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| A look inside one of Cambodia’s 500 garment factories. The Kingdom’s garment sector is a model for Southeast Asia’s developing economies, insiders say. Photo Supplied |
Tuesday, 03 April 2012
Don Weinland
The Phnom Penh Post
Cambodia’s garment sector yesterday looked more like a teacher to
regional economies such as Myanmar than a student of China and other
export juggernauts.
With more than 500 garment and shoe factories – adding a new one
every 10 days, according to the Garment Manufacturers Association of
Cambodia – the Kingdom drew the attention of officials from
Myanmar and Laos yesterday at a business-to-business dialogue hosted by
the ASEAN-EU Business Summit.
“I always give Cambodia as an example to people in my country. The
garment sector here has made so much progress in the past 10 years,”
Khine Khine Nwe, secretary general of the Myanmar Garment Manufacturers
Association, told the Post on the sidelines of the meeting.
“To be frank, we have to learn from many countries, not just Cambodia. We’re still at the first stage of development.”
Myanmar-bound
Myanmar is no newcomer to the industry.
In 2001, garment exports from the Southeast Asian nation were worth
US$767.6 million, with the United States its biggest customer, according
to Khine Khine New.
Cambodia exported about $1.16 billion the same year.
But US sanctions against Myanmar’s military-led government saw a more
than 60 per cent decrease in the value of exports by 2005, as
Cambodia’s sector experienced nearly 90 per cent growth during the same
time period, Garment Manufacturers of Cambodia figures showed.
Although Myanmar’s exports last year recovered to near-2001 levels on
trade with Japan and Korea, the value of Cambodia’s total garment
exports was about 335 per cent higher than the regional neighbour in
2011.
Lao speculates success
The Lao People’s Democratic Republic was also interested in Cambodia’s success in the sector.
The World Bank projected that garment-driven exports in Laos would grow by 15 per cent in 2011.
Laos’s landlocked, low-population status detracted from the country’s
appeal as a manufacturing destination, but officials will continue to
study other regional successes for tips on attracting investment,
Somphone Phonhaxa, a representative from the Lao National Chamber of
Commerce and Industry, said at the discussion on Cambodia’s exports
yesterday.
“We need to know what we must change to attract investors into this
sector. I think we can learn some of that from Cambodia,” he said.
‘Don’t be afraid’
President of the Garment Manufacturers Association of Cambodia, Van
Sou Ieng, yesterday recommended Myanmar exporters call on their customs
offices for speedy clearance of imported materials, as well as
improvements on inland logistics.
Bluntness with Myanmar’s new government was the overarching theme of yesterday’s lesson.
“[The manufacturers] need to tell the government what they need.
Don’t be afraid,” Van Sou Ieng offered as advice to Myanmar on the
sidelines of the meeting yesterday.
Cambodia and Myanmar both lack local textile manufactures that supply garment factories with raw materials.
Instead, the two countries import almost all of the fabrics used in
production, a step in the manufacturing chain subject to logistic risks
and unfavourable fluctuations in currency.
In this sense, Cambodia still has room to learn from other regional
players such as Bangladesh, which manufactures much of its own textiles,
Gordon Peters, manager at Emerging Markets Consulting, said yesterday.
About 90 per cent of Cambodia’s garment factories are foreign owned,
leaving little incentive to invest in the domestic value-added process,
Peters said.
Twenty-three of Myanmar’s 100 or so factories were foreign-owned, Khine Khine Nwe said.
Political push-back
Ultimately, investors interested in Myanmar would wait for a greater
sense of political stability before putting their money in the country,
experts told the Post last week.
Parliamentary elections in Myanmar on Sunday saw Aung San Suu Kyi’s
National League for Democracy Party win 44 out of 45 seats, Reuters
reported yesterday.
“The rule of law in Myanmar is still weak. Investors would like to
see stronger rule of law before they start coming,” Khine Khine Nwe
said.
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