Commerce Minister Cham Prasidh announced Monday plans to revoke or reduce US textile export quota allocations of garment makers with low utilization rates.
Cham Prasidh scolded textile manufacturers at Monday’s
special meeting for not reaching half of the ceilings even though the year is more than half over.
“What happened to you?” he questioned more than 100 representatives from Cambodia’s largest industry. “People always complain that we don’t have enough quota [allocations], but actually we don’t have enough production!”
According to the ministry, only two of 12 categories of the export items listed in the bilateral agreement have reached more than 50 percent of the ceilings. The utilization rates of the other 10 categories are as low as 4.6 percent.
If any quota allocations are not fully used by garment factories by the end of the year, next year’s allocations for such factories will be reduced by this year’s unused amounts, he warned.
He then ordered manufacturers to give back some quota allocations by Aug 15, which they might not be able to produce within this year or face a reduction next year.
“Newcomers couldn’t get enough quota [allocations] this year because it was made based on the last year’s performance,” Cham Prasidh said. “We’d like to help newly established factories by reallocating the quota.”
The move comes on the heels of a ministry plan to suspend export rights of manufacturers that violate the labor code.
Earlier this year, Cambodia and the US signed a textile trade agreement which imposed ceilings on 12 categories of export items. The government then allocated the quota to more than 160 garment factories. But many factories had blamed the ministry for unfairly allocating the quota.
Cham Prasidh claimed that low utilization has occurred because manufacturers produce only popular items. Manufacturers countered that some categories include winter items, which will be shipped later in the year.
during the second half of the year. Others said that factories are struggling to find buyers for certain categories.
But none of the manufacturers openly complained about the ministry’s warning to reduce their quotas next year.
“Business is risk-taking. Each factory has to make its own decision,” said Roger Tan, secretary-general for the Garment Manufacturers Association in Cambodia.