Over 70 garment, shoe factories in Cambodia shut down this year

More than 70 garment and footwear factories in Cambodia has closed down in the first eight months of 2016 due to on-going political dispute, illegal protests and tough competition, the local Khmer Times reported Tuesday.

Speaking at a press conference before a garment industry exhibition here on Monday, Ly Tek Heng, the operations manager of the Garment Manufacturers Association in Cambodia (GMAC), painted a worrying picture of the first eight months of the year.

"I think the political situation has affected business, both businessmen and investors. When one country has instability in politics, it is difficult to make investments and there are concerns, especially from buyers," he was quoted as saying by the newspaper.

"Political issues, illegal demonstrations and competition from the other garment and footwear exporting countries such as Vietnam, Bangladesh and Myanmar have deterred investors from investing in Cambodia and have made buyers reluctant to order products from Cambodia," he said.

He said that in the first eight months of this year, more than 70 factories had been shuttered, while only 20 new ones had opened. This came as orders from buyers for footwear and clothing made in Cambodia dropped by almost 30 percent, forcing not only closures, but the slashing of working hours.

Commerce Ministry Spokesperson Soeng Sophary downplayed the news, saying that the closure of factories did not mean the industry was under threat.

She blamed global insecurity for the closures, citing the upcoming presidential elections in the United States, the recent referendum in Britain, as well as the high price of electricity.

"Cambodia is a small country which depends on garment exports, and as such is affected by outside issues as our export market focuses on the UK and United States. The factory closures are maybe due to changing demand in the EU and U.S.. The economic waves in foreign countries have an impact on Cambodia," she was quoted as saying by the Khmer Times.

In contrast to GMAC's figure of a 30 percent drop in buyer's orders suggesting trouble in the garment sector, recent figures released by the Commerce Ministry painted a far healthier picture. The ministry stated that total garment and footwear exports in the first quarter of this year have increased by 39 percent to 2 billion U.S. dollars.

The garment and footwear industry, which is the kingdom's biggest foreign currency earner, consists of some 1,000 factories employing 754,000 workers, according to the Ministry of Labor. Enditem