Garment Exports Booming Despite Concerns

Despite criticisms over safety, outbreaks of sometimes violent industrial action and a raise in the minimum wage that it was warned would scare off manufacturers, Cambodia’s garment sector is booming, according to government figures.

A report on state newswire Agence Kampuchea Presse (AKP) on Friday said exports of garments and textiles, which make up the bulk of Cambodia’s output in the global economy, were up by almost a third in terms of value in the first six months of this year.

AKP cited Ministry of Com­merce statistics, which said that in the first half of the year, garment and textile exports were worth $1.558 billion, up 32 percent on the same period last year.

The figures show that the European Union (E.U.)—which gives Cambodia preferable trade terms under the Everything But Arms initiative—is catching up to the U.S. as the largest recipient of Cambodian-made garments.

In the six-month period, exports to the E.U. were worth $532 million, some 45 percent higher than the period in the previous year, according to AKP. Exports to the U.S. rose by 17 percent to $660 million in the period, it said.

Kong Putheara, director of the Ministry of Commerce’s statistics department, said that although he could not corroborate the six-month figures published by the state news agency, growth in exports was the result of stabilizing demand from the U.S. and Europe.

“The increase in garment ex­ports is a result of the growing external orders because international markets have become stable and people are earning more in­come [in the West],” Mr. Pu­theara said.

Srey Chanthy, interim president of the Cambodian Economic Association, said regional circumstances were also working in Cambodia’s favor as a garment producer.

He said the safety concerns sparked by the factory collapse in April that killed more than 1,000 people in Dhaka, Bangladesh—leading to the country last month being strip­ped of favorable trade terms by the U.S.—could be making Cambodia an attractive place to set up manufacturing.

“I think it must be the Bang­ladesh issue, and also China—where labor costs are very high now,” Mr. Chanthy said. “Many new factories have been coming in the last six or seven months or so. They set up very quickly and start exporting.”

Still, in May, Cambodia had two of its own collapses at factories supplying international brands—one at the Wing Star Shoes factory in Kompong Speu province, which killed two workers and injured 11, and another in Phnom Penh’s Meanchey district, where a dining hall collapsed, injuring 20 workers.

The incidents raised questions over safety in the sector and over the effectiveness of the International Labor Organization’s flagship monitoring program, Better Factories Cambodia.

Figures from the Arbitration Council released Monday show that labor disputes brought to the tribunal during the same period were steady—111 cases compared with 114 cases in the first half of 2012. The number of strikes recorded by the Arbitra­tion Council in the first half of 2013 was 30, compared with 26 in the first half of 2012.

David Welsh, country director of the U.S.-based Solidarity Center, said that the $14-a-month wage rise was not having the negative effect that had been warned by opponents during negations.

“The government and [the Garment Manufactures Association in Cambodia] argued that if wages increase manufacturers will flee, but they are pouring in at the moment,” Mr. Welsh said, adding that the raise itself was still well short of a living wage for garment workers.

“The industry is booming,” he said. “But workers need to get a fair share of that pie.”

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