The message from garment manufacturers to the government on Thursday was loud and clear: Change now, or the industry may start to whither away.
“Again, I repeat, and I’m tired of repeating the same thing: Bribery, bureaucracy and corruption are impeding the industry,” said Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia, to an audience of more than 100 factory owners, union representatives and government officials at the Hotel Inter-Continental. “If we don’t tackle this now, we won’t be able to maintain the industry.”
Appeals for government reform have become more urgent as 2005 creeps closer. The end of worldwide garment quotas for World Trade Organization members at year’s end is expected to dramatically alter the global garment producing landscape.
Though most in the industry were confident factories would not disappear en masse at the end of the year, it was apparent the government needs to make changes for the industry to maintain factories and stay competitive.
“If under-the-table payments remain ongoing, our production will not be able to compete with other countries,” Minister of Commerce Cham Prasidh said at the event.
An Asian Development Bank study presented Thursday revealed a host of problems for the garment industry, including excessive corruption costs, a complex export documentation process and long delivery times. The industry’s strengths included competitive wages, quality goods and labor law compliance.
The ADB made several recommendations to the government to help the industry. In addition to taking steps to reduce corruption, the study suggested computerizing export documentation, improving the productivity of the work force and promoting investment in so-called “backward linkages”—locally produced dyes, zippers, buttons and other materials—to speed up delivery.
If the changes in the study are made, a scenario the ADB calls “Vision 2010,” the bank estimates garment exports will reach $2.25 billion in 2007, up from $1.5 billion this year. If no changes are made, the study found, 150,000 of the industry’s 230,000 jobs could be lost.
“Let’s hope the government is serious about changing,” said one garment factory manager at the conference. “There is hope here for the industry to survive, but there’s also hope in other countries that factories will relocate.”
Government and industry officials said Thursday the country has been successful in its labor-friendly nation branding, helped by actress Minnie Driver’s visit to the country earlier this week. Orders have increased as a result of the labor compliance policy, they said, and buyers who left previously have returned.
Yet even with those efforts, and if all the study’s recommendations become a reality soon, the industry still faces steep tariffs to the US market.
Government and industry officials are urging the US to reduce tariffs, and an industry official said the topic came up when US congressional staff members visited the country last month. It is also expected to arise during a meeting between Cham Prasidh and US Trade Representative Robert Zoellick in Singapore in the next few days, the official said.
“Eliminating or reducing US tariffs for Cambodia would be a drop in the ocean for the US,” the industry official. said. “We think the US can be that generous.”
US spokesman David Gainer had no information Thursday on whether the US is considering a tariff reduction.
