The Ministry of Commerce collected more than $4 million at last week’s first round of bidding on US garment quotas, Undersecretary of State Ok Boong said Monday.
“We bid out only a small portion of the quota this time, but we collected more money than we expected,” said Ok Boong, noting only 5 percent of the country’s total quota was auctioned. The auctioned quota is in addition to quotas that are equally allocated to garment manufacturers based on last year’s production.
Last Friday, 108 factories participated in the auction, bidding in 12 categories including T-shirts, trousers and sweaters, Ok Boong said. More rounds are planned for later this year, officials said.
Garment quota items—both export license fees and auctions—constitutes one of the largest revenue sources for the government. According to the Finance Ministry, the garment quota items generated $28 million, or about 8 percent of domestic revenue, last year.
Ok Boong said the three rounds of auctions generated about $23 million last year. The only larger categories in domestic revenue are $114 million in customs duties, $87 million in value-added taxes and $29 million in telecommunications, according to the data.
While the garment quota auction could generate millions of dollars in national revenue, it also could cause imbalances among factories, industry officials said.
“The amount of auctioned quota was not enough for nearly 200 garment factories,” said He En Jia, vice president of the Garment Manufacturers Association of Cambodia. “The prices went up this year. Some factories got lots of quota and will be busy producing items, but others got nothing.”
He claimed that the country’s total amount of quota given by the US government in 12 categories would not be enough for all the factories, which increased in number from 134 in 1998 to 191 in 2000.
Garment manufacturing is the single leading industry in Cambodia, generating $640 million in exports last year.