According to research done by a well-known local economist, rising labor, transportation, logistics, and electricity costs might potentially weaken the competitive advantage of Cambodia's textile-related companies.
Ky Sereyvath, an economist at the Royal Academy of Cambodia, examines the future viability of the competitive chances in the local apparel industry as well as its current and potential competitive advantages over neighboring countries as well as the flaws that could obstruct them.
Speaking to The Post, Sereyvath pointed out that the report shows how the Kingdom's economic advantage over neighboring countries has been diminished by Vietnam's lower labor costs and the country's single deep-sea port's inability to handle large container ships.
He clarified that large quantities of cargo going to Cambodia must first pass through Vietnam and Thailand, raising costs.
He argued that the establishment of deep-sea ports in the provinces of Preah Sihanouk, Koh Kong, and Kampot would enable Cambodia to export goods at reduced prices and compete with the sophisticated ASEAN economies.
Sereyvath further emphasized that the clothing industry faces a particularly difficult challenge from electricity tariffs and that customs procedures continue to be relatively complex.
The survey revealed that it is still difficult for some factories and businesses to uphold ethical standards or maintain safe working environments. To prevent them from exploiting workers unfairly, those factories ought to be reorganized, he said.
Sereyvath also underscored that customs procedures remain relatively complicated and that electricity rates pose an especially tough challenge for the garment sector.
“The study found that some factories and industries still do not adhere to the proper principles or maintain good working conditions, which is a challenge. Those factories need to be reorganised to keep them from taking undue advantage of workers,” he said.
The Ministry of Labour and Vocational Training is set to hold six additional tripartite meetings to discuss the 2023 minimum wage for textile-related sectors – on August 24 and 31, and September 7, 14, 22 and 23. This year’s minimum wage is $194.
The NCMW is made up of labor ministry representatives, plant owner representatives, industry stakeholders, and worker representatives from trade unions and civil society organizations.
Speaking to The Post at the beginning of the month, Kaing Monika, the deputy secretary-general of the top trade organization for the sector, the Garment Manufacturers Association in Cambodia, acknowledged the challenging circumstances that the workers in the Kingdom face and the fine line that must be drawn between enhancing their living conditions and the competitiveness of the sector.
Although the sector had strong export results in the first half of the year, Monika noted that "serious concern over the export situation for the second half" is a result of the unstable global economy and the economic downturn in Western nations, which make up some of the biggest consumers of Cambodian clothing.
