Cambodia: Garment sector strategy ‘due soon’

• Feb 23, 2022

A development strategy designed to transform the Cambodian garment trade into a dynamic, diversified, high-value and competitive sector – with a focus on the upskilling of factory workers – will be launched soon, a senior finance ministry official said on February 18.

Ministry of Economy and Finance secretary of state Phan Phalla made the remark at a public forum on macroeconomic management and the 2022 Law on Financial Management on February 18.

Though the garment sector has been an important economic pole for Cambodia, value-added has remained low in the last 20 years because goods produced in the Kingdom have been made with unsophisticated skills, he said.

He added that the sector could produce better goods and fetch higher prices through the upskilling of workers, which he says has been incorporated into this strategy.

At the forum, finance ministry permanent secretary of state Vongsey Vissoth said that the garment sector still has the potential to achieve significant growth for the Cambodian economy, but that to do so requires the proper implementation of this development strategy.

“The government wants to see the garment sector move towards the production of high-value and high-value-added goods,” he said.

He added that the strategy also aims to increase the number of domestic investors, “as currently 95 per cent of investors in Cambodia’s garment sector are foreigners”.

Cambodia’s competitors – including Vietnam, Bangladesh and Myanmar – have “missed their chances”, Vissoth said without elaborating.

Garment Manufacturers Association in Cambodia (GMAC) deputy secretary-general Kaing Monika told The Post that the strategy for the development of the garment sector should be launched soon so that it can serve as a clear roadmap for the sector on how to retain its competitive edge.

He lamented what he considered a delay in releasing details about the strategy, saying that it should have been put in place a long time ago as stakeholders have been discussing the development of garment sector policies for a while.

Monika also stressed that the strategy should place a heavy emphasis on the labour sector and focus on improving workers’ well-being, productivity, professional relations and skills development.

“In order to be able to produce good, high-quality goods, we need a skilled workforce, so we need to focus on improving workers’ skills,” he said.

Exports from the garment sector increased by more than 10 per cent in 2021. Despite the positive growth, however, Monika warned that profit margins may be reduced in the Covid-19 era, with the need to implement health measures, labour issues, and rising shipping costs being key factors leading to a potential reduction in profits.

Cambodia Footwear Association president Ly Khun Thai said in an interview with The Post on February 20 that the development strategy for the garment industry will contribute to improving workers’ skills, and help attract more investment.

“Several enterprises have been using new technology in their factories that could improve the quality and quantity of goods produced”, which exemplifies a transition to Industry 4.0, he said.

Cambodia exported nearly $8.83 billion worth of garments, footwear and travel goods in the first 10 months of 2021, up by more than a tenth year-on-year, according to data posted by GMAC.

Broken down by category, exports of garments, footwear and travel goods were to the tune of $6.538 billion (up six per cent year-on-year), $1.113 billion (up 20 per cent) and $1.179 billion (up 49 per cent), respectively, the association reported.

Source: https://www.phnompenhpost.com/business/garment-sector-strategy-due-soon