'Garment industry is priority sector for Govt' – Chief, GMAC
Mr Van Sou Ieng, Chairman, GMAC
After the re-establishment of the Kingdom of Cambodia in 1993, the first foreign investors to venture into this country were the garment manufacturers. There has been no looking back since then. With the granting of MFN/GSP trade privileges to Cambodia in 1996 by both the USA and EU, the garment industry has maintained its pre-eminent position in the industrial landscape of Cambodia.
The Cambodian garment export sector also has been a victim of the recessionary trends prevailing across the globe. It is also facing the pangs of a slowdown, along with which the exporters also have to contend with demanding labour unions. But for every bad news there is also good news. The sector has received new investment and many new factories have started operations in 2009. Around 90 percent of factories have been set up with foreign direct investment.
Exports from the clothing sector have also seen a resounding fall in the first quarter of the current year when compared with the same period of the previous year in falling by 26.41 percent from US $726 million in the first quarter of 2008 to $534 million in the same period of 2009. Exports to its key markets of the US fell by a thundering 34.17 percent and that to the European Union dipped by 13.98 percent though it grew by a flattering 91.5 percent in shipments to Japan.
To get a detailed eye view of the current condition of the sector, Fibre2fashion spoke to Mr Van Sou Ieng, Chairman of the Garment Manufacturers' Association in Cambodia (GMAC). The GMAC has around 274 active members. The GMAC has been very active and in the forefront in lobbying for policy making changes along with also trying to get its members to adopt better labour management practices, which had been a matter of concern for major global apparel buyers.
We began the interview by asking Mr Van to spell out the reasons for attracting the new foreign investments in these difficult times in the garment sector, to which he said, “Setting up of new garment factories in these depressing times is a very good omen for Cambodia and the factors which have brought about this change are that the industry is still the government's prioritized sector with the voices of the industry always being heard and considered”.
He added by saying, “It is a long term perspective that Cambodia will still be a viable place for the industry in ASEAN region, since Thailand and Malaysia are no longer in the picture and Vietnam has quite a lot of big industries and is now moving up the value chain not to mention in the current period, it is still strong. Laos is landlocked and Burma has a political problem, which restricts trades.
He concluded by saying, “Cambodia's labour cost is still somehow cheap, though it needs to be offset with productivity, compared to countries in the region. Labour is seen to be in abundance with nearly 300,000 people entering the labour force every year and Cambodia does not yet have any other big industries that can absorb these hugh numbers and now it will get impetus with possibility of USA considering among 15 LDC countries”.