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Industrial Survival in Cambodia

After the end of the Multi Fiber Agreement (MFA) in January of 2005, many – including myself – were predicting extremely dire consequences for Cambodia’s economy. After all, the garment industry, which makes Cambodia a sort of export-processing zone and provides waged labor to a sizable number of young women, makes up the greatest portion of Cambodia’s national economy. With the disappearance of quotas to the US, we felt that the garment factories would shut their doors rapidly, and quickly move to places like Vietnam and China, where labor standards were even worse than in Cambodia. This would essentially collapse the only significant industry in Cambodia, and throw all resources for survival back onto the (poorly performing) agricultural sector, with some extremely limited and non-nationalized tourist income in the two major tourist areas of the country – Phnom Penh and Siem Reap.

But, it didn’t happen. At the time, most of us knew why – the Indonesian Tsunami which killed so many people but miraculously spared Cambodia (I was standing on the beach when it happened, but only learned about it from a friend’s text message) resulted in a US extension of trade quotas to the region, including Cambodia. This extended – temporarily – the life of the garment industry. We’ve largely forgotten that the life of the industry was extended through artificial political means not controlled by Cambodia itself – an act of ‘charity,’ if you will, on which Cambodia cannot depend. US politicians just aren’t that responsible or nice. We’ve forgotten that during the few months between the expiration of the MFA and the new temporary quotas, the industry fired between 20,000-30,000 workers. They haven’t forgotten, but we have.
Unions have taken advantage of the respite to try and secure gains and rights, often facing serious repression, jail, and violence. But they are in a weak position, since the factory owners have few qualms about simply moving to the next cheap location after these quotas disappear.

And now, with Vietnam’s accession to the WTO in the works, I’m prophesying doom again. I’m not a trained economist, and clearly I was wrong about the earlier prophesied demise – who can predict tsunamis and the vagaries of US Politics? – but something really big is going to have to happen to prevent the industry from collapsing

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One thought on “Industrial Survival in Cambodia

  1. Pingback: Deathpower in Cambodia » Blog Archive » Garment Factory Shocks

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