The country, which has the lowest labor cost in Southeast Asia, is also exporting more garments to the European Union, according to Cambodia daily. Exports to the EU comprised the bulk of the increase, jumping by 45 percent to $532 million. Exports to the U.S., the biggest recipient of Cambodian apparel, were up 17 percent to $660 million.
Demand has stabilized in the western markets, allowing Cambodia to increase exports. There is also speculation that Cambodia is benefiting from instability in Bangladesh and rising wages in China.
“Many new factories have been coming in the last six or seven months or so. They set up very quickly and start exporting,” Srey Chanthy, interim president of the Cambodian Economic Association told Cambodia Daily.
Wages in Cambodia are now $14 a month and have continued rising despite protests from manufacturers. The country has a labor force of around 8 million, making it roughly 1/10 the size of Bangladesh. Because of this constraint, it is unlikely that Cambodia will ever be a major garment exporter.
Cambodia also has a high rate of labor unrest, and is not without its own factory collapses. In May, two factories collapsed, killing two workers and injuring 31.
Labor activists complain that a shift to Cambodia will only worsen the plight of workers, as more and more makers fight for a slice of the pie. More likely, however, is that a labor shortage in Cambodia will cause wages to rise in the long term until they are on par with the regional average.