The value of Cambodian garment exports declined by 27 percent in January compared to a year earlier, according to the Ministry of Commerce; yet another indication of the slowing of Cambodia’s economy.
Garment exports totaled about $246 million in January 2008 but this January the number dwindled to about $177 million, according to figures release by the ministry, which could change up to 10 percent as more information is collected.
The numbers also show that major markets such as the US and European Union have reduced their demand. Exports to the US declined 35 percent from January 2008 to January this year. Exports to the EU declined by nearly 10 percent.
“The data shows clearly that the global financial crisis is going to hit the garment sector hard, and the downside risks to our 2009 growth projection of minus 0.5 percent are very real,” International Monetary Fund Country Representative John Nelmes wrote Wednesday.
“Producers are finding themselves fighting for a bigger slice of a swiftly shrinking pie,” he wrote.
The figures also show the importance of improving Cambodia’s competitiveness and the need to lower the cost of doing business in Cambodia, he wrote.
The most recent decreases come on top of an overall decrease in 2008 of 2 percent from 2007, according to Finance Ministry statistics.
Roger Tan, secretary-general for the Garment Manufacturers Association, said transport, import, and export costs must decrease.
It’s not clear precisely why the numbers have dropped, he said.
“We don’t know whether buyers are delaying their purchases or whether they are going somewhere else,” he said. “We know that business has dropped substantially and [it] is not isolated to Cambodia.”
The slump has led to the closure of 30 garment factories so far this year, he said. Between six and eight new factories opened in that time period, he said.
Kang Chandararot, executive director of the Cambodia Institute of Development Study, said that,“Only the strong factories will survive.”
