Thailand
Cambodia: Footwear industry regaining footing
The government has projected that the Kingdom’s economy will grow by about 5.6 per cent this year despite the threat posed by the Omicron variant.
The footwear industry has been growing rapidly in the last few years, employing more than 130,000 workers and attracting a lot of new investment in 2021.
Cambodian Footwear Association president Ly Khun Thai sits down with The Post’s May Kunmakara to discuss the industry and how the prolonged spread of Covid-19 might affect the industry.
How has the Cambodian footwear industry trended since the pandemic began over two years ago?
I believe that the industry has improved since the pandemic first began in 2020. Although every sector has been interrupted worldwide – and footwear is no exception – I noticed that the industry had increased its orders from June 2020 until the end of 2021.
I foresee that it will increase further this year due to the fact that many countries around the world are reopening their economies and welcoming tourists in spite of Covid-19 – they are living in the ‘new normal’. Indeed, we cannot escape from Covid-19, we have to live with it. Even in Cambodia, we’ve already reopened the economy since November. Still, it’s important for us to follow health guidelines.
Where are our export destinations?
Our export destinations are Europe, the US – which are the big ones – and Japan, South Korea and Canada.
It’s been more than two years since Covid-19 not only upended our daily lives but also the economy. What has the Cambodian Footwear Association been doing to help its members?
We have been working very closely with members and helping them by providing face masks and sanitisers. At the same time, we’ve worked with the government’s ministries and institutions, by seeking health advice where it has been necessary and by following health guidelines.
Presently, we have more than 60 factories that are members, but in total we have more than 100 members, including sub-contractors and raw materials suppliers. The industry employs more than 130,000 workers.
What do you think about the government’s intervention in the footwear industry?
I think it’s been a great help for the industry. We are especially happy about the rapid vaccination of our workers, free of charge, at the factories.
In addition, we’ve seen that the government has contributed by paying around $40 per worker, which has helped ease the employer’s burden. Compared to our neighboring countries, we’ve had it much better in terms of government aid.
Of course, we don’t deny that several factories – around six – closed over the course of the pandemic. However, it’s made up for by the fact that many factories have been opened in response to the increase in orders last year compared to 2020. In fact, the total volume of export of the footwear industry increased 20 per cent from 2020 to 2021.
We see that factories in Myanmar have closed due to the country’s internal armed conflicts, while Vietnam has been facing rising labour costs. Has Cambodia benefitted from these regional supply issues?
Of course. A lot of factories have relocated to Cambodia because buyers from factories in Myanmar have put in more orders in Cambodian factories instead. That’s why we’ve been able to increase our orders and open more factories despite having to shut several of them.
As for the rising labour cost in Vietnam, we do benefit from that because some factories in Vietnam have subsidiaries here in Cambodia so they’ve increased their orders here.
Recently, the government launched a development strategy for the Kingdom’s garment and textile industry. It also focused on the rise of the Fourth Industrial Revolution, or Industry 4.0. What does the strategy mean for the footwear industry?
It is good because it provides a roadmap for the sector. The strategy also contributes to improving the skill of workers, from low to high skill. This will also help to attract more investment.
I see that at the moment, several factories have been using new technology in their factories that could improve the quality and quantity of goods produced – that’s a move to Industry 4.0.
Factories now have their own training programmes helping workers develop more skills. A decade ago, our productivity was very low – for instance, a worker could only produce 1,000 pairs of shoes a month. That number has doubled today.
The government has projected that the Kingdom’s economy will grow by around 5.6 per cent this year despite the threat posed by the Omicron variant. Will we achieve that, from your perspective?
I am still optimistic that we can achieve that despite the presence of Omicron in Cambodia and worldwide. I haven’t seen any countries around the world announce any lockdowns as a result of Omicron.
Although Omicron spreads more rapidly than Alpha or Delta, the number of deaths has been very low, and recovery time is very short.
We see that the government has been very vigilant in managing it and has done very well – that’s really appreciated. I don’t believe that Omicron can affect the industry’s production much due to our high vaccination rate. I don’t think that Omicron will affect our exports.
What’s important is that all factories have complied with the health guidelines set by the government, while our workers are also happy to comply. Our hope is that Omicron will continue not to affect our factories’ production this year.
This interview has been edited for length and clarity.
Source: https://www.phnompenhpost.com/business/footwear-industry-regaining-footing