Crisis looms over silk sector

Photo by: Sovan Philong
A silk worker threads a loom. High prices for imported silk and low profits from sales have driven many out of work.

via Khmer NZ

Thursday, 12 August 2010 15:01 Chun Sophal

THE rising price of silk thread imports is threatening the survival of the Cambodian silk industry as half the Kingdom’s silk weavers have abandoned their jobs since the end of June, according to industry officials.

Prince Sisovath Pheanuroth, president of the Khmer Silk Village Association, said the cost of silk thread had already nearly doubled compared to this time last year, and showed no signs of abating.

The KSVA said that silk threat prices stood at US$40,000 per tonne – 46 percent higher than last year’s $27,500 per tonne. It estimated that prices would reach between $45,000 and $50,000 per tonne by the end of the year.

“We think the silk thread price will continue to increase in the future as silk thread exporters decrease supply,” he said on Tuesday.

Cambodia produces about 4 tonnes of silk thread per year, about a 400th of domestic demand. There are plantations of mulberry trees, the natural diet of silkworms, in Banteay Menachey and Siem Reap provinces.

From 2005 to 2009 Cambodia imported between 300 and 400 tonnes of silk thread per year from Vietnam and China to produce finished products, KSVA statistics show. Thirty percent of finished products were exported internationally and 70 percent sent to supply local markets.

Ke Muny, deputy secretary general of KSVA, said the price increase was threatening the jobs of roughly 20,000 people employed in the sector, resulting in many former weavers seeking employment elsewhere as silk profits shrink.

“[From July], nearly half of weavers throughout the country have abandoned their jobs because the finished products they produce cannot be sold for a higher price and therefore are not profitable,” Ke Muny said.

Heng Sinon, who has a silk-weaving business in Kandal province’s Prek Takov village, said that since early last month nearly half of the weavers in her village had ceased working as incomes dropped.

She said that the middlemen who bought the finished products from the village weavers, were not only unwilling to increase prices, but even tried to lower them, saying it had been very difficult for them to sell the products.

“Currently I use only two of the eight looms I have because most of my weavers have abandoned their jobs to do something else,” she said.

The government has already introduced measures to counter the rising import silk thread price.

On April 27, Prime Minister Hun Sen made silk thread imports tax-free, suspending import tax and value-added tax on the product – a 7 percent to 10 percent cost cut. But the rising cost of the raw material has continued to squeeze profits.

In May, silk thread was imported for around $37,000 per tonne – 8.1 percent lower than the present price.

Prince Sisovath Pheanuroth, also a senior technical advisor at the UN International Trade Centre, which is cooperating with the Ministry of Commerce on silk projects, said the duty-free import policy still constituted a significant prop for the industry.

“I strongly support tax removal because it helps, especially at a time where the price of silk is increasing,” he said.

However, he said that more needed to be done or the industry would face bigger problems om the next five years.

“I think that Cambodia should encourage the growing of more mulberry trees domestically if they want to tackle the lack of silk, which could otherwise kill the weaving sector in the future,” said Sisovath Pheanuroth.

Oum Mean, Ministry of Labour secretary of state, said his ministry was not responsible for the silk sector. “It is the responsibility of other ministries,” he said.

The Ministry of Commerce could not be contacted for comment.