Earnings disappoint as apparel exports rise

Experts have warned that the garment industry’s recent export growth may not translate into improved profit margins due to rising production costs, as the latest industry figures reveal that exports of textile-related products in 2021 increased by more than 15% compared to the previous year.

Data from the Garment Manufacturers Association of Cambodia (GMAC) reveals that exports of textile-related products amounted to $11.3896 billion in 2021, a jump of $1.505 billion or 15.2% compared to 2020.

Broken down by category, apparel accounted for $8.017 billion, footwear $1.390 billion, travel goods $1.490 billion, and other categories over $0.49 billion. “Travel Goods” is a designation that includes suitcases, backpacks, handbags, wallets and similar items.

However, GMAC General Secretary Kaing Monika told the Post that while export growth was good news, profit margins for the industry were no better than before.

“We know that the clothing industry has spent a lot of money on measures to prevent Covid-19 [transmission]. In particular, there has been an increase in the cost of logistics, especially transport. So sometimes, although profits have jumped, it hasn’t translated into profitability,” he said.

During a working meeting with Minister of Labor and Vocational Training Ith Samheng on March 3, GMAC Chairman Kong Sang reaffirmed the importance of the ministry’s involvement in the labor-intensive garment industry. labor.

“If the labor sector is in turmoil, it will not grow or be sustainable, regardless of how other sectors perform. In this sense, coordination [between the ministry and various sectors] creates an environment where professional relationships are better and more mature, which leads to more stable production,” he said.

Sang added that Prime Minister Hun Sen’s vaccination policy, coupled with support from the Ministry of Labor, has ensured production stability and export growth in the sector.

Labor Minister Samheng highlighted the government’s various interventions in the garment sector, including the launch of a comprehensive roadmap to safely restart the economy as the novel coronavirus becomes rampant. The document is known as “The Policy Framework and Economic Recovery Programs in the Context of Living with Covid-19 in a New Normal 2021-2023”.

The government is working on the introduction of a Labor Sector Strategy 2021-2024, encompassing employment and vocational training, which will boost the development of the garment, footwear and bag industry in Cambodia over the next few years. next three years, he said.

Samheng stressed the importance of a strategic plan to ensure the long-term sustainability of the sector, and that it continues to grow and attract more investors to Cambodia.

He also praised GMAC for its long career as the primary spokesperson for apparel investors. “This association has been operating for 25 years and has acted as the sole representative of investors in the apparel industry, protecting and enhancing the legitimate rights and interests of all investors,” he said.

He noted that the GMAC has established a forum for consultation and social dialogue with stakeholders on a wide range of issues that could impact the global investment climate. He hailed the association’s goal of creating an enabling environment for export growth and sustainable development.

Faced with a surge in orders in the garment sector and an associated labor shortage, the Ministry of Labor has urged the National Employment Agency (NEA) and private recruitment agencies to provide workers to factories and companies in order to increase their various production capacities.

Michael O. Stutler