Showing posts with label Garment sector. Show all posts
Showing posts with label Garment sector. Show all posts

Sunday, May 20, 2012

UK investment in Cambodian apparel sector to surge

May 19, 2012
Fibre2Fashion

Investments in the Cambodian garment sector from the UK are to get a boost as the UK Trade and Investment Office is set to open a permanent branch in Phnom Penh.

Traditionally, Cambodia’s clothing sector has attracted the largest chunk of UK investment. Last year, the UK was the only European country to invest in Cambodia.

During the past five years, bilateral trade between Cambodia and the UK have risen by more than 300 percent and it was worth US$ 400 million in 2011, as per the data available with the British embassy in Phnom Penh. In the first quarter of the current year, there has been a growth in bilateral trade by over 40 percent year-on-year.

Tuesday, August 17, 2010

Unions threaten mass strike

Union leader Ath Thun addresses union members in a discussion about strike plans yesterday. (Photo by: Heng Chivoan)

Monday, 16 August 2010
Kim Yuthana
The Phnom Penh Post


MORE than 60,000 garment workers have reportedly pledged to hold a one-week strike next month after the Ministry of Labour and Vocational Training and the Garment Manufacturers Association in Cambodia rebuffed their request to renegotiate the sector’s newly established minimum wage.

Ath Thun, head of the Cambodian Labour Confederation, said at a meeting in Meanchey district yesterday that labour leaders had collected thumbprints from more than 60,000 workers who vowed to participate in the weeklong strike next month.

“We have abided by the law, but still they have denied us [further negotiations]. Therefore, a huge strike will occur on September 13,” Ath Thun said.

“We want fairness for workers who work very hard, but receive only very small payment.”

Last month, the Labour Advisory Committee, a body of government officials and industry representatives, elected to raise the minimum monthly wage for garment workers by US$5 to $61, a decision that will take effect in October.

However, labour leaders have said the raise is insufficient and have called for an increase to as much as $93 per month, plus additional benefits.

Ath Thun was part of a group of 13 union leaders who wrote to GMAC and the Ministry of Labour earlier this month to call for a new round of wage negotiations. He said the unionists had yet to receive a response to this request, but that there was still time to avert a work stoppage.

“If there is a positive reply from the ministry before the date set for the strike, then we will meet and talk,” Ath Thun said.

GMAC secretary general Ken Loo said yesterday that union leaders and workers must “respect” and “comply” with the LAC’s decision.

“Obviously, we have to comply with the government’s stance. Going on strike is the right of workers and Ath Thun, but they have to abide by the law,” Loo said.

Oum Mean, a secretary of state at the Ministry of Labour, said the LAC’s ruling could not be changed.

“It is the law. It was a decision made by the majority, and it satisfied the workers. Therefore, it is not right for the minority to keep protesting,” he said.

Anthony Pa, a member of the Council of Jurists at the Council of Ministers, warned earlier this month that the government would consider bringing lawsuits and criminal charges against any who engage in unlawful demonstrations.

“If Ath Thun keeps making demands like this and we keep agreeing with him, then one day the garment industry will collapse, and tens of thousands of workers will lose their jobs,” Oum Mean said. “Then will Ath Thun be brave enough to take responsibility and go to prison instead of the workers?”

Friday, May 28, 2010

Cambodian Factories Seek Eco-Friendly Power Alternatives

May 27, 2010
By SIMON MARKS
International Herald Tribune (Paris, France)


PHNOM PENH — Almost every day for the past 15 years Cheang Vet, a roadside mechanic near Phnom Penh’s Cambodian-Japanese Friendship Bridge, has witnessed the constant flow of traffic making its way in and out of the capital by its main northeasterly access point.

But in the last decade, as the number of people employed in Cambodia’s garment sector has increased from about 25,000 in 2000 to around 300,000 today, he has noticed a steady increase in one particular type of vehicle entering Phnom Penh: heavy-load trucks carrying huge stacks of firewood.

“There are at least 10 trucks a day carrying about two and a half tons of firewood,” Mr. Vet estimated. “They tell me they are on their way to the garment factories on the other side of the city.”

The majority of the country’s garment factories — making clothes for brand names in the U.S. and European markets — use firewood to heat old-fashioned boilers that produce hot water for dying fabrics and steam for ironing.

Some factories depend on firewood to supply all of their energy needs, according to industry experts.

Indeed, the use of firewood for energy is widely considered better for the environment than fossil fuels, as trees can be replanted to offset carbon emissions released during combustion. But replanting plans are limited here, while demand for firewood is growing.

In the 1990s, large areas of Cambodia’s rubber plantations — planted by the French in the early 20th century — had aged to the point where their yields of latex, the sap from which natural rubber is made, had dropped considerably, requiring extensive replanting.

Felling old trees made large quantities of rubber wood available to the emerging garment and brick factories in the Phnom Penh region.

But, according to a report released last year by the French environmental organization Geres, this source of timber is running out.

The Geres report found that 69 of the 310 garment factories then registered with the manufacturers’ association said they were using rubber wood to produce steam for ironing and dyeing clothes. In total, Geres estimated that garment factories burned around 65,000 cubic meters, or about 2.3 million cubic feet, of wood every month.

But a “critical period” started in 2009, the report said, “where rubber wood will not be available in sufficient quantity to supply the industrial sector its energy requirements.”

Energy experts and environmentalists say that timber is now being obtained instead from the country’s remaining natural-growth forests.

Graeme Brown, a private consultant working on natural resource management issues, said that a heightened demand for new rubber plantation acreage was leading to forest clearance, creating a “ready supply of natural forest timber.”

With the costs of wood-fired heating far lower than the cost of electricity from the national grid — power prices in Cambodia are among the highest in the region because of poor infrastructure and the use of inefficient diesel generators — there are fears that demand for firewood will continue to grow.

Still, there are signs that Cambodia’s garment factories, after a decade of efforts to improve labor standards, are now starting to concern themselves with environmental issues, too.

Albert Tan, vice president of Suntex, a Singaporean-owned garment factory in Phnom Penh, said the company had brought in a team of engineers from Malaysia to assess ways the factory could use less energy.

Mr. Tan said that wasting less energy would allow the factory to burn less wood and would also reduce dependence on diesel-powered backup generators in the event of a power cut — a frequent occurrence in Cambodia.

“There are not many results yet, but some studies are going on to see how best we can be eco-friendly and take care of the environment,” he said.

The owners of the factory, which produces about 2.5 million pieces of clothing per month for export to client brands in the United States and Europe, are also considering installing a gasification unit that would convert biomass or organic waste into cleaner-burning, more efficient synthetic gas, he added.

Rin Seyha, managing director of SME Renewable Energy, in Phnom Penh, said his company had been approached by several garment factories looking to use gasification.

But the technology available in Cambodia is still insufficient for large energy users like clothing factories, he said, and potential clients are often put off by the cost of importing larger units.

A gasification plant with a one megawatt generating capacity, imported from India, costs $300,000. Mr. Seyha’s company sold just one plant to a garment factory last year and so far in 2010 has aroused interest in three more. After 70 factories shut down during the global financial crisis, there are now about 250 factories operating in Cambodia.

