Cambodia’s exports grew by 7.2 per cent in 2016.But the number of registered exporting factories fell by 10.4 per cent, while the number of workers declined by 2.9 per cent, compared to 2015.

Garments and footwear are still the country’s most important exports, accounting for 78 per cent of total merchandise exports in 2016.

The EU remains the most important market destination for Cambodia’s garment and footwear exports, with the US second.

The sector’s exports to the EU and US combined accounted for only 65 per cent in 2016, down from 72 per cent in 2015, with an increasing share going to markets outside the US and EU, notably Japan and Canada.

While the country’s economic growth remains strong, growth in garment exports eased, expanding at 8.4 per cent in value terms year-on-year in 2016, compared with 12.3 per cent in 2015.

Rising labor costs, driven in part by the increasing cost of living, the dollar appreciation, and competition from other regional low-wage countries, in particular Myanmar, continue to exert downward pressure on prices of exported garment products.

The system of subcontracting factories in Cambodia could be a way to undercut regulations, including labor laws and the minimum wage.