Garments still suffering

Photo by: TRACEY SHELTON

Garment workers' unions have threatened strikes after calling on the industry to raise minimum wages above $50 per month, factors that GMAC said could hurt garment manufacturers this year.

via CAAI News Media

Thursday, 11 February 2010 15:01 Steve Finch

Exports of garments and apparel fell just 0.2pc in December, but GMAC said the low 2008 base dampened any optimism

GARMENT and apparel shipments, Cambodia’s main export products, fell just 0.2 percent in December campared with the year before, data from the Ministry of Commerce showed Wednesday – the smallest decline of 2009, but still far from a recovery, said the secretary general of the Garment Manufacturers Association of Cambodia.

Ken Loo told the Post that the decline – to US$254.12 million from $254.638 million a year before – was worrying because December 2008 had been a bad month for many businesses here as the global economic crisis had started to hurt Cambodian exports.

“You look at it year on year and it’s good, but if you look at November and December, its bad news,” he said Wednesday following the release of the data.

Garment and apparel exports dropped an annualised 18.16 percent in November following an October fall of just over 2 percent, a sign of the inconsistent nature of the sector and ongoing delays in economic recovery.

“It’s not getting worse, it’s just as bad,” said Loo, adding that anecdotal evidence suggested that there would not be an improvement once figures for January and February are released later this year.

Overall garment and apparel exports slumped 15.83 percent, an improvement on the 20 percent fall over the first 10 months of 2009, but again an indication that the better end to last year had simply been due to the lower base at the end of 2008 when demand began to plummet as main markets the United States and Europe began to suffer from the post-Lehman fallout.

Still, there were positives. The sector’s concerted effort to diversify markets away from North America and Europe appear to have had some effect.

Garment and apparel exports to Japan climbed 58.8 percent last year to $47.7 million, and to markets other than Japan, North America and the European Union, exports rose 25.6 percent to $185.8 million.

“There has been a significant shift,” said Loo, adding that these new markets still represented only a tiny fraction of total garment exports and were improving on a tiny base.

And although garment exports were slightly down in December, US shipments climbed 14.63 percent to $142.89 million, a sign that the Kingdom’s main market was beginning to raise demand.

The US economy began to show signs of recovery at the end of last year as GDP climbed 5.7 percent in the last quarter, according to figures from the US commerce department – the largest upswing in six years.

US duties set to continue

However, the US showed no sign it would cut duties on Cambodian garments, as it has done with other least-developed countries, albeit those that export less to the world’s largest economy than Cambodia.

At the start of last month, Chea Mony, president of the Free Trade Union of Workers of the Kingdom of Cambodia, sent a letter to Nancy Pelosi, the speaker of the US house of representatives, calling for a reduction in tariffs. US embassy spokesman John Johnson confirmed on January 27 that the letter had been received by the US state department and would be passed on to Pelosi.

However, Loo said Wednesday that he did not expect any movement on the issue until the last quarter at the earliest.

“I personally wonder when [the US government] will have time to look at external matters,” he said, citing continued problems with the US economy.

Loo added that Cambodia’s garment industry remained under threat from other factors closer to home. Garment workers have threatened strikes this month as unions called this week for the industry to consider raising workers’ monthly wages above $50 per month.