Cutting down on emissions from burning wood and protecting the forests would help the industry’s image with environmentally conscious consumer abroad. But profit-focused private investors often balk at the first hurdle when it comes to introducing more environmentally friendly technology, because they consider the costs involved to be too high, said Yohanes Iwan Baskoro, country director for Geres.

Investors need to be educated to understand that improved technology can achieve a profitable return for companies in the long run, he said, adding that as well as fiscal incentives from the government, the banking sector also needs more encouragement to provide loans for environmental improvement.

“If we can’t show that there is profits in it for them I don’t think they will participate,” Mr. Baskoro said.

Julia Brickell, resident representative in Phnom Penh for the World Bank’s private-sector lender, the International Finance Corp., also said lenders needed to be persuaded.

“Financial institutions may focus too much on the short-term costs of investing in energy-efficiency improvements and not immediately see the longer-term benefits for their potential clients in terms of cost savings,” Ms. Brickell said. “This may impact their willingness to provide financing for technological upgrades.”

Garment workshops often operate from leased premises and lack fixed assets to provide collateral for loans, she added. “This may also result in reluctance on the part of the financial institutions to extend financing for energy efficiency improvements.”

Still, some progress is being made. A factory in Kandal Province, near Phnom Penh, which supplies garments to Hennes & Mauritz of Sweden and Marks & Spencer of Britain, is a case in point.

Wood is still being used to heat the factory’s boilers, but the company is using its staff house to test energy saving technologies on a small scale.

“Every factory wants to save costs, and our biggest cost is electricity,” said a manager at the factory, who spoke on condition of anonymity because, she said, bosses in Hong Kong had asked her to keep a low profile.

The company, one of Cambodia’s largest with nearly 3,000 workers, has installed solar panels on the roof of its staff house, where 50 air-conditioned rooms accommodate the management. To discourage energy waste, anyone using more than 200 kilowatt-hours of electricity per month is charged 50 cents per extra kilowatt-hour used.

Marks & Spencer is advising the factory through its so-called Plan A corporate strategy, to focus on improving environmental standards. More efficient lighting, better insulation and improved temperature control are three measures that have been identified.

At another factory, in Phnom Penh, where roughly 1,000 workers make luxury menswear for export, a program to fit energy-saving light bulbs is under way. With 3,500 neon lights in operation throughout the day, a sizable reduction in electricity consumption is expected, the factory’s general manager said, also speaking on condition of anonymity.

But balancing the need for increased productivity — Cambodia’s work force is among the least productive in the region, reflecting poor training levels — against the investments needed for better environmental standards is an almost impossible challenge, this manager said.

“The bottom line is this industry — in particular the garment sector — is the toughest sector in terms of competition,” he said. “Some people just can’t afford to make some of the changes that are being recommended.”

And according to several economic analysts and consultants here, who declined to be named because of the delicacy of the issue, it is not in the interests of manufacturers to show they can afford to install environmentally friendly technologies, because their brand-name clients may respond by putting pressure on them to lower their costs.

Still, Kanwarpreet Singh, chief representative for the H&M clothing brand in Cambodia, said that the industry as a whole was looking into newer and cleaner technologies to improve its image.

“If you use a lot of firewood, then it is not good for the environment,” he said. “As a company we try to encourage other sources of energy.”

Although Hennes & Mauritz factories use firewood as an energy source, Mr. Singh said, the company was evaluating alternatives.

For now, though, those are still unclear, and as Cambodia struggles to recover from a slump last year in exports to key U.S. and European markets, improving energy standards in factories is not a priority, he said.

Garment exports, accounting for 90 percent of Cambodia’s total exports, dropped almost 20 percent by value in 2009, to $2.38 billion.

“Nowadays one has to compete globally,” said Permod Kumar Gupta, chief technical adviser for the United Nations Industrial Development Organization in Cambodia. “We have to think, in the coming years, if we are not able to compete economically, environmentally and socially then difficulties will remain in how to compete with countries like China.”

Regardless of environmental concerns, Cambodia’s garment sector desperately needs to improve energy efficiency, with some factories spending up to $1,700 to produce a ton of clothing — more than three times the amount in neighboring Vietnam.

“In terms of energy efficiency, the sectors that are using biomass are particularly wasteful,” said Mr. Gupta.

Thursday, May 20, 2010

Cambodia employs 320,734 workers in 269 garment factories

May 19, 2010
Xinhua

Despite global economic crisis, Cambodia's garment sector still remains strong in terms of providing jobs to Cambodian people, a government data showed Tuesday.

The data provided by the Ministry of Commerce showed that there are currently 320,734 workers, among them 293,664 women, are working in 269 factories across the country.

It showed that the total garment exports to foreign countries in 2009 amounted 2,385 million U.S. dollars, of which 1,486 million U.S dollars to the United States, 577 million U.S. dollars to European markets, 184 million U.S. dollars to Canada and 136 million U.S. dollars to other countries.

The data also showed that Cambodia's general exports to foreign countries in 2009 were 3,907 million U.S. dollars, and the imports were 5,448 million U.S. dollars.

Late last month, a report of the Garment Manufacturers Association in Cambodia, showed that the number of strikes staged by garment workers in Cambodia declined nearly half compared to a year earlier,

The report said there were 58 strikes occurred in 2009 as compared with 105 strikes in 2008, or represented only a decline of 44 percent in the number of strikes.

However, it said, there were 53,097 garment workers who had lost their jobs because of the closure of 122 factories in 2009.

Even though 67 factories were re-opened, and they provided jobs to 19,772 workers, the report showed.

Monday, May 10, 2010

Cambodian garment industry remains wary despite export growth

May 10, 2010
Xinhua

Cambodian garment and apparel exports have increased 7.24 percent for the first quarter of 2010 compared with the same period last year, but remain below the pre-crisis levels of the first quarter in 2008, local media reported on Monday, citing the figures from the Ministry of Commerce.

Ministry of Commerce (MoC) figures value Cambodia's garment and apparel exports for the first quarter at 671 million U.S. dollars, up from 626 million U.S. dollars for the same quarter last year, the Phnom Penh Post reported.

According to a country by country breakdown, exports to the U.S. market went up 4.13 percent - from 395 million U.S. dollars to 411 million U.S. dollars - while the EU markets saw a 7.32 percent increase, and other foreign markets were up 20.12 percent.

Garment Manufacturers Association in Cambodia (GMAC) Secretary General Ken Loo was restrained in his response to the new figures, emphasising that the increase was from "the very low level of 2009 ", the Post said.

But MoC Secretary of State Ok Boung was more optimistic, saying he believed the sector would continue to recover thanks primarily to an improved economic outlook in the U.S., the biggest market for Cambodia's garment industry.

Total garment export dramatically fell more than 20 percent to 626 million U.S. dollars in the first quarter of last year, from 784 million U.S. dollars for the same period in 2008, according to MoC data.

Overall, the year 2009 saw Cambodia's garment and apparel exports sliced by 15.46 percent compared with 2008.

