Cambodia will have to change the way it handles manufacturing if it expects to compete with Vietnam for investor dollars, warns one leading businessman.
Following a garment quota auction last Friday that saw lower than usual bids for many lots, Van Sou Ieng, chairman of the Garment Manufacturers Association of Cambodia, said the industry here was struggling to compete with Vietnam.
Garment manufacturing makes up 20 percent of Cambodia’s overall economy and accounts for more than 80 percent of its exports. Until recently, Cambodia held an edge over neighboring countries because it received access to markets in the US and Europe that its competitors did not have. But a new trade deal between the US and Vietnam could lead to similar market access for Vietnamese factories, whose labor is cheaper and faster, Van Sou Ieng said.
In Cambodia’s garment industry, there are too many strikes, too many holidays, too much bureaucracy, high transportation costs and a time delay in exporting goods, Van Sou Ieng said.
“If the Cambodian government does not rush to be two or three times faster than Vietnam, Cambodia will lose the opportunity to export products,” he said.
He spoke just days after a garment quota auction from which the Ministry of Commerce earned slightly more than $8 million in bids from nearly 80 companies trying to sell their products in the lucrative US market.
Privately, some garment manufacturers say that some factories have already moved to Vietnam or are now considering it.
“I’m very sure that in Vietnam the [investment] conditions are better, including labor cost, [workers who are] quite the same, but working more with less public holidays,” said Davis Miu, general manager for Tinunggal Komara Garment Industry Co, Ltd.
“I believe investors will not wait for Cambodia,” Van Suo Ieng said. “The country has had civil war for more than 20 years, and it’s too poor. Why do you need so many holidays?”