our country for respecting labour standards," he added.

He said local factories were improving their quality standards and were capable of competing with producers in Bangladesh and Vietnam.

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

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

The GMAC president said he hopes the industry will recover this year.

"I think in the second quarter we will be able to maintain orders at the current level if we make factories more competitive," he said.

The sector has been hit hard by the global economic slowdown and is heavily dependent on the crisis-hit American and European markets.

Garment makers have had limited success diversifying into the Middle East, Japan and Eastern Europe. The Commerce Ministry said export sales were down $60 million in February compared with last year, with $337 million in sales in 2009.

The monthly payroll for January and February was down $1.1 million from last year.

"In the second quarter, we will ... maintain orders at the current level."

Commerce Minister Cham Prasidh said he is optimistic that tourism and agriculture will stay strong, but added construction investment had fallen 40 percent.

From 2004 to 2008, total investment was $1.96 billion, with $1.17 billion in foreign investment and $7.880 million in local investment.

Mean Sophea, director of the Trade Preferences System Department of the Ministry of Commerce, said Sunday that the government has been encouraging more investment in the garment sector.

Union strikes

But a Commerce Ministry spokesman said worker unions and GMAC could help stimulate the sector.

"I think that GMAC can help make buyers feel confident in buying garments from Cambodia," Mean Sophea said.

Van Sou Ieng called Sunday for the country's 1,000 unions to limit their activities while the sector faces problems.

"Some union activities are leading to fewer orders and are leading to thousands of job losses, so [unions] must be careful with their actions," said Vann Sou Ieng. "I would like to publicly announce to the world that no matter what obstacles we face, Cambodia will not die. I will try to look for new markets and new buyers."

Chea Mony, president of the Free Trade Union of Cambodia, rejected the GMAC accusation, saying that many of the factories closing down were simply avoiding taxes.

"This is just GMAC's accusation," he said. "GMAC cannot blame strikes - there have been no strikes in the first two months of 2009, but 70 factories closed."

Cambodia Expects Tourism Business to Increase 3 pct in 2009

2009-03-15
Xinhua

Cambodia still expects a top line of three percent increase of tourism business in 2009, even in face of the global financial crisis, national media said on Sunday.

If the government takes adequate measures to counter the crisis, a three percent rise can be expected in 2009, Chinese-language daily newspaper the Commercial News on Sunday quoted Tourism Ministry officials as saying.

However, if estimated in a conservative or even pessimistic way, the industry might hit its bottom this year, with a minus three percent rise, according to the officials at a seminar.

After all, the financial downturn has led to mass unemployment, especially in Europe, the U.S. and Asia, and much fewer people can afford overseas trips now, they added.

Earlier on Tuesday, Tourism Minister Thong Khon told a press conference that foreign tourist arrivals in Cambodia dropped by 2. 19 percent in January, compared with the same month in 2008.

Cambodia received around two million foreign tourist arrivals in 2008, a 5.5 percent rise over 2007, but slightly lower than the government's expectation, according to official figures.

Cambodia issues new border regulations for neighboring foreigners

PHNOM PENH, March 13 (Xinhua) -- People of the bordering provinces of Thailand, Vietnam and Laos with border passes issued by their governments can stay in the bordering provinces of Cambodia for one week, the Commercial News reported on Friday.

This measure aims to facilitate cross-border trade and shore up the tourist sector, one of Cambodia's pillar industries, the Chinese-language daily newspaper quoted Tourism Minister Thong Khon as saying.

In addition, Vietnamese and Lao people with passports can travel in Cambodia within a period of one month, without applying for visa, he said.

"They can also drive their cars into our country, with their automobile insurance certificates," he added.

Earlier on Tuesday, the minister told a press conference that foreign tourist arrivals in Cambodia dropped by 2.19 percent in January, compared with the same month in 2008.

Cambodia received around 2 million foreign tourist arrivals in 2008, a 5.5 percent rise over 2007, but slightly lower than the government's expectation, according to official figures.

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.

Tourist arrivals in Cambodia down by 2.19% in Jan. [-Sorry Dr. Hun Xen, looks like the world economic crisis is hitting Cambodia after all!]

PHNOM PENH, March 11 (Xinhua) -- Foreign tourist arrivals in Cambodia dropped by 2.19 percent in January, compared with the same month in 2008, the Phnom Penh Post reported on Wednesday.

It was a sign that another key economic driver was flagging in the face of the global financial crisis, the English-language daily newspaper quoted ministry official as saying.

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

Cambodia received around 2 million foreign tourist arrivals in 2008, a 5.5 percent rise over 2007, but slightly lower than the government's expectation, according to official figures.

Both garment and tourism are the pillar industries of the country.

Thai-Cambodian conflict hits border villagers in the pocket

Sunday, October 19, 2008

KANTHARALAK, Thailand (AFP) — Up until late June, thousands of tourists each month would flock to the 11th century Preah Vihear temple to admire its elegant carvings and crumbling stone staircases.