Tuesday, March 09, 2010

Report From Cambodia's Garment Factories

Garment workers returning after a lunch break. (Photo: Anne Elizabeth Moore / t r u t h o u t)

Monday 08 March 2010
By Anne Elizabeth Moore
t r u t h o u t | Report


Meet the international working class - the faceless laborers that likely had a hand in stitching together your mid-range jeans, your jaunty parka or your favorite silky smooth T-shirt: They are super giggly and sharing snacks in the back of a converted military pickup truck over their lunch break.

In fact, they're downright cute as buttons, and make about that, too. Cambodia offers a national monthly minimum wage for garment workers of $50. This is still higher than in some countries, but Cambodia's economic boom means that prices and wages in almost all other sectors have risen rapidly in recent years. In 2009, the Cambodian Labour Union Federation and the National Institute of Statistics determined that the minimum wage to support the conditions factory workers lived under was $93 per month. Yet, recent talks to grant laborers a living wage stalled immediately.

"It is too much money to consider when the economic crisis has affected the sector," the president of the Free Trade Union of Workers Chea Mony admitted to the press mast month. Ninety-three garment factories closed and 60 suspended work in 2009, leaving 68,190 workers - close to 20 percent of the force at last tally - out of jobs, according to official Ministry of Labour records. Many women, with few other opportunities in the developing nation, took jobs as sex workers. The so-called entertainment industry grew rapidly, and some fear HIV transmission rates are on the rise too.

In the truck, though, no one's concerned. Six of them, matching kerchiefs tied over their brows, nestle together in the back, three in the front, all in respite from the heat of the torrential noonday Cambodian sun, not eating very much because they can't afford to. They each have smooth, light brown skin; bright, charming eyes; and luscious, dark hair. They could be models or - given some time and the funds to study - accountants, scientists or lawyers. Instead, they are garment workers, but I've come to find out if they have a contingency plan.

"Are you worried that your factory will close down?" I ask the group, and they laugh.

"Not worried," my translator explains. "They would be happy."

Concerned there may be a language problem, I ask again, more shrill: "What will you do if the factory closes down?"

I'm not sure what I'm expecting - panic, acknowledgment or a fully worked-out five-point plan - but more laughter is not it.

"Forever," the translator explains over their guffaws, meaning that the factory will never close, and they will continue working there until they cannot work anymore. "Not stop," he clarifies. They're still giggling, but it's no longer funny.

I do know this: I did not expect the choice among a return to poverty, a life in the entertainment industry and garment work - the occupation of around 300,000 women in Cambodia, and the nation's third-biggest money maker - to be so bleak. So bleak it's funny.

The tittering pack of five girls and solitary boy in the back of the military vehicle - to represent the gender ratio in the Cambodian textile industry we would need five more girls, but there isn't room in the truck - touch each others' arms affectionately and tell animated stories. They wear matching kerchiefs to tie back their hair. It's a factory requirement that creates a monotone visual on the floor, and allows bosses to identify workers easily. Plus, it gives them another reason to fire infringers.

I am traveling with my partner, an academic who writes about jeans. When we approach, the group quiets, but only for a moment.

Later, we find out that our translator and friend Mr. Lee told them we were not reporters, so they would talk to us. He explained that we are just tourists who like factories. Still, they fear being fired without the meager stipend a factory closure would bring, so they do not give their names. To further protect them, I will not name their place of employment, either.

This particular group sews and packs jeans for sale in Mexico, Panama, China, Canada and the US. Such information wouldn't usually be available to workers in individual factories, but this group, at the end stages of production, gets to read the boxes. (Many garments, jeans in particular, go through several different international ports before they are completed. This leaves most workers completely in the dark about where their handiwork is retailed - and sometimes, what the final product looks like.)

Most of the clothes produced in Cambodia - 70 percent - are intended for US export. This means that if these same workers were doing these same jobs under US standards - that is, if things switched up a bit and either the pay scale was exported or the entire labor force was imported - they would be earning about 30 times what they do now.

Each member of this group makes $55 per month base pay. The slight increase over the minimum gives them bragging rights, and may quell some protests, but to get enough to send $50 or $60 back home to the provinces, this group works seven days per week, which can bring in as much as $100. (Around 20 percent of the country's 14 million people are estimated to rely on the pay of a garment worker.)

Women who've left the factories say that forced overtime is common, but the workers in the truck do not complain, as jobs cuts and layoffs are often threatened in retaliation. Many work through illness, fearing the loss of wages or of their job. (In-factory health clinics are sometimes available, but lines are often too long and the care too insubstantial to make the wait worthwhile.) One woman tells me of a regular occurrence on the factory floor: that a worker will faint in the stifling heat. This is a fireable offense in the garment industry.

This group doesn't know how much the jeans they make sell for, which is probably good. A reporter friend told me once about a plane that crashed into the ocean near Kep. Packed and priced T-shirts and jeans washed ashore, and the locals who found them couldn't believe their eyes. They asked her, "This is how much people pay?" One was laughing so hard, my reporter friend was concerned he would asphyxiate.

None of the women in this group yet has children, and each lives with up to four other girls in a small concrete room. Advancement is unlikely, and the garment factory workers realize it. "Do any of you want to be managers?" we ask, and Mr. Lee translates their raucous response: "Oh, they would like."

Female managers at the factories are rare - by some estimates only 6 percent of the managers in the country are women, most are rumored to be related to owners. When asked what it would take to advance through the hierarchy, the girls basically agree: Time. Time to study accounting, earn a high school diploma, attend university. Plus, they add sadly, "the owners only recruit high quality."

Some factory workers supplement incomes with piecework, and a very few work already in the entertainment sector. The most popular of the part-time job, though, according to the Women's Agenda for Change, is money lending: loaning other factory workers a few bucks under high interest rates.

These workers, though, are just too tired. When we ask, "what do you do after work?" they look at us askance.

"They sleep," Mr. Lee says.

Undaunted, we try again: "Have you visited the city center?" It is 20 minutes away, a trip that might cost 12 and a half cents on the moto of a friendly driver." Two years ago," one says. The others are silent.

"A few months ago, these were all empty," our translator and guide Mr. Lee explains as he leads us through the dank, but lively concrete caverns that house the garment factory employees who reside and work along the southernmost edge of Phnom Penh, Cambodia.

"Now," he says, "they fill."

Mr. Lee has brought us home to meet his wife, who just quit the factories. The walkway is jam-packed with motorcycles, toys, drying clothes. The walls are crumbling. The only security system is the massive padlocks on each door. He opens the door to one of the flats and, in Khmenglish - a mix of Cambodian and English that adds gratuitous S's and sees no need for verb tenses - asks us to step into his home.

It is small. The tile floors are utilitarian enough, but the walls crumble and mold with years of abuse. Most walls do not see as much human contact as these: but when three people sleep, cook, eat, read, wash and dry laundry, relax, bathe, play - and, if the inhabitants are lucky, store their motorcycle - in a space approximately eight feet by ten feet, the walls are going to show wear.

The tiny abode is occupied by Mr. and Mrs. Lee and their three-year-old son. They pay $25 per month. Utilities aren't included, and add another $5 to $10 every month. Water for cooking and drinking must be purchased separately. (Rents vary, depending on the size of the room and the number of people sharing it, but it's hard to find a place to sleep near the factories for less than $15 per month, before utilities.)

