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Cambodia’s uncertain political climate to hit apparel industry

The World Bank has noted Cambodia has moved up the manufacturing value chain significantly. However, the country’s political climate is in turmoil and is likely to have an adverse impact on its growing garment industry. The uncertain political climate has raised concerns over trade relations and even the currently trade benefits Cambodia enjoys. This dissonance comes just after a meeting in August where the US and Cambodia discussed enhancing their partnership under the Trade and Investment Framework Agreement (TIFA) in order to facilitate trade.

Further, the EU is considering reworking Cambodia’s trade status under its Everything But Arms (EBA) program which permits Cambodia’s garments and other exports to enter the EU duty free. GMACs Deputy Secretary-General Kaing Monika had appealed for calm, “We are just worried there might be some misunderstanding by the US or EU about the decisions of our government. What we are trying to say is to caution people not to misunderstand the situation in Cambodia.”

Cambodian workers are happy with their recent 11 per cent wage hike to $168 per month, which they will earn as of January, currently there is no labour unrest despite the current tension. GMACs Deputy Secretary-General is of the view that the EU would not roll back Cambodia’s trade privileges as part of EBA, but that it would not be entirely detrimental if it did. For the year to October, the US imported textiles and apparel valued at $2.18 billion from Cambodia, a 2.42 per cent decline when compared to the same period in 2016.

As per the World Bank’s latest economic update, Cambodia’s exports of clothing and other textile products grew in the first six months of the year, touching $3.3 billion, but that level of growth may not continue.

 
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