Cambodia’s garment exports strengthen, but challenges remain

A garment worker at a factory in Phnom Penh (Picture: World Bank)

Cambodia’s garment, footwear and travel goods industry has seen a rebound in 2021 as exports rose by 15.2 per cent to $11.38 billion, according to data from the country’s General Department of Customs and Excise released on February 12.

The industry segment is the largest foreign exchange earner for Cambodia. The sector consists of roughly 1,100 factories and branches, employing approximately 750,000 workers, mostly female, according to the labour ministry.

The increase in exports is mainly owing to a recovery in international demand as Covid-19 restrictions got gradually eased in Cambodia’s main export markets, including the European Union, the UK and the US, and a successful national vaccination campaign which has allowed the country to fully resume its socio-economic activities in all areas.

Better-then-expected growth

“Cambodia’s economy is projected to grow at a better-than-expected rate of three per cent in 2021 from a 3.1 per cent contraction in 2020, propelled by a swift rebound in both the garment and non-garment sectors, as well as in agriculture,” economy and finance minister Aun Pornmoniroth said.

”For 2022, the economy is predicted to grow at a higher rate of around 5.6 per cent, buoyed by the expected rise of global demand and foreign investors’ confidence,” he added.

However, looking ahead, analysts see in Cambodia not only short-term opportunities, but also long-term challenges, as well as acute exposure to potential supply chain disruptions and external forces.

Reliance on garment industry too strong

Cambodia’s garment industry generates more than a third of the country’s gross domestic product, which is a reliance that is too strong, many analysts noted. One of the problems is that the sector is built on low-skilled, low-cost labour, a model that they say would eventually catch up with the nation.

Moreover, Cambodia also faces the vulnerability of being entirely reliant on imported fabric, of which more than 60 per cent comes from China. That way, Cambodia is strongly exposed to price shocks and potential supply chain disruptions.

This would eventually make it necessary for Cambodia to implement a diversification strategy for its economy which would mandate to improve its education system to create a higher-skilled workforce to increase its competitiveness in the region.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

[caption id="attachment_38228" align="alignleft" width="300"] A garment worker at a factory in Phnom Penh (Picture: World Bank)[/caption] Cambodia’s garment, footwear and travel goods industry has seen a rebound in 2021 as exports rose by 15.2 per cent to $11.38 billion, according to data from the country’s General Department of Customs and Excise released on February 12. The industry segment is the largest foreign exchange earner for Cambodia. The sector consists of roughly 1,100 factories and branches, employing approximately 750,000 workers, mostly female, according to the labour ministry. The increase in exports is mainly owing to a recovery in international demand as...

A garment worker at a factory in Phnom Penh (Picture: World Bank)

Cambodia’s garment, footwear and travel goods industry has seen a rebound in 2021 as exports rose by 15.2 per cent to $11.38 billion, according to data from the country’s General Department of Customs and Excise released on February 12.

The industry segment is the largest foreign exchange earner for Cambodia. The sector consists of roughly 1,100 factories and branches, employing approximately 750,000 workers, mostly female, according to the labour ministry.

The increase in exports is mainly owing to a recovery in international demand as Covid-19 restrictions got gradually eased in Cambodia’s main export markets, including the European Union, the UK and the US, and a successful national vaccination campaign which has allowed the country to fully resume its socio-economic activities in all areas.

Better-then-expected growth

“Cambodia’s economy is projected to grow at a better-than-expected rate of three per cent in 2021 from a 3.1 per cent contraction in 2020, propelled by a swift rebound in both the garment and non-garment sectors, as well as in agriculture,” economy and finance minister Aun Pornmoniroth said.

”For 2022, the economy is predicted to grow at a higher rate of around 5.6 per cent, buoyed by the expected rise of global demand and foreign investors’ confidence,” he added.

However, looking ahead, analysts see in Cambodia not only short-term opportunities, but also long-term challenges, as well as acute exposure to potential supply chain disruptions and external forces.

Reliance on garment industry too strong

Cambodia’s garment industry generates more than a third of the country’s gross domestic product, which is a reliance that is too strong, many analysts noted. One of the problems is that the sector is built on low-skilled, low-cost labour, a model that they say would eventually catch up with the nation.

Moreover, Cambodia also faces the vulnerability of being entirely reliant on imported fabric, of which more than 60 per cent comes from China. That way, Cambodia is strongly exposed to price shocks and potential supply chain disruptions.

This would eventually make it necessary for Cambodia to implement a diversification strategy for its economy which would mandate to improve its education system to create a higher-skilled workforce to increase its competitiveness in the region.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

NO COMMENTS

Leave a Reply