Garment Exports Rise in the First Two Months of 2010

Cambodian garment exports rose 11.9 percent in the first two months of 2010 compared to same period in 2009, according to data released yesterday by the Commerce Ministry.

The US imported 59 percent of Cambodia’s garment output, worth $275.58 million, in January and February, an 8.7 percent improvement on the same period last year.

Exports to Europe grew by 15.2 percent over last year and accounted for $78.03 million in garment purchases, or 23 percent of Cambodia’s total exports.

Despite the growth, signs of a recovery in the sector are still uncertain with export figures fluctuating from month to month.

After garment exports in January rose by more than 20 percent compared to the same month in the previous year, exports in February only rose around 4 percent compared to the same month in 2009.

Still, analysts are finding plenty to be optimistic about.

“If you look at garments the corner has now been turned,” Eric Sidgwick, senior country economist for the Asian Development Bank, said yesterday at a press conference on a periodic economic forecast.

According to data from the US Department of Commerce, he said, figures for the first two months of the year are positive in terms of volume though slightly negative in terms of value due to a drop in prices on international markets.             Nevertheless, US retail sales have risen about 5.5 percent in the first quarter of this year, an indicator that Mr Sidgwick said could point toward a recovery in the garment sector.

The task ahead for Cambodia, experts say, is reclaiming some of the market share it has lost to regional players, including Bangladesh and Vietnam, during the course of the economic crisis.

US Commerce Department data show a loss of Cambodian market share as the crisis resulted in a 21 percent drop in Cambodian exports to the US in 2009 at same time as US garment imports fell by only 12 percent.

The Cambodian garment sector had grown mainly due to protective economic measures such as safeguards on China from markets in the US and EU and other bilateral agreements.

“Those are now disappearing and Cambodia is beginning to feel the full force of world competition in garments,” Mr Sidgwick said.

“It’s not just how well Cambodia’s doing relative to its past,” he said. “Its how well Cambodia is doing relative to its competitors today.”

According to Tuomo Poutiainen, chief technical officer for the International Labor Organization, the growth of exports in the first two months of 2010 is indicative of buyers’ continued interest in doing business with Cambodia but not an indication that Cambodia’s infrastructure is developed enough to remain competitive with either Vietnam or Bangladesh.

“Cambodia needs to stress overall competitiveness over the long term by addressing issues like high electricity costs, poor transport, bad roads and inefficient ports, and poorly administrated export and import processes,” Mr Poutianinen said. “These numbers are a reason to be optimistic, but there still needs to be investment in human capital and in the improvement of employer-union relations.”

Labor leaders, however, are not cheerleading the turnaround.

“If there is small growth like this, it will not be enough to respond to a labor force that is growing day to day,” said Ath Thorn, president of the Coalition of Cambodian Apparel Workers of Democratic Union.

Chea Mony, president of the Free Trade Union, said the garment industry has been in decline since 2007.

“The textile industry is easy to collapse if the government doesn’t reform the job condition system, salary of garment workers and rights of workers,” said Mr Mony.

(Additional Reporting by Hul Reaksmey)


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