On Garment Exports, Gov’t Figures Vary Wildly

Cambodia’s critical garment industry may be doing significantly better than Commerce Ministry figures suggest, judging by the Finance Ministry’s count, but just whose numbers to trust is up for debate.

In February, the Commerce Ministry’s import-export inspection general directorate said Cambodia’s garment exports for 2014 hit $5.75 billion, up 4 percent from 2013. Though the figures defied predictions by the Garment Manufacturers Association in Cambodia (GMAC) that exports would not grow at all, they did mark a major slowdown for the sector following a 20 percent jump in 2013.

The Finance Ministry, however, says the industry may be doing much better.

According to the ministry’s customs department, 2014 garment exports reached $6 billion, a 10.7 percent increase over the year before.

That’s a difference of a quarter-billion dollars for what is by far the country’s largest export industry. The garment sector single-handedly contributes a third of the country’s GDP and employs some 600,000 Cambodians.

Why the difference?

A Finance Ministry spokesman said he was uninformed about the issue and deferred to another ministry spokesman, who could not be reached. The director of the ministry’s customs department could not be reached, either, and the head of the department’s statistics office declined to comment and refused to confirm his own department’s figures, which were reported by the Asian Development Bank (ADB).

Commerce Ministry spokesman Ken Ratha said the import-export directorate relies on garment order records, while the Finance Ministry’s customs department records the actual volume and value of garments leaving Cambodia through its ports and borders. Mr. Ratha said that made the customs department’s numbers more complete than his own ministry’s.

Keo Chetra, the head of national accounts at the Planning Ministry’s National Institute of Statistics, said the government also turns to the customs department’s import and export figures to calculate the country’s annual GDP, on the advice of the International Monetary Fund.

The customs department had better numbers, he said, “because they are created from the border, so it is at the point of import and export.”

The ADB says it, too, turns to the customs department for its figures “because it is directly dealing with all exports.” The World Bank does the same.

But the Finance Ministry is not everyone’s choice.

Kang Chandararot, who heads the Cambodia Institute of Development Studies and studies the garment industry, said he preferred the figures coming out of the Commerce Ministry’s import-export directorate because the ministry has more contact with the sector. He said the Finance Ministry’s customs department also has a reputation for having to revise its figures once or twice before the Commerce Ministry’s import-export directorate accepts them for use in its own calculations.

“Sometimes the customs department has revised [its figures] many times…before it is released,” he said.

There are also concerns among some that customs figures are being artificially inflated by the export of goods, including garments, that are made elsewhere but smuggled into and shipped out from Cambodia to take advantage of the trade benefits the country enjoys with some markets.

GMAC Secretary-General Ken Loo said he, too, relies on the Commerce Ministry, which, according to the records he has seen, says that exports grew by 8 percent last year, not 4 percent.

Whatever the actual number, he said, a few hundred million dollars here or there amounted to a mere statistical error in an industry that earns billions. And even if exports did grow by nearly 11 percent in 2014, he added, the figure still marked a major—and worrying—slowdown for one of the country’s main economic drivers.

“It’s a very bad figure because it’s down,” he said. “Eleven percent is still an extremely bad figure because in previous years it’s been growing at 20 percent or more.”

Garment factories have seen a significant drop in orders from abroad in the wake of mass strikes that turned violent in January 2014 and came to a bloody end in a matter of days when military police shot into a crowd of workers protesting for higher wages in Phnom Penh. Their gunfire killed at least five of the workers and wounded more than 40.

GMAC blamed unruly unions for the violence. Unions and rights groups blamed factories for refusing to pay them a living wage and the government for responding to protesters lobbing rocks and petrol bombs with bullets. Either way, orders have since fallen; by how much depends on whom you ask.

Mr. Chandararot said the answer matters. Whether international brands and foreign investors believe the industry is growing at 4 percent or 11 percent could impact the pace of growth to come, he said. The faster they think the industry is growing, he said, the more comfortable they will feel placing additional orders and building new factories.

“If we have good growth…it’s good for the brands to invest more here because there is a good use of their capital,” he said.

With different ministries putting out different numbers, Mr. Chandararot would like to see more research into just who—if anyone —is right.

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