With overtime, a worker can bring in as much as $85 to $120, but a 2009 Cambodian Institute of Development Study found that workers earn an average of $79 per month. After rent and utilities, and the $50 most send back to the provinces every month, garment workers are left with between $4 and $9 per month for food, in a city where it's hard to eat on less than $1.25 per day. It's a particularly tight fit for families with kids to feed.

A few months ago, despite losing his own job with an NGO, Mr. Lee asked his wife to leave the garment factory job because, although they needed the money, they missed their son. There is no childcare available to workers and young Lee Hira was living in the provinces with grandma so they could both work. Visits were rare.

Now Hira is home - such as it is - and the family's together. When the boy is old enough for school, Mrs. Lee will look for more work in the factory. She was worried a few months ago, when there were so many open rental units in their building.

But now, she thinks, things are looking up.

"Can we go inside the factory?" I ask Mr. Lee after we've left his home. We're out on the street in front of another factory hoping, like wallflowers at a high-school dance, that someone approaches us.

Cambodia got into the garment sector in the mid-1990s to take advantage of the Multi-Fibre Agreement, a quota system that offered developing nations a fair shot at exporting apparel to the lucrative US market. At the time, inspections and unions and oversight of factories all flourished. This allowed Cambodia to proclaim itself "sweatshop-free," even as details of conditions in some factories painted a less-than-rosy picture.

At the end of 2004, however, the Multi-Fibre Agreement ended, and the textile industry in Cambodia panicked. Some closed up shop immediately, some simply laid off workers. Many that stayed open doubled workload but not pay, changed contracts to make it easier to fire employees or simply stopped meeting workers' demands for rights.

The good thing about the "sweatshop-free" aura that still clings to the garment industry is that factories are supposed to allow outside monitors to come through for inspections. In practice, however, only 300 factories are registered with the International Labor Organization's Better Factories Cambodia program, which sends only 12 inspectors out, in pairs and with advance appointments, to monitor compliance.

Mr. Lee denies my request without saying no. "They scared you want to take a photo," he says. "The owner of the garment factory - sometimes they scared, some foreigner want to know if they are breaking regulations."

They should be. During the 2008 inspections, the most recent year for which reports are available, Better Factories Cambodia found only 97 percent compliance with the minimum wage pay standards for regular workers, and 70 percent compliance for casual workers. Legal requirements regulating payment for maternity leave were only adhered to 74 percent of the time, sick leave paid out 66 percent of the time and a lowly 8 percent of the companies inspected adhered to laws limiting compulsory overtime. Half the companies failed to meet basic health and safety requirements.

But while Mr. Lee and my traveling companion are otherwise engaged, I meander closer to the factory door. A friendly guard waves me in. "Hi!" she says enthusiastically, but this turns out to be the only English she knows.

A not-so-friendly guard, standing with four uniformed pals, grips his rifle in greeting. I gesture toward the two picnic tables full of eating women and turn on the charm. "I'm starving, what kind of food do you serve here?" I ask him.

He laughs and pokes his chin toward the door. "We don't make anything here," he says. "You must leave."

A whole family on a motorbike stops when we wave. A four-year old girl stands on the seat in front of her mother and behind her father, who steers. None wear helmets. The first law requiring them was passed recently, but only about half the riders on the street wear them still. They are from Kandal province. On their motorcycle, a trip home takes about two hours.

They tell us they pay $25 per month rent, utilities included - which means their room must be impressively tiny. They send as much money home as possible and, during the rainy season, return home to work the rice fields.

Agriculture barely beats out the garment industry in national income, but working in the country's two grossest-earning sectors doesn't seem to be helping the crew from Kandal, whose down time at one job is spent at the other.

"What is better," we ask, "to work at the farm or to work in the factory?"

In the factories, Mr. Lee explains, "Every month they get the monthly pay. But the farmers? Not every month. For a few months, four months," he says, they make enough to survive. But after that? "Finish."

The husband is speaking, but the wife looks tired. They need to rush home, cook dinner, get to sleep, wake up, eat a meager breakfast, bring the daughter to their friends and check in for work in the morning. They have a few more months of this before they go back to the farm, but after that they'll return to the factory and pick up where they left off.

If they didn't, you might not have anything to wear.

Wednesday, March 03, 2010

Ignorance is bliss for us, agony for them

Illustration: John Spooner

March 3, 2010
MARTIN FEIL
The Sydney Morning Herald (Australia)


The AFR Review (26 February 2010) contains a four page article titled Life is Sweat by Ken Silverstein from Harpers Magazine. It describes the working conditions and lives of 350,000 women working in the Cambodian clothing industry.

The author said that the average production employee generated about $ US 200,000 in annual retail sales and received $US750 in income. The factory price for a small quantity and without bargaining was $US1.87 for a garment (including door to door shipping). The garment retailed for $ US25. The women workers received 0.375 of one per cent of the retail price.

In our Age Opinion piece on 1 September 2008 John Spooner drew a portrait of Kevin Rudd in his flash $100 shirt and tore a piece of it for every finger in the retail pie. We estimated that the Customs duty protecting our own miniscule garment industry was worth about a fifth of a cent in the retail dollar. We estimated that the workers actually got fifty cents or 0.5 cent of the retail dollar. This is twice as much as the Cambodian women get.

The first blindingly obvious point is that the supply chain generally and the retailer in particular is benefiting from the Asian sweatshops that have been bowdlerised by the spin kings. I still gag on the view expressed at a public meeting ten years ago when a woman Liberal Senator ( so much for sister solidarity) said that if women in Thailand weren’t employed in sweatshops they would be prostitutes in Bangkok. The Harpers’ article quotes Julia Macgruder (1907) and Senator Knute Nelson (1906) as arguing for child labour on the basis that the alternative was worse.

The evil is that the alternative isn’t the only alternative. We could always pay a dollar more or force the retailers to reduce their margin from 800 % to 700%. I wonder what would happen if they had to make their pricing structures public? The trouble is that the additional sellers’ margin would be appropriated by the factory or brand name owners. It would not filter down to the workers living on $ US50 a month. That’s right. A month. Not a week or a day. Oh, that amount includes overtime. It works out at 33 cents an hour.

In the lucky country you can’t park your car in the city for a day for the $A dollar equivalent of $50. You can’t buy a sandwich lunch for a week.

We used to employ 160,000 people in our textiles, clothing and footwear industries mostly in Victoria. They were hounded out of existence by the claim that they were inefficient. I’d like to see how the government’s mantra of productivity improvements would have any impact at all on our competitiveness against the sweatshops of Asia. Why would they bother swapping capital equipment for reduced labour? The ultimate sanction in the sweatshops is that you get sacked if you don’t produce your quota. They don’t have unemployment benefits.

The textiles clothing and footwear industries have been constantly derided by the Productivity Commission, the media and everyone else beating the drum of free trade. They have been caustic about our inability to compete. I’d like to know how we could or why we would want to treat our workers so badly. I also want to know why we think that we can regard a huge number of women living on the edge in other countries so callously.

The answer is that ignorance is bliss. No one advertises their retail margins or the number of steps in the supply chain. There aren’t too many now. The major retailers have simply by-passed importers and sourced directly from the manufacturers .They make their own arrangements for sea freight. They negotiate directly with the brand name owners and the sweat shops. They are very profitable.

