Cambodia garment makers get nervous over Hun Sen’s policies

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The Cambodian textile and garment sector, the main pillar of the impoverished country’s export industry, starts feeling the heat of Prime Minister Hun Sen’s authoritarian policies that include crushing the opposition and silencing human rights groups and other critics of his government.

The European Union, in response, has threatened to alter its trade preferences system for Cambodia, which is one of the main drivers of the textile sector’s successful business. This could deal a heavy blow to the garment industry as a whole.

While the prime minister is apparently willing to hazard the economic consequences of his anti-democratic strategy that aims at cementing his power over the country because he feels he is backed by China, representatives of the garment industry and the trade union think otherwise.

The Garment Manufacturers Association in Cambodia (GMAC), representing 600 factories that employ around 700,000 workers, appealed to foreign buyers to continue supporting Cambodian factories and not to turn away from the country after the trade preferences might be suspended.

“GMAC appeals to all of our international buyers to continue their support for Cambodia and our member factories to materialise our economic goal which is the improved wellbeing of all the Cambodian people,” GMAC said in a statement, adding that textile factory work had “lifted millions of people out of poverty” in the nation.

Garment and textile exports generate $6 billion annually in export revenue for Cambodia at average annual growth rates of six to seven per cent in the past, and are by far are the country’s biggest export, having fueled years of impressive GDP growth. EU countries accounted for around 40 per cent of Cambodia’s exports in 2016, while the United States accounted for a further 20 per cent, a ratio which would make any punitive sanctions from the West extremely damaging to the Cambodian economy. China took little over six per cent, which is why support from Beijing might fail to help the textile industry at all.

These tensions all come as the cost of labour in Cambodia is set to increase, too.

The country recently approved an 11-per cent wage hike that will bring garment workers’ average wages to $170 a month, starting next January. The hike, which was part of a bigger benefits package, has garment manufacturers worried that it will hit Cambodia’s competitiveness when compared to other low-cost sourcing countries like Vietnam and, in particular, Myanmar, where wages are still considerably lower.

 

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Reading Time: 2 minutes

The Cambodian textile and garment sector, the main pillar of the impoverished country’s export industry, starts feeling the heat of Prime Minister Hun Sen’s authoritarian policies that include crushing the opposition and silencing human rights groups and other critics of his government.

Reading Time: 2 minutes

The Cambodian textile and garment sector, the main pillar of the impoverished country’s export industry, starts feeling the heat of Prime Minister Hun Sen’s authoritarian policies that include crushing the opposition and silencing human rights groups and other critics of his government.

The European Union, in response, has threatened to alter its trade preferences system for Cambodia, which is one of the main drivers of the textile sector’s successful business. This could deal a heavy blow to the garment industry as a whole.

While the prime minister is apparently willing to hazard the economic consequences of his anti-democratic strategy that aims at cementing his power over the country because he feels he is backed by China, representatives of the garment industry and the trade union think otherwise.

The Garment Manufacturers Association in Cambodia (GMAC), representing 600 factories that employ around 700,000 workers, appealed to foreign buyers to continue supporting Cambodian factories and not to turn away from the country after the trade preferences might be suspended.

“GMAC appeals to all of our international buyers to continue their support for Cambodia and our member factories to materialise our economic goal which is the improved wellbeing of all the Cambodian people,” GMAC said in a statement, adding that textile factory work had “lifted millions of people out of poverty” in the nation.

Garment and textile exports generate $6 billion annually in export revenue for Cambodia at average annual growth rates of six to seven per cent in the past, and are by far are the country’s biggest export, having fueled years of impressive GDP growth. EU countries accounted for around 40 per cent of Cambodia’s exports in 2016, while the United States accounted for a further 20 per cent, a ratio which would make any punitive sanctions from the West extremely damaging to the Cambodian economy. China took little over six per cent, which is why support from Beijing might fail to help the textile industry at all.

These tensions all come as the cost of labour in Cambodia is set to increase, too.

The country recently approved an 11-per cent wage hike that will bring garment workers’ average wages to $170 a month, starting next January. The hike, which was part of a bigger benefits package, has garment manufacturers worried that it will hit Cambodia’s competitiveness when compared to other low-cost sourcing countries like Vietnam and, in particular, Myanmar, where wages are still considerably lower.

 

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