But now, the stunning UN World Heritage Site perched just over the Thai border high on a Cambodian mountaintop is teeming with troops, not tourists, after a decades-long dispute over surrounding land erupted into violence.

The Thai entrance to the temple has been closed since June 22 when border tensions between Thailand and Cambodia unravelled, leaving many Thais along the border who relied on the steady stream of sightseers in dire straits.

"My income has dropped more than 50 percent from when I was selling at the temple," said 50-year-old clothes seller Malai Konghom, who has had to move her business 13 kilometres (eight miles) away from the border.

"I am lucky that all my kids have already graduated but I still feel the effects... I sit here on a quiet day, hoping to sell something to tourists visiting the waterfalls."

Hotel manager Porntip Nimlamai, 47, said she had to sack a maid and reduce her expenses, as only four of the 14 rooms at her property in Kantharalak town near the border are filled.

"It is quite serious, I stopped doing my accounts in August because it is always in the red," she told AFP, adding that she had resorted to switching off lights and removing refrigerators from empty guestrooms to reduce bills.

Preah Vihear is the most important example of ancient Khmer architecture outside Cambodia's famed Angkor Wat temple complex.

Although the World Court ruled in 1962 that it belonged to Cambodia, the most accessible entrance is in Thailand's northeastern Si Sa Ket province.

Any tourists wanting to visit from Cambodia would have to scramble up a thickly forested mountain or charter a helicopter.

The current tensions erupted when the UN's cultural body awarded Preah Vihear World Heritage status, reigniting old arguments about land surrounding the temple, which has never been fully demarcated.

Thailand and Cambodia agreed in August to reduce troop numbers at the site, but the remaining soldiers engaged in a gunfight Wednesday that left two Cambodian soldiers dead and several from both sides injured.

Since the shoot-out, both sides have agreed to a joint border patrol aimed at preventing more violence, but with no timetable planned the villagers have no idea when the border will reopen and healthy trade will return.

Like other countries, Thailand is also suffering from the global financial crisis, and tourists are also wary of domestic political tensions which erupted into deadly clashes between police and anti-government protesters on October 7 in Bangkok.

Sriphuwong Chantachompoo, a Si Sa Ket tourism official, said that until the military face-off at the border, the number of tourists visiting Preah Vihear from Thailand had been increasing.

Figures from the Thai national park where tourists cross over to Preah Vihear show that during the 2006/2007 fiscal year, 142,679 tourists visited the park, up from 125,353 a year earlier.

From October 1, 2007 until the temple entrance closed in June, it had received 111,728 tourists -- and none since.

Sriphuwong said the whole province only sees about 80 tourists a month now, who come to visit the area's other temples and waterfalls.

"It has had a huge effect -- the number of tourists has dropped sharply," he said.

"It is difficult to hold events to draw tourists (without the temple). It's not like the south, which has beaches, or the north, which has beautiful views of the mountains. The northeast does not have scenery like that," he added.

And foreign embassies in Bangkok are now advising their citizens to stay well away from the entire area, as tensions remain and troops stay put.

"Previously, we used to advise people to avoid the temple, now we're telling them to avoid the whole border area," a British embassy spokeswoman in Bangkok told AFP.

Tourism revenue in Si Sa Ket down 10%

Saturday, July 26, 2008
TNA

Trade and tourism revenues in Thailand's Si Sa Ket province has plummeted

10 per cent following the ongoing dispute over an area which both Cambodia and Thailand claim, adjacent to an ancient temple atop a promontory at the poorly defined Thai-Cambodian border, a senior trade official said Saturday.

Sriwan Kiatsuranond, chairman of the Si Sa Ket Chamber of Commerce, said there were around one thousand tourist daily visiting Preah Vihear temple before the standoff, but the authorities on both sides of the disputed area have closed off access even before that happened, the official said, many tourists had canceled their trips for fear of their safety.

Some Bt4-5 million generated by tourists visiting the temple between January-May had dropped significantly, he said.

Because of the military standoff and tensions in the border area where the 11th century temple stands, tourists have now stopped visiting the temple as Thai and Cambodian soldiers sealed off the border, he said.

Souvenir traders also lost income, according to Mr. Sriwan.

The Si Sa Ket Chamber of Commerce has joined with banks and tourism operators in the province to submit a letter to the Thai-Cambodian General Border Committee asking the group to resolve the border problem.

The provincial organizations hope that Monday's meeting between the foreign ministers of both countries will be able to resolve tensions along the border.

Both countries have insisted on exclusive sovereignty over the 4.6-square-kilometer area of the overlapping zone adjacent to Preah Vihear temple which was awarded to Cambodia in 1962 and listed as a World Heritage site by UNESCO earlier this month.