Too much information about the sweatshops makes us uncomfortable. We don’t really want to know. There is a trend to get information on the origin of food (especially fresh food) but this is an issue that potentially affects us.

I remember seeing workers clear the slag from the blast furnaces at BHP where the hot metal flowed under the slag. I stood on a platform about three times further away from the furnace mouth than the workers. I could feel my eyelashes burning away. The superintendent told me that “they are used to it”. Maybe the Cambodian women are used to the unremitting agony of endlessly remorseless work with no hope of ever getting out of it.

Their agony is something we don’t want to know about. Saying the consumer is king is a sick joke.

Wednesday, February 24, 2010

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.

Wednesday, February 17, 2010

Cambodian garment trade struggles to get over slump

By Prak Chan Thul

PHNOM PENH, Feb 17 (Reuters) - Cambodia's garment industry, its third-biggest currency earner, shed almost 30,000 jobs in 2009 after a drop in sales to the United States and Europe and could struggle this year, a senior official said on Wednesday.

Oum Mean, secretary of state at the Labor Ministry, said 106 factories had closed in 2009, putting 45,500 people out of work.

On top of that, 66 factories suspended operations, leaving another 38,000 on half pay, after a slump in export orders as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis.

However, 48 factories had opened during the year, employing 16,900 people, Oun Mean said. These firms had received permits before the downturn and had taken the risk of continuing with their ventures, banking on an improvement in the world economy.

"In 2010, we suspect garment and shoe production will still be affected," Oum Mean said, adding the industry had 468 factories by the end of last year, employing 330,000 people.

"We just feel happy after hearing information that there's been some recovery in those big countries," he said.

According to data from the Garment Manufacturers Association of Cambodia, the country exported garments, textiles and shoes to the value of $2.3 billion last year, down from $2.9 billion in 2008. More than half of its exports go to the United States.

In recent years the sector has been the third-biggest foreign exchange earner after agriculture and tourism in a country ravaged by civil war in the 1970s but which has achieved some stability over the past two decades.

It accounts for about 16 percent of gross domestic product, 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 forecast in December that the economy would shrink 2.7 percent in 2009 before growing 4.3 percent this year.

The government has offered vocational training to the unemployed, but Oum Mean said some female workers had also turned to the "entertainment industry" -- a euphemism for prostitution. "Some think that these jobs are not good for society," he said.
Chea Mony, president of the Free Trade Union, said some workers had sought jobs in neighbouring Thailand, Malaysia and South Korea.

"Some of the women went to work in night clubs and beer gardens," he said. "Unemployment is a heavy burden for Cambodian women."

(Editing by Alan Raybould)

Tuesday, February 09, 2010

Cambodian garment workers fail to win pay rise

Tue, 9 Feb 2010
Robert Carmichael, Phnom Penh

Discussions between Cambodia's government, manufacturers and unions over a pay increase for garment workers have ended without agreement.

Most of Cambodia's 350,000 garment workers are young women, and on average earn the monthly minimum wage of $US50 a month, stitching clothes for export.

But unions have long said that is insufficient, and the government's own statistics office agrees, saying workers need at least $US93 a month to make ends meet.

This week's meeting between government, unions and the Garment Manufacturers' Association of Cambodia - the main trade body - ended without agreement.

But the manufacturers' representative said his members would look further into the issue.

The proposed increase would represent a rise in costs for the industry, which has suffered in the past 18 months from lower orders.

Dozens of factories have closed and tens of thousands of workers have lost their jobs as demand from the key US market slumped.

Saturday, January 30, 2010

The US will end tariff reduction on import of Cambodian garment

US Ambassador Carol Rodley gave an interview at the Meng Ieng garment factory on 28 January 2010 (Photo: Den Ayuthyea, RFA)

29 January 2010
By Den Ayuthyea
Radio Free Asia
Translated from Khmer by Heng Soy
Click here to read the article in Khmer


Carol Rodley, the US ambassador to Cambodia, indicated that, due to worldwide economic problems, the US will no longer reduce import tariff on garments manufactured in the Cambodia.

She made this statement during her visit to the Meng Ieng garment factory, a model factory with good work ethic located in Russei Keo district, Phnom Penh city, in the afternoon of 28 January.

Through a translator, Mrs. Rodley said: “The quota system does not exist anymore, therefore, US orders have dropped significantly. The US also faces severe economic problems, therefore, the US is also facing the same challenges and it is trying to tame these economic difficulties.”

Chea Mony, President of the Free Trade Union of Workers in the Kingdom of Cambodia (FTUWKC), said that if the US does not lower import tariff on garment made in Cambodia, then the Cambodian garment sector may face collapse.

He hopes that the US will take a second look to see if it has the ability to reduce import tariff on Cambodian-made garments, otherwise, this could seriously affect the livelihood of Cambodian factory workers as they may lose their job when the garment factories will be forced to close.

Chea Mony claimed: “The US will have to take a second look because if the US government does not exempt import of Cambodian-manufactured garments, and if it insists on imposing import tariff, then the US will destroy the Cambodian workers. Right now, Cambodian factory workers face severe hardship, and when the workers have no job, they will face danger and they will be forced to go find work in Thailand. Then, the Thai will shoot them, arrest them on a daily basis!”

Last week, Chea Mony sent a letter to the US Congress asking the US to exempt import tariff on Cambodian garments. Chea Mony claimed that if the US does not exempt the tariff, the Cambodian garment sector will face problems in 2010.

Nevertheless, Ambassador Rodley claimed that, in 2010, the reduction of import tariff on Cambodian garment will be eliminated. She indicated that the Cambodian garment sector will have to compete with those of her neighboring countries based on quality standards instead.

Thursday, January 14, 2010

Union leader Chea Mony sends letter on tariffs to US

A vendor sews clothes at Phnom Penh’s Russian Market. Cambodian exports incur duties averaging 16 percent upon entering the United States, the Kingdom’s biggest overseas market. (Photo by: SOVAN PHILONG)

Wednesday, 13 January 2010
Sen David
The Phnom Penh Post


Free Trade Union of Workers of the Kingdom of Cambodia head calls on Capitol Hill to back bill abolishing duty on exports

THE President of the Free Trade Union of Workers of the Kingdom of Cambodia said Tuesday he had sent a letter to Speaker of the US House of Representatives Nancy Pelosi through the US Embassy in Phnom Penh as part of the latest effort to push for duty-free exports for the Kingdom.

Chea Mony, who sent the letter Monday to the speaker, said it was necessary given the huge decline in Cambodian exports to the US – mostly garments – following the onset of the economic crisis.

“It is a message to show that we want to help Cambodian workers because nowadays there are so many workers that have lost their jobs,” he said, adding that although the US donates a lot to the Kingdom, excessive corruption means that much of it does not reach the people.

“If the US wishes to help Cambodia, the US will pass duty-free access for Cambodian exports,” said Chea Mony.

While almost all garment-producing countries suffered a decline in exports last year, Cambodia suffered more than others due mostly to structural weakness in the sector and high tariffs.

