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Pressure Mounts on Garment Industry

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Garment factory workers will soon have a training institute. Supplied

Falling productivity and rising infrastructure costs are putting Cambodia’s garment industry at a disadvantage as it tries to compete with rivals Vietnam, Bangladesh and Myanmar, a leading union said yesterday.
The Garment Manufacturers Association in Cambodia (GMAC) yesterday urged the government to launch a productivity campaign to improve the situation in one of the country’s biggest industries. 
GMAC quoted the ILO’s bulletin between 2011 and 2014, which said labor productivity in the garment and footwear sector dropped by about 14 percent. It said labor productivity appears to have fallen as the growth in employment has outstripped the value the sector added to the economy.
Ken Loo, GMAC’s secretary-general, was quoted as saying that the decline in productivity appears to have continued into 2016 and the organization has asked workers, unions and the government to focus more on improving productivity in the industry, as competition is increasing globally. 
“Everyone has to do their part to keep our industry as healthy as it can be in the current global competitive environment. As employers, we are doing our part by investing in building skills among our workers,” he said. 
Mey Kalyan, a senior advisor to the Supreme National Economic Council (SNEC), has suggested the government and concerned stakeholders in the industry sit down together and work out how to deal with the issue.
“Both sides have to meet and talk to find out the real issue and seek the solution,” Mr. Kalyan said. “If not, it is a concern for our country while we have a very good trade preferential system from the United States and the EU so we have to know how to deal with it.”
However, Mr. Kalyan, said that after he met and talked with many factories owners, the owners said Cambodian workers’ productivity is much better compared with Vietnam and other places in the region.
“I also see a shift in the industry as some analysis said Cambodia’s garment industry has been improved from low-end garments to high-end products right now,” he said. 
According to the Asian Development Bank, the sector grew 11.7 percent last year and was the biggest overall contributor to GDP. This was bolstered by an increase in merchandise exports of about 14.1 percent to $8.5 billion in 2015, and a 10.2 percent increase in shipments of garments and footwear, which comprise 70 percent of total exports. 
The industry is predicted to grow by 9.5 percent next year, supported by diversification in garments and footwear toward products with higher added value.
The ADB also mentioned the country’s competitiveness as a manufacturing hub is being challenged by others in the region, particularly other low-cost garment producers such as Myanmar. Cambodia needs to further diversity its economy if it hopes to maintain the high growth rates it has enjoyed in recent years, the bank said. 
GMAC said it has been having discussions with the Ministry of Labor and Vocational Training about launching a productivity campaign. Key components include an intensive campaign aimed at raising productivity awareness at national, industry and company levels and providing practical advisory to translate awareness into real specific actions for productivity improvement.
“This requires a high-level commitment from GMAC, the government, factory management, buyers, labor unions and the ILO as well as other concerned parties,” Mr. Loo said.  
“Wildcat strikes, poor labor relations and other issues are deterring our efforts to improve the productivity in our sector. So we would like everyone to be more considerate and prioritize things that can make our industry even better.” 
Mr. Loo added that the sector is also battling rising infrastructure costs, such as electricity and transportation, forcing factories to look elsewhere.
“GMAC welcomes new government initiatives that have eased export processing, but we still see a need for a further reduction in documentation fees, especially the unofficial ones,” he said, adding that GMAC is playing its part by building a specialized training institute within the Phnom Penh Special Economic Zone.
The institute, which is about 70 percent complete, will train local workers to fill middle management positions in garment factories across Cambodia. 
“With this new institute, we hope to reverse the decline in productivity by offering education that leads to better jobs,” said Mr. Loo.

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