Wednesday, 17 February 2010

Cambodian garment trade struggles to get over slump

via CAAI News Media


By Prak Chan Thul

PHNOM PENH, Feb 17 (Reuters) - Cambodia's garment industry, its third-biggest currency earner, shed almost 30,000 jobs in 2009 after a drop in sales to the United States and Europe and could struggle this year, a senior official said on Wednesday.

Oum Mean, secretary of state at the Labor Ministry, said 106 factories had closed in 2009, putting 45,500 people out of work.

On top of that, 66 factories suspended operations, leaving another 38,000 on half pay, after a slump in export orders as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis.

However, 48 factories had opened during the year, employing 16,900 people, Oun Mean said. These firms had received permits before the downturn and had taken the risk of continuing with their ventures, banking on an improvement in the world economy.

"In 2010, we suspect garment and shoe production will still be affected," Oum Mean said, adding the industry had 468 factories by the end of last year, employing 330,000 people.

"We just feel happy after hearing information that there's been some recovery in those big countries," he said.

According to data from the Garment Manufacturers Association of Cambodia, the country exported garments, textiles and shoes to the value of $2.3 billion last year, down from $2.9 billion in 2008. More than half of its exports go to the United States.

In recent years the sector has been the third-biggest foreign exchange earner after agriculture and tourism in a country ravaged by civil war in the 1970s but which has achieved some stability over the past two decades.

It accounts for about 16 percent of gross domestic product, so the factory closures will hurt, with a ripple effect in the countryside as the money sent home by garment workers dries up.

The International Monetary Fund forecast in December that the economy would shrink 2.7 percent in 2009 before growing 4.3 percent this year.

The government has offered vocational training to the unemployed, but Oum Mean said some female workers had also turned to the "entertainment industry" -- a euphemism for prostitution. "Some think that these jobs are not good for society," he said.

Chea Mony, president of the Free Trade Union, said some workers had sought jobs in neighbouring Thailand, Malaysia and South Korea.

"Some of the women went to work in night clubs and beer gardens," he said. "Unemployment is a heavy burden for Cambodian women."

(Editing by Alan Raybould)

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