In the first eight months of last year, the Kingdom’s exports to the US fell 23.31 percent compared to an average 14.3 percent slide, according to US Office of Textiles and Apparel statistics. Vietnam, where total manufacturing costs are about 20 percent lower than Cambodia, saw garment exports fall just 1.2 percent over the same period.

At the same time the Kingdom is severely hampered by US tariffs – 30 out of 49 least-industrialised countries in Asia enjoy duty-free, quota-free access to the US, whereas Cambodia is subject to an average 16 percent tariff, a fact that many – including Chea Mony – deem unfair.

The US is Cambodia’s biggest export market. In 2008, official figures showed 65 percent of the Kingdom’s exports were garments, of which three-quarters went to the US.

US Embassy Spokesman John Johnson confirmed Tuesday that the letter had been received and would be passed on to Washington.

It comes after a Cambodian delegation – including Commerce Minister Cham Prasidh – went to the US capital in November to lobby for the passage of a bill that would grant duty-free access for Cambodian garments.

Cheat Kemra, a senior official of the Garment Manufacturers Association of Cambodia (GMAC), said Tuesday that garment producers would focus more on Asia and the European Union as the US continues to struggle to recover from the economic downturn.

Also working against the Kingdom, he said, was the fact that Cambodian exports make up 3 percent of the total imports into the US – typically Washington does not grant duty-free access to exporting nations representing above 2 percent of the total.

“It is an obstacle, but we believe that the US will favour … Cambodian garment exports,” said Cheat Kemra.

Thursday, December 03, 2009

Cambodia Wants Tax-Free Exports to US: Minister

By Taing Sarada, VOA Khmer
Original report from Washington
02 December 2009


[Editor’s note: Last month, the International Finance Corporation invited Commerce Minister Cham Prasidh to its offices in Washington, to celebrate the 10th anniversary of preferential trade agreements between Cambodia and the US. On his visit, Cham Prasidh testified before the Trade Subcommittee for the US House of Representatives’ Committee on Ways and Means. He also sat with VOA Khmer for an interview at a hotel in Washington. What follows is an excerpt of that interview, in the first segment of an eight-part series.]

Q. What gains has Cambodia received from 10 years of trade agreements with the US?

A. The trade agreement in 1999 provided us with a big opportunity to export clothes for sale to American over other countries. As you know, countries usually export their products within a limited quota by the US. For some countries the US would increase this by 6 percent after the first export. But because Cambodia has this agreement, Cambodia had the 6 percent increased to 14 percent. We exported more than other countries, and around 20 garment factories in Cambodia grew quickly to almost 300 factories.

Q. What is the next strategy to improve Cambodian trade and people’s daily lives?

A. Overall, we need an open market. That means that if the US grants us duty-free and quota-free status, we will have the possibility of selling more products, and we also have the possibility of attracting investors to agriculture. So we’re trying very hard to get the US market. The US market is the biggest market for Cambodia.

Q. You requested that US Congress remove taxes on every product, including clothing. Do you believe this request will be fulfilled?

A. It is our request, but we’ve only come here to lobby them to draft a bill to submit to Congress. I came to lobby them in 2004, and there was a bill in 2005 submitted to Congress. But the bill hasn’t gone further. Among more than 200 Congressmen, 40 of them supported us, but hundreds more still have not yet looked at our bill. Now, in 2009, we started lobbying and submitted it again, but it has not progressed yet because of, as you know, the economic downturn in the US.

We’ve come here this time to reaffirm [our position] as America prepares to review its [generalized system of preferences]. And I’ve come here to express to them that Cambodia needs to have free taxes on our products exported to America, as America considers which countries should be provided the GSP and which countries should be cut back on the GSP. If the US market opens for us, then all the products that come to America will be tax free. Then we will also have to attract many investors to our country, and our people will have better living conditions.

Q. According to your report, Cambodia paid $407 million in tariffs to America on exports worth $2.4 billion. That’s a tariff of 16.7 percent, which is much higher than that for developed countries like the United Kingdom, Thailand, Russia or South America. Do you think it’s fair for Cambodia to pay such a large tax, when its sales are so small?

A. It is extremely unjust for us as an impoverished country. After we told them these tax statistics, they seemed to feel embarrassed. We are also a poor country, like Africa, but they have not allowed us free duty, while some poor countries in Africa can access America’s market with free duty. It is not fair when a small, poor country pays taxes greater than rich countries like France and the UK. They export more products to America but pay less tax. Cambodia exports a small amount of products, but pays a higher tax. So our struggle here is to lobby the US to lower the tax. Then we can export more.

Tuesday, December 01, 2009

Industry Urges Trade Benefits for Cambodia

Tuesday December 01, 2009
By Liza Casabona with contributions from Kristi Ellis
WWD Business


WASHINGTON — Apparel brands, retailers and Cambodian officials are urging duty free benefits for Cambodia, the eighth-largest apparel supplier to the U.S., arguing the move would help the country stay competitive at a crucial time.

During a program last month marking the 10th anniversary of the Better Factories Cambodia project, an initiative to improve labor compliance in the Cambodian garment industry, speakers said the competitiveness of the country’s apparel industry is threatened by the economic environment as well as the lifting of quotas last year on garment imports from China and the conclusion of the Vietnam monitoring program, also last year.

The quotas and the monitoring program “gave Cambodia room to breathe” as the country built its garment sector, said Cham Prasidh, senior minister and minister of commerce. However, the end of those programs “started an onslaught.” Dozens of factories have closed and more than 50,000 jobs have been lost as a result of production shifts to other countries, Prasidh said.

Apparel imports from Cambodia dropped 23 percent to $1.41 billion this year, according to the most recent statistics from the U.S. Commerce Department.

A significant portion of the volume lost by Cambodia has shifted to other countries, including many that “do not share Cambodia’s commitment to improving respect for workers’ rights,” said Michael Kobori, vice president of supply chain social and environmental sustainability for Levi Strauss & Co.

Kobori urged apparel buyers to reward responsible sourcing behavior by supporting “trade preference legislation that provides further incentive to countries like Cambodia that are committed to improving workers’ rights.”

A group of apparel brands, retailers and an entertainment conglomerate called on congressional leaders last month to treat Cambodia as a “special case” and grant it duty free status immediately.

Gap Inc., J.C. Penney Co. Inc., Jones Apparel Group Inc., Levi Strauss & Co., Nike Inc., American Eagle Outfitters Inc., Columbia Sportswear Co., Phillips-Van Heusen Corp. and The Walt Disney Co., which all have significant investments in production in Cambodia, urged U.S. lawmakers to help the country halt the decline in imports and reverse the loss of tens of thousands of jobs in the apparel sector.

Congress is unlikely to grant Cambodia duty free status this year, but could do so next year in the context of a broader reform and expansion of trade preference programs.

Friday, November 27, 2009

Workforce Abuse Jeopardizes US Trade Status: Union

Uncle Sam WARNS you!

By Taing Sarada, VOA Khmer
Original report from Washington
26 November 2009


If the government continues to ignore labor violations and fails to address working conditions, it risks its special trade access to lucrative US markets, a leading labor leader said in Washington last week.

