Following a report by the European Union on Friday that did not specifically mention or condemned the political situation in the kingdom, local garment manufacturers say the country is no longer at risk of losing its preferential treatment status with the EU.
Arguing that the recent report is proof that the EU will not cancel its Everything-but-arms (EBA) with Cambodia, the Garment Manufacturers Association in Cambodia (GMAC) is urging investors to increase their stakes in the local garment and footwear industry.
On Friday, the European Commission submitted a report to the European Parliament and the European Council on the generalized scheme of preferences for 2016-2017.
The report made no mention of a possible withdrawal from the EBA with Cambodia over the dissolution of the main political opposition party, the Cambodian National Rescue Party (CNRP), in November last year.
However, the report did raise concerns over human rights abuses related to land disputes in sugar cane plantations.
“The EU is engaging with Cambodia to address human rights issues related to land disputes arising from sugarcane concessions and labor rights issues, in particular freedom of association. The EU needs to see real and sustained improvements, if further steps are to be avoided,” the reported said.
The report urged the government to “establish an independent and transparent mechanism in order to deal with claims for compensation”.
Kaing Monika, deputy secretary general for GMAC, told Khmer Times that the EU report was good news for the garment factory.
“Reading the report’s section on Cambodia, we feel very relieved,” he said. “It doesn’t mention the political situation or a possible cancellation of the EBA.”
Mr Monika said this was important because the EBA contributes significantly to Cambodia’s competitiveness in the international scene.
“Based on the report, we continue to call on investors to remain confident in our garment industry,” he said.
Som Aun, president of the National Union Alliance Chambers of Cambodia, shared the same sentiment.
“The report was very positive for our garment and footwear industry. The EU did not mention anything about a withdrawal from EBA. This should help keep investors’ confident in our industry,” he said.
Under the EBA initiative, all Cambodian products – except arms and ammunition – are allowed duty-free and quota-free into the EU market.
In 2014, the EU became the largest purchaser of Cambodian garments, surpassing the US. The European bloc absorbs roughly 50 percent of all Cambodian garment exports, according to GMAC.
Accounting for 25 percent of those purchases, the United Kingdom is the biggest EU economy in terms of its trade with Cambodia, followed by Germany (20 percent), Spain (12 percent), the Netherlands (12 percent) and France (16 percent), according to data from 2016.
Cambodia is the eighth largest exporter of garments and shoes to the world, with a market share of 1.5 percent. China remains the top exporter in the sector, followed by Vietnam and Bangladesh.