Cambodia’s international partners on Tuesday stressed the imminent threat facing the country’s garment sector from a growing list of strong competitors and urged the government to draw up a clear, concrete plan of action to keep up or watch the economy’s star performer fade away.
The warning and advice were meted out at a celebration of the 15th anniversary of Better Factories Cambodia, a monitoring program of the International Labor Organization (ILO) born out of a 1999 trade deal—since ended—that linked U.S. garment imports from Cambodia to improving workplace conditions.
U.S. Ambassador William Heidt credited the program for much of the sector’s growth since 1999, when he was an economic officer for the embassy and Cambodia had about 120 garment factories turning out less than $1 billion in exports. Cambodia now hosts more than 600 exporting garment factories that put some 700,000 people to work—the vast majority of them young women—and topped $6 billion in exports last year. The sector accounts for a third of the country’s GDP.
“I don’t think we would have gotten there without the Better Factories program,” which gives international brands some peace of mind about how factories make their clothes, Mr. Heidt said.
But the ambassador warned that those buyers were growing nervous about Cambodia’s ability to keep pace with the competition.
If “we take a step back and look at the broader competitive environment and you talk to the international buyers, there’s a real sense of unease now about the future of the garment industry in Cambodia,” he said.
“Many new suppliers have emerged. Some of these are larger than Cambodia and could be very strong competitors, and some are much poorer and therefore receive a lot of international support in their own right. All of them want a slice of the global apparel trade.”
What worries Cambodia’s industry watchers most is the Trans-Pacific Partnership, a pending free trade deal between the U.S. and several Asian countries including Vietnam—a main competitor—but not Cambodia. Vietnam is also on the verge of a free trade deal with the E.U., threatening to diminish the benefits of Cambodia’s existing deal with its main export market.
E.U. Ambassador to Cambodia George Edgar said such deals mean “there’s inevitably going to be an erosion of Cambodia’s competitive advantage just in terms of access to markets.”
Better Factories Cambodia program manager Esther Germans said a recent survey found the same concerns among local factory managers and their international buyers.
“They agreed that, indeed, trade deals with neighboring countries could become a threat to Cambodia,” she said, also adding African nations to the growing list of rivals.
The managers and buyers gave the usual list of challenges facing Cambodia’s factories, including high energy prices and low-skilled workers. But above all else, “they said the biggest risk to Cambodia right now is basically to not do anything,” Ms. Germans said.
Labor Minister Ith Sam Heng and Commerce Minister Pan Sorasak said the government was doing plenty: adding power capacity, strengthening factory inspections, training workers, improving roads and ports, and enforcing the law more consistently and evenly.
But buyers seem to be looking for more.
Ivanka Mamic, senior director of responsible sourcing for U.S. retailer Target, said they wanted more “predictability and certainty” about the future. Dan Rees, director of Better Work, another ILO program aimed at improving factory conditions, called on Cambodia to draw up a “roadmap” for its garment sector.
They all said Better Factories Cambodia should remain a part of the mix. The ILO and government on Tuesday signed a memorandum of understanding to keep the program going until at least 2019.
But what the anniversary did not provide was a forum for all the industry heavyweights gathered in one place—ministers, factory managers, brand representatives, union leaders—to assess just what Better Factories Cambodia has and hasn’t achieved over the past 15 years.
The program has plenty of detractors. After a long break, Better Factories Cambodia resumed naming and shaming factories falling short of its labor standards only two years ago, after heavy rebuke that hiding their identities was helping perpetuate their bad behavior.
Critics also say the program doesn’t pay enough attention to the companies to which the factories it monitors subcontract some of their work, and is only now starting to work with the government and brands to find solutions to the daily, dangerous commutes workers face.
William Conklin, country director for the Solidarity Center, a U.S.-based labor rights group, said the program has plugged some of the large gaps in the government’s own factory inspection routine, but was failing to spark fundamental change.
“The data is out on how much workers’ lives have improved over the past decade or so. Obviously, if you look at the issue of transport, that hasn’t changed a bit. Are working hours better? Are conditions better? You still have mass faintings,” he said on the sidelines of the event.
The ILO says the factories are, on the whole, scoring better and better in the categories upon which the program grades them. But Mr. Conklin said they aren’t getting graded on all the right things.
“They’re measuring certain things, and by those certain things, yes, it’s getting better. Like obviously there’s…very little child labor,” he said. “But overall, do workers need to work overtime to make ends meet? Are they gaining any skills in the sector? Are they rising up the ranks in seniority pay?…. These are things that are not happening.”
peter@cambodiadaily.com
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