\nBloomberg
\nby Daniel Ten Kate and Carole Zimmer<\/p>\n
March 18 (Bloomberg) — Cambodia\u2019s garment exports are declining as a global recession crimps demand in the U.S. and Europe, cutting into an industry that supports a 10th of the Southeast Asian country\u2019s population.
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\nIn January, garment exports plunged 25 percent from a year earlier to $185 million, said Mean Sophea, who heads the Commerce Ministry\u2019s Trade Preferences System Department. Over the past decade, they grew at an average pace of 28 percent per year, according to the World Bank.<\/p>\n
\u201cI\u2019ve never seen garment exports drop this much,\u201d Mean Sophea said by phone from Phnom Penh, the capital. \u201cThe government is trying to reduce expenses for exporters, but we have seen a lack of demand from the U.S. and Europe.\u201d<\/p>\n
The U.S. and Europe take more than 90 percent of clothes made in Cambodia. Southeast Asia\u2019s second-smallest economy may shrink 0.5 percent in 2014, the International Monetary Fund said March 6, revising down its 4.8 percent growth projection made a month earlier.<\/p>\n
The proportion of garment shipments to total exports is higher in Cambodia than any country except Bangladesh and Haiti, according to World Trade Organization data. Some 70 percent of the country\u2019s clothes were shipped to the U.S., where it was the eighth-largest supplier in 2014, the World Bank has said.<\/p>\n
Lost Jobs<\/p>\n
About 30,000 Cambodian garment workers, or a 10th of the total, lost their jobs in the past year as factories closed, the World Bank said in a March 8 report. The industry accounted for 17 percent of Cambodia\u2019s gross domestic product in 2014.<\/p>\n
The garment industry took off 10 years ago after Cambodia signed a trade deal with the U.S. that linked market access with improved labor standards in its factories. Exports went from almost nothing in 1994 to $2.7 billion two years ago.<\/p>\n
The money earned every month by those who sew and stitch jeans and T-shirts for retailers such as Gap Inc. and Stockholm- based Hennes & Mauritz AB supports as many as 1.5 million Cambodians, said Douglas Broderick, resident representative of the United Nations Development Fund in Phnom Penh.<\/p>\n
\u201cThere\u2019s a whole community around the garment sector, little vendors, landlords, food stalls,\u201d he said. \u201cAll those people will get hit.\u201d<\/p>\n
Sary Muong, a Cambodian garment worker earning less than $2 per day, has struggled to provide her family basic goods like food and clothing. The 34-year-old single mother makes a monthly salary of $55 that supports her parents and 8-year-old daughter.<\/p>\n
\u201cJust look at the factories,\u201d Sary Muong said from a one- room shack with no running water or toilet in Phnom Penh where she lives with her sister. \u201cThey\u2019re closing. The living standards get worse and worse.\u201d<\/p>\n
Labor Standards<\/p>\n
Cambodia\u2019s garment industry has built a reputation for good labor standards over the past decade that the Commerce Ministry says contributed to its growth. In 2001, the government, garment factories, labor unions and the International Labor Organization, a UN agency, agreed to set up a monitoring agency called Better Factories Cambodia.<\/p>\n
It files semi-annual reports on working conditions in factories that go to buyers like Nike Inc., Wal-Mart Stores Inc. and Adidas AG. Still, the higher labor standards haven\u2019t stopped retailers from demanding ever lower prices, said Roger Tan, a factory manager and secretary-general of the Garment Manufacturers\u2019 Association of Cambodia.<\/p>\n
\u201cEvery factory is cutting costs now whether they like it or not,\u201d he said. \u201cThe whole world is in deep trouble. Nothing should surprise anyone now.\u201d<\/p>\n
The government, reliant on overseas aid to finance a quarter of the national budget, has said it will extend tax breaks for clothing manufacturers to help reduce costs. Even so, Cambodia remains \u201cincreasingly affected\u201d by the global slowdown, the IMF said, adding that its 2014 growth forecast may be revised again.<\/p>\n
The world economy will shrink this year in a slump that is the worst \u201cin most of our lifetimes,\u201d Dominique Strauss-Kahn, the IMF\u2019s managing director, said March 10. The World Bank, which also expects a contraction, said two days earlier that global trade would decline by the most in 80 years.<\/p>\n
To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Carole Zimmer in New York at czimmer2@bloomberg.net. <\/p>\n","protected":false},"excerpt":{"rendered":"
Bloomberg by Daniel Ten Kate and Carole Zimmer March 18 (Bloomberg) — Cambodia\u2019s garment exports are declining as a global recession crimps demand in the U.S. and Europe, cutting into an industry that supports a 10th of the Southeast Asian country\u2019s population.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"\n