Cambodian Garment Factories Closing: Debate about causes, None about effects

Garment Factories closing, fast. Alarm bells? Phnom Penh Post:

Cambodia’s garment exports to the US – the Kingdom’s largest foreign textile market – totaled US$1.8 billion in the first nine months of 2008, slightly down from the same period last year, according to data from the US Department of Commerce.

Last year, the sector exported $2.9 billion worth of garment produced in 319 factories that employed more than 380,000 workers, according to figures from Cambodia’s Ministry of Commerce.

But some 30 garment factories have closed their doors so far this year, leaving nearly 20,000 workers unemployed, said Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia (GMAC).

The effects of these wide-spread layoffs could be devastating for many impoverished families in the countryside, for whom the monthly salaries of relatives working in factories are one of the few sources of income available to them.

The Cambodian garment slowdown is rooted in the US recession, which has seen sharp drops in clothing sales, industry officials say.

US retailer sales tumbled in November, the worst monthly decline in almost four decades, according to Bloomberg, and the Dow Jones US Retail Index is down about 28 percent on the year.

Nuon Veasna, an employee education coordinator for the International Labour Organisation in Cambodia, said the increasing effects of international market turmoil has made it more difficult for unions to protect workers rights.

“It has always been difficult to demand worker protections from employers, but it has become harder as purchase orders continue to fall,” he said.

But Chea Mony, president of the Free Trade Union of Workers, says Cambodia’s garment sector has remained largely unaffected by international markets.

“For me, I do not believe the global economic crisis has affected factories much because the industry has made a lot of
progress recently,” he said, saying instead that the decisions by individual investors to close shop in Cambodia were to blame for the layoffs.

“The closing of garment factories is the result of long-time investors who want to pull out of Cambodia … in order to escape legal confrontations with their workers,” he said.

“I remain sceptical as long as there is no confirmation from relevant ministries or [national auditors] that factories have closed because of the global crisis,” he said.

Reasons for the growing decline in garment sales might vary, but the effects are not in dispute.
Sitting on a hammock beneath a plastic tarp, 29-year-old Se Thy has created a makeshift camp in front of Phnom Penh Garment City Ltd in Phnom Penh’s Meanchey district.

He represents 500 workers seeking compensation for lost wages.
“I have been waiting here for 10 months since the factory closed,” he said.


4 thoughts on “Cambodian Garment Factories Closing: Debate about causes, None about effects

  1. Hi Erik,

    It is quite interesting to see that you still keep your interest in the social issues in Cambodia.

    This is Chanroeun. I hope you still remember me. I am a friend of Boramy and we met once in the Socio-Cultural Research Congress on Cambodia 4 years ago.

    Best wishes

    • erikwdavis says:

      Thanks for commenting, Chanroeun. Of course I remember you! I think I will always remain interested in the issues of Cambodia. Warmly, E

  2. Jenn Lee says:

    What I find surprising about this piece is that it’s a piece at all. I, a lowly and unpromising grad student predicted exactly this in a paper for my first grad class in 2007. I agree, what is interesting is not that this happened, it was obvious back in the day to an ignorant student, but much more interesting, and what no one talks seriously about (except for anti-civ/establishment anarchists) is how to prepare in advance for these types of things or, better yet, how to bypass sweatshops completely. It’s called a living wage and a lot of places in the US get it. Why not places like Haiti and Cambodia too? More sweatshops is not what the ‘Bodge needs, it needs skilled wage jobs. Meaning someone is going to have to recognize the skills they already have and invest in them.

  3. I thoroughly agree, Jen. And I share your frustration. On the one hand, no one wants to get rid of the apparel factories: like it or not, they are buoying both the individual workers and (more importantly) their rural families through remittances. But what is NOT HAPPENING in Cambodia, or anywhere else sweatshops exist in Export Processing Zones, is secondary industrialization. Textile work is almost a startup industry: it cannot industrialize a country by itself, especially if none of the profits stay in country for recapitalization.

    The best way to transform this situation, in my humble opinion, is twofold. First: work like hell to change local tax regimes (which has to happen largely through institutions like the World Bank and the ADB) to insist that profits from the factories must remain in country. That’s an enormous task by itself. Second: encourage the direct militancy and direct action of rank-and-file labor unions in Cambodia. The first will encourage secondary industrialization and the creation of better, more skilled jobs; the latter will ensure higher wages, better safety standards, and most especially democratic rank-and-file control of workspaces by the workers. These suggestions seem utopian to people who are incapable of considering effective changes; I see no other realistic solutions. Your thoughts?

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