Manufacturing Sector

EXECUTIVE SUMMARY

This report is written to study the manufacturing sector particularly the garment industry. Cambodia’s economy strongly depends on the garment exportation and had contributed 90% of total export value and employed over 300,000 workers. Firstly, overview of manufacturing sector described the importance of the industry in Cambodia’s economy. Next, garment industry in detail will be described in which apparel and footwear play important role in the sector. The strategy for the future of the industry such as cutting cost, increasing productivity and market diversification will be focused, afterward. The outlook of industry seems to be positive due to the world economic recovery. Finally, leading companies in the industry will be enumerated.

OVERVIEW OF MANUFACTURING SECTOR
During the global economic crisis, Cambodia’s economy was badly affected particularly by the garment industry and led to loss of 25,000 jobs as the government stated 73 garment factories were closed in 2008 and at the same year there were 64 new factories opened absorbing 13,000 workers, according to South-East Asia Business Review. The rebound of garment sector and the growing in food industry absorbed more workers back. In December 2010, there were 262 garment factories active, in which new 20 factories were opened, compared with 243 in December 2009, according to MOC. Among them, there were 236 garment export-oriented factories registered with GMAC with 93% of them were foreign direct investment.Many sub-sectors in the industry such as food, beverage and tobacco; garment were recovered and translated in hiring and re-hiring of 38,543 workers back to factories. The growth in the agro-industry comes largely from the fast development in the remarkable growth of the food, beverage and tobacco industries,


as reflected a surge in projected investment for manufacturing sector from 2006-2010 (figure 1), according to CDC. Cambodia has abundant of cheap labor and recognition from the government on industry’s importance in the economy as the Royal Government of Cambodia treats the labor intensive and exported industries as one of the priorities for the 4th term of the legislature (2008-2013). Besides, the country enjoys some benefit from the market access to the US, EU, Canada and Japan through trade agreements.

Figure 2 shows the performance of industry in which garment industry was recovered in 2010 after encountered the economic downturn since 2008. On the other hand, food, beverage and tobacco industries were slightly increased thanks to the government policy promoting export particularly rice products.

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