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Cambodia’s GFT woes unabated as exports decline 23%
The lean patch of Cambodia’s biggest export-earning segment of garments, footwear and travel (GFT) goods continued into the fifth month of the year as the January to May exports recorded a decline of 23.06 percent, compared to the same period in 2022.
According to the latest trade data released by the General Department of Customs and Excise (GDCE), recently, Cambodia exported $3.99 billion worth of GFT goods during the first five months of the year, a sharp decline from the $5.18 billion exported during the same period last year.
The GFT goods exports for May 2023 alone showed a decline of 17.03 percent compared to May 2022. The decline assumed significance as the country’s overall exports picked up in May by 7.9 percent compared to the same month last year after falling consecutively for the first four months.
In April this year, GFT exports declined by 30.42 percent, in March by 14.60 percent, in February by 24.54 percent and in January by over 28 percent, compared to the respective months last year.
Within the sector, knitted apparel articles brought in $1.85 billion till May, a decline of 26.1 percent, compared to $2.51 billion earned for the same period in 2022. Non-knitted apparel articles earned $938.56 million, compared to $1.13 billion for the same period last year, again a decline of 17 percent year-on-year.
Travel goods netted $638 million till May this year, compared to $842 million for the same period last year, registering a decline of 24.3 percent year-on-year. Footwear exports earned $558.54 million for the first five months this year, also showing a decline of 20.4 percent compared to the same period in the previous year when they earned $702 million.
As the slide in the export earnings from GFT goods that started in the latter half of the last year continued into the fifth month of this year, there are growing worries about more factory closures and job losses. The sector, the biggest source of employment in the country, is providing jobs to nearly 850,000 people and a majority of them are women.
While the share of the exports from the sector stood at 43.4 percent till May end of this year, it was 55 percent of the total exports for the same period last year, underscoring the concerns about the declining trend.
Industry experts attributed the decline in the exports to a reduction in demand due to excess or unsold stocks with retailers in Europe and the US from the previous seasons and indicated that the trend would continue for the rest of the year. The reasons include the continuing Russia-Ukraine conflict and the subsequent inflationary pressures.
According to Tassilo Brinzer, President of the European Chamber of Commerce in Cambodia (EuroCham), in the last one year, 20-25 percent of the Kingdom’s garment and shoe factories were closed, resulting in a significant number of people losing jobs.
“While this is a result of lower demand in wealthier countries – this situation might not change in the near future. As a result, a credit crunch is taking place and shakes the ability of many to repay their debt. This, in turn, has repercussions on the banking, real estate & property and hospitality industries,” he told the Green Economic Forum, organised by the EuroCham recently.
The Cambodian government, meanwhile, started a scheme in partnership with textile and garment factory owners to provide financial support to workers who lost jobs following factory closures and retrenchments.
Workers who lost jobs get $70 dollar each a month with factory owners contributing $30 and the remaining met by the government. The financial support will continue during the suspension of their contracts.
Source: https://www.khmertimeskh.com/501306694/cambodias-gft-woes-unabated-as-exports-decline-23/