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Asia Sourcing Southeast Asia APR 16

THE GARMENT AND FOOTWEAR SECTOR CONTINUES TO SHOW STRONG MOMENTUM

Despite rising wages, the country’ s garment and footwear sector continued to expand last year, with approved foreign investment reaching US$377 million, according to the Cambodian Garment and Footwear Sector Bulletin released by the International Labour Organisation (ILO) in March. The Chinese Mainland accounted for 34.6% of total approved investment in the sector in 2015, followed by the United Kingdom (29.5%), Taiwan (10.3%) and Hong Kong (10.0%).

During 2015, 75 new garment and footwear factories opened, while two factories closed. Of the net increase of 73 factories, 68 were garment and five were footwear. The number was less than that in 2014, when 98 net new factories opened.

The country recorded total garment and footwear exports of US$6.3 billion in 2015, up by 7.6% yoy. Of the US$5.7 billion garment exports, 31.4% went to the US market, while 44.7% destined to the EU market. Of the US$538 million footwear exports, the US accounted for 18.4% and the EU made up another 56.3%.

Figures from the Bulletin show that employment in the garment and footwear sector increased by 10.4% yoy in 2015. While the minimum wage for the sector was set at US$128 per month in 2015, the average monthly wage stood at US$175.

CAMBODIA PASSES TRADE UNION LAW AMID STRONG OPPOSITION

Cambodia’ s first trade union law, which sets rules for establishing, operating and dissolving labour unions and had been in the works since 2008, was passed by the National Assembly in early April in its original form, without amendments requested by unions, employers and labour rights groups.

The law was widely criticized by unions and labour rights groups for restricting a worker’s freedom of association and the right to strike. Critics said the law places onerous financial reporting requirements on unions and contains clauses that discriminate against union leaders. Registration requirement for forming a union, which sets a minimum threshold of 20% of workers in a factory, is considered overly strict compared to 10 people in many other countries.

In late March, the Office of the United Nations High Commissioner for Human Rights (OHCHR) in Cambodia released an analysis on the law, raising concerns that the draft law is not circulated widely enough before legislation and several provisions do not comply with the ILO conventions agreed by the country.

A government spokesman, however, defended the law by stating that it balances the concerns of both employers and employees, and complies with the Cambodian standards. Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, said that after months of opposition against provisions in the law, employers would now turn their attention to how the law is implemented.

EUROCHAM SURVEY FINDS OBSTACLES TO DOING BUSINESS IN CAMBODIA

European Chamber of Commerce in Cambodia (EuroCham Cambodia) released in February the findings of its first Business Confidence Survey, which was conducted between September and October in 2015. The survey provides an overview of the advantages and challenges to doing business in Cambodia, as well as insights into the country’ s prospects over the coming years.

The 72 respondents to the survey, most of which were local small and medium-sized enterprises with foreign ownership, represented a total of 17 distinct sectors. 79% of the respondents identified the low cost of human resources as the country’ s major competitive advantage over other ASEAN countries, and low levels of taxation, which was chosen by 33% of the respondents, came the second. Besides, 45% of the respondents highlighted physical infrastructure as the most improved area over the past 12 months.

The majority of the respondents, however, perceived Cambodia to be less competitive than other investment destinations in ASEAN, saying that the country was held back by a skill gap in the workforce and a lack of transparency in processes and fees. Besides, 69% of the respondents said they had yet to experience any major improvements in the ease of doing business i n Cambodia over the past 12 months.

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Content provided by Fung Business Intelligence
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