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Economic turmoil begins collecting toll
22
Nov '08
The global economic turmoil has started taking its toll worldwide and it is the smaller and under developed economies of the world who are the first to face the brunt of the development. Cambodia which has a very small garment sector but on which it is economically dependent has been badly hit by the crisis.

The recessionary trends prevailing mainly in its main markets of the US has brought with it a fear of closures and mass lay offs in the export oriented sector. 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.

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

There is an expectation of nearly 35-40 garment exporting units closing in the next two months as new orders have trickled down or have totally stopped coming in. Already it seems nearly 20,000 employees have been laid off and if these other companies close down it will add nearly 25,000-30,000 to that number.

Most of the other garment export companies are working between 50-70 percent capacities due to lack of orders and according to some exporters they do not expect the situation to improve even in 2009.

But labour unions counter the observations made by these garment companies by saying that those companies which have closed down, have done so due to labour related issues and have shifted their operations elsewhere, but do accept the gravity of the situation created by the crisis.


Fibre2fashion News Desk - India

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