Exports from Cambodia grew by 22.29 percent to $1.81 billion during the first seven months of the year compared to the same period last year, according to figures released Wednesday by the Commerce Ministry.
The rise marks a slight increase from the first six months, where exports rose by 18.46 percent.
Garment exports increased by 19.20 percent to $1.59 billion between January and July, with garment exports rising by 17.02 percent and 11.64 percent to the US and European Union respectively. Exports to Canada experienced a larger boost of 41.19 percent to $142.25 million during the same period.
The total number of shoe exports from Cambodia increased by 35.11 percent to $87.36 million.
Despite signs of a recovery, garment exports, which make up the bulk of Cambodia’s exports, are still about five percent below the levels recorded prior to the global financial crisis.
And there is little hope of an increase in demand leading up to the Christmas season in the West.
“Traditionally we have a seasonal effect in trade where we actually export more,” said Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, referring to the last three months of the year. “I think for this year we will see a reverse.”
Mr Loo said rising costs for raw materials, which have doubled since the beginning of the year due to high demand, have urged buyers to over order so they could hedge against any further rise in prices.
Retailers will thus be obliged to clear their existing stock before more orders come in.
The cost of production in the sector “has got to correct itself. It has basically got to balance,” Mr Loo said.
Although Cambodia can boast competitive labor costs–the minimum wage now stands at $61 a month compared to about $140 in China and $70 in Vietnam–recent worker unrest could deter investment and result in the cancellation of orders, Mr Loo said.
Much of the growth potential in Cambodia’s garment sector currently hinges on debate in the US on whether or not to change its so-called General System of Preferences, a large-scale trade system outlining benefits for least developed countries.
Recent turmoil in the industry “will definitely curb investment,” Mr Loo said. “It’s forward-looking. Buyers that have the intention of X orders might now think of putting in X minus Y.”
