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Despite Setbacks, Cambodia’s Exports Continue to Expand

Cambodia’s apparel exports continue to surge despite political turmoil, rising 20 percent to $5.52 billion for 2013, according to its Ministry of Commerce. Exports to the E.U. were particularly robust, increasing 28 percent to $2 billion, while its deliveries to the U.S. jumped 7.6% to $2.12 billion.

Previously, there were concerns that Cambodia’s civil discord was undermining its central manufacturing sector, shutting down factories, disrupting shipments and potentially scaring off foreign investment. The chairman of the Garment Manufacturers Association in Cambodia (GMAC), Van Sou Ieng, contends that Cambodia’s garment industry is hemorrhaging money, both from the loss of clothing sales and the loss of foreign capital being withheld from investors grown wary from the country’s persistent unrest. Ieng calculates that as much as $200 million in clothing sales has been squandered and another $70 million in forfeited investment.

The economic damage is all the more worrisome since Cambodia is heavily dependent upon its garment sector, which accounts for more than 80 percent of its commercial industry. The industry employs more than 300,000 workers, more than 90 percent of them female.

Also, much of the growth of Cambodia’s garment manufacturing is underwritten by an influx of foreign investment, which has flooded in from Australia, England, India, Japan, Korea, Malaysia, Singapore, China, Taiwan and the U.S. China alone sent the nation $121 million in 2013.

While initially peaceful, the protests have devolved into chaotic spasms of violence between throngs of demonstrators and increasingly agitated police.  The civil discord grew out of rampant dissatisfaction with the new minimum wage recently approved by the Cambodian government, thought by many labor activists to be unacceptably low.

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Initially, the Labour Advisory Committee reported a $15 increase in monthly wages, effective April 1, 2014. Under the newly accepted plan, the minimum wage will rise incrementally over the next five years, lifting it from its current $80 per month to more than  $160 per month. In 2015, the monthly minimum wage is set to increase again by $15, then by $16 in 2016, $17 in 2017 and, finally, $17 in 2018.

However, the streets were overrun by  a deluge of frustrated factory workers, furious over what they considered to be a stingy  increase. Tens of thousands of workers launched an organized march on December 24, shutting down factory production and halting transportation. In an attempt to placate the demonstrators, the Cambodian government offered to raise the wages by an additional 25 percent to $100 per month, effective sometime in February, instead of the original proposal of $95 per month.

Major retailers who manufacture their apparel in Cambodia have expressed concern over the unrest, as well the government’s heavy-handed response, circulating a jointly-signed letter calling for a peaceful resolution. The letter read, “It is with great concern that we have observed both the widespread civil unrest and the government’s use of deadly force. Our primary concerns are for the security and safety of the workers employed by our suppliers and the long-term stability of the Cambodian garment industry.” The signatories included representatives from H&M, Inditex, Levi Strauss & Co., among others.

And on January 17, President Obama signed the U.S. Consolidated Appropriations Act, which halts any aid to Cambodia other than food and health related goods until the government conducts an investigation of parliamentary elections in July, which some say were tainted by corruption. In 2012, the U.S. sent about $70 million to Cambodia to finance various kinds of development.