Exports in garment sector dropped more than 5 percent to around $3.78 billion in the first half of the year, according to a spokesman of the Ministry of Labour and Vocational Training.
The Labour Ministry’s spokesman Heng Sour said at a news conference on Government Measures in Response to the Impact of COVID-19 at the Ministry of Economy and Finance (MEF) yesterday that in the first half of 2020, Cambodia’s garmentexports were around $3.784 billion, a fall of 5.4 percent from more than $4 billion in the same period in 2019.
“The reason for the decrease is because of the impact of COVID-19. Purchasing also dropped globally. The drop is not only in Cambodia, but also in other garment-producing nations such as Bangladesh and Vietnam,” Sour added.
Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia (GMAC), said the general decline was because of the suspension of factories and fewer purchasing orders.
A spokesman at the Ministry of Labour said that, as of June, 450 factories suspended production in the garment, footwear and travelling bag sector and 83 factories were formally closed compared with 2019, when 75 factories were closed. He added that if there is no effective measures and policies of the government to support the private sector, more factories will be closed.
Sour also added that so far more than 10 factories have asked permission to transform their production chain to produce face masks. Currently there are two factories producing face masks in Cambodia. “One production chain for face masks that can produce 2 million masks a month needs 20 employees. We are working with some factories in Cambodia to transform them so they can produce masks.”
Permanent Secretary of State at Ministry of Economy and Finance Vongsey Vissoth said that although exports of the garment sector have dropped, the total amount of Cambodia’s exports to the international market in the first five months remained positive.
“Our exports of the garment sector dropped, especially to the EU, but we must think about the total export products from Cambodia to international markets, where we see growth such as bikes, rice, electronics and some raw materials from agriculture. It is a resilient economy. We have strong fundamentals in both the economy and financial system,” Vissoth said.
Based on the semi-annual report from the National Bank of Cambodia (NBC), in the first half of 2020, Cambodia’s trade deficit dropped -20 percent. That was because imports fell but the exports continued to increase.
Imported products dropped 5 percent because of a drop of imported raw materials in the garment sector fell 15 percent. Construction equipment imports were 15 percent down. Automotive were down 2 percent, oil by 4 percent and food and beverages by 8 percent.
The decrease in imported raw materials for the garment sector was caused by an interrupted supply from China, which was affected by tough COVID-19 restrictions in early 2020.
The NBC’s report also added that that the exports of Cambodian products increased 3 percent, stemming from an increase of electronics by 45 percent, bikes by 18 percent, rice by 29 percent and other products by 30 percent while exports of manufacturing dropped around 6 percent and rubber by 27 percent.