Marking the 10-year anniversary of a preferential Cambodia-US trade agreement in Washington, Art Thorn, president of the Cambodian Labor Confederation, said unfair practices and poor working conditions will continue without the intervention of the international community.

They exploit the workforce, and the employers fire factory union leaders or violate workers’ rights when the law isn’t well enforced,” he said at the World Bank’s International Finance Corporation.

“I think what has happened will continue to happen if the government and donor countries such as America do not help,” he said. “Our union is trying to work hard to solve the issues, but in reality our power is very limited. And if the leader of the country doesn’t help, then it will be impossible for us to do it alone.”

Cambodia’s economy is heavily dependent on the garment sector, a major earner of foreign currency, but observers warn that abusive practices and a lack of worker rights could drive buyers away.

The Freed Trade Union of Workers of the Kingdom of Cambodia, the country’s largest union, has warned that factory employers regularly violate labor codes, denying time off and maternity leave, paying salaries irregularly or even declaring bankruptcy and failing to pay workers when they strike. Union leaders say they are routinely discriminated against in their efforts to organize workers.

However, Cambodian trade officials say they have a strong labor law they try to enforce, and they have worked in recent years to brand Cambodian garments under fair practices.

In an interview with VOA Khmer on a trip to Washington last week, Commerce Minister Cham Prasidh said the law is well written and to international standards. His ministry sends monitors to factories often, he said.

“Honestly, we respect our labor rights more than any other countries,” he said. “We have a good law, but sometimes we also have some slow practices and a lack of enforcement.”

Trina Tocco, a member of the International Labor Rights Forum, based in Washington, told VOA Khmer that if Cambodia does not focus on the rights of workers, they will face abuses in the workplace.

John Ritchotte, a specialist in labor relations at the International Labour Organization, based in Bangkok, told VOA Khmer the labor law may need updated.

“The Cambodian labor law is now 10 years old, and like any law it needs to be adjusted and adapted to the change of circumstances,” he said at the IFC in Washington. “And now that there is a growing economy, a more diverse economy, they need to adapt the law to that reality.”

Wednesday, November 18, 2009

Duty-free access to Cambodia damages [US] textiles: NCTO

November 18, 2009
National Cotton Council of America (USA)

David Hastings, chairman of Mount Vernon Mills, urged the House Ways & Means Committee’s Subcommittee on Trade to keep in mind that the United States’ manufacturing sector is hurting badly and not to take action that could potentially cause further job losses in this country.

Testifying on behalf of the National Council of Textile Organizations (NCTO), Hastings specifically urged the Subcommittee that as it reviews different options regarding preference programs – not to consider a proposal to extend duty free status to apparel imports from Bangladesh and Cambodia as a part of broad trade preference reform.

Hastings said, for example, if this Committee grants these large competitive countries with duty-free status, Mount Vernon’s Trion facility, and many others, will be forced to close.

“And, in the case of Trion, the U.S. military will lose one of the country’s largest producers of combat fabric for our soldiers,” he noted.

Hastings said of the 55 countries in the current trade preference and free trade areas, not a single country or NGO support is granting any sort of preference to these two countries.

“In fact, not one country has asked for broad trade preference reform for textiles,” he said.

Hastings testified that 42 textile and apparel associations from 28 countries in Africa and the Western Hemisphere, including Least Developed Countries such as Haiti, asked him to present to the Committee a letter stressing strong opposition to any such effort.

With regard to trade preferences, Hastings offered three solutions: 1) Congress must pass an Andean trade preference extension immediately; 2) take action against China; and 3) the U.S. government should do more to support manufacturing.

“I also do not think we should abandon our free trade and preference program partners in order to reward countries that barely pay their workers or engage in predatory and illegal subsidy schemes,” Hastings stated. “Instead, I believe that we should be focusing our efforts on ensuring a prosperous future for the U.S. worker, as well as the millions of workers in the preference and free trade areas.”

Tuesday, October 27, 2009

Vietnam seeks larger garment market share in Cambodia [- Vietnam seeks everything in Cambodia!]

10/27/2009
VOV News (Hanoi)

The Viet Tien Garment Joint Stock Corporation on October 26 opened an office for a sole sales outlet for Viettien-branded products in Phnom Penh, Cambodia.

The corporation’s first overseas outlet is a 120 s.q.m showroom built in partnership with Cambodia’s Caja Top company to display a wide variety of garments including shirts, trousers, shorts, jeans, and coats made of various materials such as khaki, elastic, and cotton.

Vietnamese goods are on the right track to gain a foothold in the Cambodian market, especially after series of trade fairs which promoted high-quality Vietnamese products to Cambodian consumers.

Observers said Vietnamese goods, which have been greatly improved in terms of quality, now stand a chance to successfully compete with products from Thailand and China which have long flooded the market.

Viet Tien Corporation plans to partner with Caja Top to open more showrooms and sales outlets across Cambodia.

Wednesday, August 26, 2009

Cambodia needs to be more than dressmaker to the world

Wednesday, 26 August 2009
By Anne-Laure Porée
OnlineOpinion.com.au


Defying the gloom descending on the tourism sector brought about by the global crisis, the capital’s airport recently launched a hopeful initiative: a new airline. Cambodia Angkor Air was launched to boost tourism between the capital and Siem Reap near the famed ruins of Angkor Wat. With tourist arrivals falling sharply since late last year, this may signal a triumph of hope over reality. If anything, the hopes and fears surrounding Cambodia’s tourist revenue and garment trade underline how the fortune of the country has become intertwined with the larger world.

Since peace came to Cambodia in the last years of the last century, the country has emerged as a poster child of globalisation in South-East Asia. In the middle of this decade, Cambodia enjoyed double digit growth and even hoisted itself up to 6th place in the rank of the fastest growing economies for the 1998-2007 period.

And now the country is experiencing the downside of dependence on the world. The sectors most affected by the crisis - tourism and garment export - are the ones that have seen the most development thanks to the integration of Cambodia into the global economy a decade ago, after peace was restored in the country.

At this time, the economy was opened to foreign investors, who poured money into the garment industry, taking advantage of supports granted to Cambodia such as the Most Favoured Nation (MFN) and the Generalised System of Preferences (GSP). This status provided access to the American market and it enabled other Asian investors - Chinese in particular - to get round their own quotas or the Least Developed Country status conferred upon them by the United Nations.

But the happy days are now threatened by the shrinking world market. Of the four major pillars of Cambodian economy - the garment industry, tourism, construction and agriculture - three are seriously impaired by the global crisis. With 70 per cent of Cambodia’s garment production going to the US, the declining American economy, choosey shoppers and stay-at-home tourists have led to job losses in Cambodia.

The figures released in late July by the Garment Manufacturers Association of Cambodia (GMAC) showed a worse than anticipated loss: exports dropped almost 30 per cent and one garment worker in six lost her job in the first six months of 2009. Most of these workers are women who transfer a substantial part of their earnings to their family living in rural areas in order to supplement farming-based incomes. In some villages, every family has one or several members working in the garment factories based in the Phnom Penh suburbs. Some go for unpaid leave or part time jobs, some enter prostitution, but most decide to go back to their village in order to work in the rice fields.

