Increasing job productivity and opportunities. Improving workplace conditions and worker welfare. Boosting domestic and foreign investments in high-value-added products. Promoting market diversification in sector exports. As Cambodia angles itself for a post-pandemic economic rebound, these five “strategic measures” will form the pillars of the garment, footwear and travel goods industry’s roadmap for the next five years, the Southeast Asian nation’s government said last week.
The Cambodia Garment, Footwear and Travel Goods Sector Development Strategy 2022-2027 has a “vision to develop the garment, footwear and travel goods industry in Cambodia into an environmentally sustainable, high value-added industry, focusing on products that can be sold with high price, competitive and fundamentally supportive of economic diversification by 2027,” said minister of economy and finance Aun Pornmoniroth as he kicked off the plan’s launch on March 21.
Cambodia’s garment sector, the country’s largest employer with roughly 800,000 mostly female workers, received a double beating from the Covid-19 pandemic and the European Union’s revocation of trade benefits under the Everything But Arms scheme for least-developed nations. As political turmoil in Myanmar and production outages in Vietnam worsened, however, the nation was able to scoop up any spillover in orders, easing those twin pains and bolstering its share of the global market. According to trade data, Cambodia exported $11.4 billion worth of garment, footwear and travel goods in 2021, a 15.2 percent year-over-year increase from 2020. Europe, its biggest customer, receives roughly 40 percent of its clothing exports.
Now, the country seeks to pivot its garment, footwear and travel goods industry toward “sustainability and resilience and high-value-added,” minister of labor and vocational training Ith Sam Heng said at a meeting announcing the strategy, adding that the roadmap will allow Cambodia to “seize opportunities as well as respond to the rapid changes in regional and global architecture.”
The rollout follows the signing of a Memorandum of Understanding between the European Chamber of Commerce in Cambodia, which represents European business interests in the country, and the Garment Manufacturers Association in Cambodia, its leading factory trade organization, to tackle the challenges that prevent the garment sector from achieving its full potential, including a low-skilled workforce and a lack of renewable energy infrastructure.
To position Cambodia as a green sourcing destination, the country will also need to address the use of forest wood that stokes the boilers of one in three factories, contributing to its high rate of deforestation. Improving worker welfare will also require scrutiny of minimum wages, which employees say are below subsistence level but employers claim are beyond their ability to pay. Labor campaigners say that the health crisis has rolled back many worker rights, with union busting and wage theft becoming increasingly common.
As one of the first initiatives under the agreement, Eurocham Cambodia, with the support of German development agency GIZ under its FABRIC program, will set up a public training program with the Cambodian Garment Training Institute in Phnom Penh focused on sustainable textile sourcing, occupational safety and health and compliance. Sustainability has always been a cornerstone of Eurocham’s work, Massimiliano Tropeano, a sustainability expert who splits his responsibilities between EuroCham Cambodia and GIZ FABRIC, told Sourcing Journal, but the funding from the GIZ has enabled it to “do so much more” to help GMAC build an eco-friendlier garment sector.
“It’s all about pushing a green agenda into the sector on all fronts, from energy to water to chemicals to air pollution to solar panels to sustainable wood, you name it,” he said. “The garment sector represents the backbone of the manufacturing Cambodia, hence the government should put a real effort into making it green, and if they will succeed, it would be very effective for the entire economy.” H&M Foundation, the Hong Kong Research Institute of Textiles and Apparel, GIZ and The North Face owner VF Corp., for instance, are planning to establish a “Green Machine” facility that can recycle cotton-polyester blends at scale in the country.
High logistics and energy costs relative to neighboring regions are other areas Cambodia needs to nip in the bud, Sang told the Phnom Penh Post. “While trucking costs are mostly affordable and acceptable, the clearance cost fee is unmatched, and almost half of them do not have supporting invoices,” he said. “This is an important issue that needs to be addressed in the short-term action plan.”
Ultimately, collaboration is key, Sang noted. “Having the development strategy documents and the implementation of this strategy is a good starting point, but for this strategy to be successful, it requires the willing participation of the relevant ministries and institutions in effective implementation under the inter-institutional mechanism led by the economic and financial policy committee,” he added.