LDN - Business

Cambodian garment makers seek continued support after EU trade access threat

[December 12, 2017]

By Prak Chan Thul

PHNOM PENH (Reuters) - Cambodian garment makers on Friday urged international buyers not to turn away from the country amid concerns that its access to vital EU trade preferences could be under threat after the main opposition party was dissolved last month.

The United States stopped election support for Cambodia and the European Union threatened trade preferences after the main opposition Cambodia National Rescue Party was dissolved at the request of the government of authoritarian Prime Minister Hun Sen on Nov. 16.

Garment and textile exports generate $6 billion annually and are the country's biggest export by far, fuelling years of growth. EU countries accounted for around 40 percent of Cambodia's exports in 2016 while the United States accounted for a further 20 percent. China took little over 6 percent.

Garment Manufacturers Association in Cambodia (GMAC), a representative of 600 factories that employ around 700,000 workers, appealed to foreign buyers to continue supporting Cambodian factories.

"GMAC appeals to all of our international buyers to continue their support (for) Cambodia and our member factories to materialize our economic goal which is the improved wellbeing of all the Cambodian people," GMAC said in a statement.

GMAC said that factory work had "lifted millions of people out of poverty" in the Southeast Asian nation.

Hun Sen, who has been courting garment workers in the leadup to the 2018 general election, has said that workers would be the ones to suffer if the EU withdraws preferential trade terms.

China, a longtime supporter of Hun Sen, has poured money into infrastructure and other investments in Cambodia that has emboldened Hun Sen to brush off criticism from Western donors.

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Cambodia's Prime Minister Hun Sen arrives for a meeting with garment workers on the outskirts of Phnom Penh, Cambodia, November 8, 2017. REUTERS/Samrang Pring

But the importance of the European Union and United States for Cambodia's exports ultimately gives them major leverage.

Global brands have also come under greater scrutiny over their supply chains.

"We are concerned about the recent developments in the country," Iñigo Sáenz Maestre, press officer of Sweden's H&M group, one of the biggest buyers from Cambodia, told Reuters last month.

Kaing Monika, deputy secretary general of the GMAC, said he was unaware of any buyers turning away from Cambodia and factories said they were not concerned about any possible withdrawal of trade preferences.

"We just got new orders for next year," said an executive at the Malaysian-owned 8 Star Sportswear Ltd factory who declined to be identified.

The factory produces garments for Gap Inc <GPS.N>, among other customers.

But workers told Reuters that they were worried about job security.

"Only workers will be affected," said Dork Sovann, 35, a Phnom Penh factory worker. "The risk is high for us."

(Additional reporting by Amy Sawitta Lefevre in BANGKOK; Editing by Amy Sawitta Lefevre and Nick Macfie)

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