Cambodia has extended tax breaks for eligible textile-related enterprises until the end of 2025.

The move is expected to ease the burden on the sector, which has experienced a severe decline and drop in orders as a result of global economic headwinds linked to the ongoing Ukraine crisis. These sharp drops in orders are most likely to persist throughout 2023. Some factories may be temporarily closed and jobs may be cut due to the Russian-Ukrainian war’s effects on the incomes of the peoples of Europe and the US, some of Cambodia’s biggest markets.

The Ukraine and Covid crises have weakened global economic growth, driving up prices for fuel and commodities across the world, eroding incomes and forcing consumers to cut back on spending, particularly so in Europe and the US. So the tax breaks are aimed at maintaining the sustainability of industries as well as safe guarding local employment although global economic conditions have yet to improve.

Cambodia’s exports of garments, footwear and other textile-related items from January 2022 to November 2022 were up 17 per cent year on year. These category of items accounted for 49 per cent of the value of the country’s total exports over the eleven-month period.