According to Van Sou Ieng, GMAC president, Cambodia is much more severely affected by the crisis than other Asian countries like Indonesia, Vietnam, Bangladesh or China because the industry sector in Cambodia is less competitive. “We need more time to produce than China or Vietnam,” he says. Though the government helps with profit tax exemptions or export charge reductions, there’s no miracle cure for Ieng.

Tourism - the second pillar of the economy - has suffered from the economic crisis, and the fallout from the swine flu. In Siem Reap, located next to the famed Angkor temples, a spot visited by more than 1 million tourists in 2008, the situation is described as “catastrophic” by hotel managers. The hotels’ occupancy rate has fallen 25 per cent compared to the same period in 2008. Several three- or four-star hotels have definitely closed their doors, and the mid-range hotels have been multiplying promotional offers for months.

The drop in western tourists’ arrivals (down 14 per cent during the four first months of 2009 according to the Minister of Tourism) has a direct impact on tourism generated incomes - foreigners spent US$1.6 billion in 2008. The Ministry of Economy and Finance expects a drop in tourism growth of 7 to 8 per cent this year.

The construction sector is also affected: many foreign investors have delayed, reduced or slowed their projects. The capital Phnom Penh started to change face in 2008 with the building of huge towers, business centres and shopping malls but activity slid in the second half of 2008, leaving workers without employment. Such trends have had significant consequences, particularly among the banking sector. The Acleda bank, which has the largest branch network in all provinces, reported a fall in profits in the second quarter of 2009 because of late payments and less lending. The Cambodians, who speculated on land as investment, are now facing difficulties because the prices of land and real estate have plunged and they can’t sell and get cash.

The hardest hit, of course, are the poorest of the poor who count each riel. For them, any drop in income, as well as any unexpected crisis, immediately results in cutting down the number of meals a day.

Agriculture, the fourth pillar of the Cambodian economy and the least exposed to global currents, could bolster the country’s 2009 growth, which is forecast at 2.1 per cent. The agricultural sector (with 4.3 per cent growth expected in 2009 depending on weather conditions) is essentially based on rice farming and fishing.

But the part of agriculture that has drawn foreign interest proves to be a mixed blessing.

In northeastern Mondolkiri province, plans by a French company to set up a rubber plantation have created a conflict that symbolises the double edged sword of globalisation. For several months, Bunong, a Montagnards ethnic group, has been fighting against the project - as their farmland gets swallowed up by the rubber company that has an agreement with the Cambodian government. The company is expected to make huge profits, a part of which could return to the community via the salaries of the plantation workers and the development of a new city.

The crisis has forced the government to pay attention to those left behind by globalisation. “We thought that the private sector could solve every problem but we have to reconsider the role to be played by the State in order to palliate the deficiencies of the market,” says Hang Chuon Naron, Secretary General of the Ministry of Economy and Finance.

The crisis has also led the leader of political opposition Sam Rainsy, former Economy Minister, to call for injecting government funds into the economy and for pushing reforms, in particular against endemic corruption. But the government would rather let the storm blow over, waiting for growth to come back in developed countries, hopefully pulling the country out of its recession in the process.

In the meantime, some hopes turn to the mineral, oil and gas resources development. But the revenues from these productions will be mainly derived from exports of raw materials with no local added value, whereas imports of manufactured goods will increase. Even after growth returns, Cambodia will still have to figure out how to hitch its industry to the global economy profitably rather than be a supplier of garments produced by cheap labour. Cambodia is beginning to learn the challenge of being part of an integrated world.

Saturday, July 11, 2009

Key Sectors Challenged by Downturn: UNDP

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
10 July 2009


The world economic crisis is having a direct impact on four of Cambodia’s key economic drivers, which will need to become more competitive, according to a report released by UNDP this month.

Agriculture, construction, garments and tourism each face challenges from the economic downturn, and “Cambodia now needs to consolidate its progress, nurture its potential and sustain its growth,” the UNDP said in its report, “Cambodia Country Competitiveness: Driving Economic Growth and Poverty Reduction.”

“It is a unique opportunity right now,” Douglas Broaderick, the UNDP’s chief representative, told VOA Khmer. “Cambodia needs to get some of the things done that could set-up Cambodia to be stronger economically and to be able to help people in a much better way, in terms of competitiveness linked to economic growth.”

The agricultural sector, which generates a third of Cambodia’s GDP and employs more than half its workforce of 8 million people, suffers from low education in the rural work force, limited access to financing, poor roads and irrigation and limited market access, the report said.

The UNDP recommended the development of rural non-farm economies, such as roads, rural electrification, education and financial training, as well as better coordination between suppliers and manufacturers.

And while the cost of labor is a main motive for garment manufacturers to come into Cambodia, productivity remains lower than neighboring countries, the report said, citing as an example productivity that is three times lower than in Thailand.

The UNDP also recommended that the government re-examine its investment laws, to improve the manufacturing of textiles and garments, which comprised 12 percent of the GDP in 2007 and employed more than 360,000 people.

The sector lost 51,000 jobs between September 2008 and March 2009, as a global economic crisis, kindled by a US financial meltdown, spread. Around 70 factories have closed in that time.

The UNDP recommended training workers to begin producing goods higher in value, and to improve industrial relations.

Meanwhile, competitiveness in the tourism sector remains poor, ranking 112th of 130 countries at a recent World Economic Forum, due in part to high energy costs and expensive flights, as well as limited infrastructure and costs associated with corruption, the UNDP said.

Human resources in the sector remain low, and an uneven application of policies and rules plagues the sector.

“Rich cultural assets, such as Angkor Wat, give Cambodia a competitive advantage, but reliance on Angkor Wat as the primary tourist attraction cannot be sustained,” the report said.

The UNDP recommened relaxing tourist visa restrictions, exploring open sky policies and reducing the costs and improving the quality of tourism products.

In the construction sector, Cambodia has enjoyed an increase in both scale and value of projects, including high-rise apartment and office buildings currently under construction.

The country has the lowest wages for construction workers in Southeast Asia, but productivity is relatively low and there are shortages of labor to meet demands and of skilled workers, the report said.

Engineers and architects are overwhelmingly foreign, while electricians, welders, carpenters and other skilled workers are in short supply.

Added to these difficulties is the complicated constrution law, which means it takes an average 710 days for approval of construction permits—compared to 200 days in Vietnam and 150 days in Thailand.

Companies say they resort to paying bribes in order to shorten the time frame.

“The highly bureaucratic regulation of licensing in the construction sector may reduce its competitiveness,” the report said.

Cambodia is at the bottom 10 percent of countries in the World Bank’s corruption index, leading to a dearth of investment from the world’s largest industrialized countries, whose own national laws forbid participation in corrupt practices.

The UNDP recommended investments in vocational training, improvements to permit procedures and the strengthening and enforcement of building standards.

With the four key sectors flagging, costs remain high in information and communication technology, discouraging further investment.

Overall, the UNDP recommended putting more resources into education, as Cambodia lags behind its Southeast Asian neighbors, ranking lowest in the region.

Cheam Yiep, a Cambodian People’s Party lawmaker and head of the National Assembly’s finance commitee, said the UNDP’s analysis was “just partly true,” but he did not elaborate.

Still, the goverment will take the report’s findings under consideration, he said.