130 garment factories shut this year, govt says

Photo by: Sovan Philong

A worker makes garments at Phnom Penh’s Modern Dress Sewing Factory in this file photo. Nearly 80 factories have closed this year, and 53 have suspended operations due to the economic crisis.

(Post by CAAI News Media)

Thursday, 01 October 2009 15:01 Chun Sophal

Closures resulted in more than 30,000 lost jobs, says ministry, with fewer than 10,000 positions created at 40 new factories.

THE Ministry of Labour announced Wednesday that 130 garment factories had closed or suspended operations during the first three quarters due to declining purchase orders.

According to an official report, 77 garment factories were shuttered, resulting in the loss of 30,683 jobs in the first nine months, while 53 suspended operations, causing a further 30,617 workers to go without work during the closure period.

A further 40 factories opened during the same period, the data showed, creating work for 9,605 people.

The temporarily closed factories would reopen should sufficient orders be placed, said Thau Buthorn, deputy director of the department of inspection at the Ministry of Labour.

“Only purchase orders can help garment factories in Cambodia resume their production and face the effects of the global economic crisis,” he said.

Kaing Monika, business development manager at the Garment Manufacturers Association of Cambodia (GMAC), said it had been a difficult period for the sector, the largest export industry in Cambodia.

“Only those factories which are supported by significant international buyers have survived and managed to continue producing through this hard time,” he said, adding that just 283 GMAC factories were still operating.

Ath Thun, the president of the Coalition of Cambodian Apparel Workers Democratic Unions (CCAWDU), said some factories had closed briefly and reopened to take advantage of a five-year tax holiday for new factories.

They also used it as a way to lay off staff without severance payments and then rehire them on new contracts with reduced benefits, he said.

He said factory owners bribed “corrupt officials or union leaders” to get away with the practice, illegal under Cambodian law, which states that bankrupt companies must go through bankruptcy proceedings first.

The World Bank noted in its Doing Business 2010 report that bankruptcy proceedings have not gotten off the ground in Cambodia despite the passage of the bankruptcy law.

Kaing Monika said only two GMAC factories had reopened after closure, both with different owners.