PHNOM PENH, Cambodia — Cambodia’s apparel and footwear exports rose 9 percent in 2014 to $5.83 billion, withstanding the tumultuous year that the industry experienced.
Beginning in January last year when government authorities opened fire on workers protesting for a higher minimum wage and killing at least five, the sector has been experiencing tensions. Unionists and workers were arrested for their participation in protests, while minimum wage negotiations between unions and the Garment Manufacturers Association in Cambodia (GMAC) reached an impasse. International brands sourcing from Cambodia’s factories also reduced their orders in 2014, citing the government’s repression of workers’ rights and the industrial unrest.
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While GMAC had previously predicted a doomsday scenario for the sector — which generated $5.3 billion in exports for 2013 — figures from the ministry show that exports to the European Union grew by 26 percent to $2.4 billion, while to Canada and Japan, they increased 9 percent and 21 percent, respectively. Only exports to the U.S. dropped, by 3 percent, generating $1.94 billion compared with 2013’s $2 billion.
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The overall 9 percent growth is in line with yearly figures provided by GMAC, which show an annual increase of about 10 percent from 2011 to 2013. The industry saw a significant jump between 2009 and 2011.
Nate Herman, vice president of the American Apparel and Footwear Association’s international trade department, said that 2010’s exports from Cambodia to the U.S. was high due to “the bounce coming out of the global recession.”
He added that in 2014, U.S. buyers were in a “wait-and-see” mode as negotiations over the minimum wage were not yet resolved. Since it was settled in late 2014 — with the government raising minimum pay to $128 a month from $100 — he remained optimistic that buyers would return this year.
“The hope is that with the peaceful resolution of the minimum wage issue, some confidence will be restored and we could see the trend change in 2015,” Herman said, adding that footwear exports from Cambodia actually jumped to $123.8 million from $56.8 million. “So, not everyone is hesitant..”
Ken Loo, GMAC’s secretary-general, remained pessimistic, saying that the industry is uncompetitive due to workers’ low productivity and wildcat strikes. “The government is moving in the right direction by strengthening infrastructure and reducing the costs of doing business here, but the problem is we still have illegal strikes,” Loo said.
He believes that there will be more factory closures in the second half due to owners not being able to afford the new minimum wage.
Ath Thon, leader of the Cambodia Coalition of Apparel Workers Democratic Union, said GMAC has often resorted to scare tactics when speaking about the minimum wage. Despite all the turmoil the sector has faced, he believes that setting a wage mechanism was a necessary process. “Now, workers will not do a general [nationwide] strike and buyers will have more confidence,” he said.