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Garment sector in doldrums due to US economic slowdown
13
Aug '08
The Garment sector of Cambodia, which is the leading export earner and employment generator for the country, is presently collapsing under the pressure built up by falling US orders, sky-rocketing transportation costs and low productivity of workers.

Slowdown of the US economy has immensely hurt the revenues flowing into Cambodia as well as the profit of the exporters. More so because unlike other competing countries like Thailand, the Cambodian garment manufacturers cum exporters failed to diversify its markets in to Europe, Russia and the thriving Middle East.

About 70 percent of the garment exports of Cambodia are directed to the US while only 24 percent go to the EU. Experts believe that slowdown in US will lead to further drop in the sales of clothing which plummeted by 5.5 percent in the month of July alone.

Growth rate of the country's garment sector is likely to slump from 20 percent in 2007 to just 5 percent this year, creating a havoc in the industry that employs some 360,000 workers. The sector grew by a meager 3 percent in the first half of 2008. The greatest challenge, however, would be to survive competition from and coexistence with giants like China and Vietnam.

Besides, rising cost of energy brought about by hike in fuel prices have also taken a toll on the garment industry of Cambodia which depends heavily on expensive diesel generators to power their plants. With rise in shipping costs and as if all this was not enough, frequent strikes and low worker productivity in the sector have further brought down the growth level considerably.


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Courtesy: Raymond

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