In 2008, the Cambodian garment industry imported US$1 billion in raw materials. The Cambodian Garment Manufacturers Association called for more use of local products, lower costs, and increase exports to the West.
The president of the association said: “Compared with other countries, Cambodia’s garment sector imports most raw materials. Importing too many raw materials reduces our competitiveness and tax revenue.”
The association’s external affairs manager said: “66% of garment companies import raw materials from China, and the rest from Taiwan and South Korea. This increases the price of Cambodian products and affects Cambodia’s status as a country of origin. During our trade meeting, some Countries that import clothing from Cambodia require Cambodia to import raw materials from ASEAN countries in exchange for favorable taxes.” In 2007, Cambodia spent US$800 million importing fabrics, of which US$531 million was imported from China.
The EU has given Cambodia a preferential trade status for manufacturing products using fabrics imported from ASEAN, so it is at a disadvantage when importing fabrics from China. If Cambodia is allowed to import fabrics from China, this means that the trade deal will not help Cambodia, only help China.
High start-up costs are a barrier to new investment, and government assistance for new projects should be a catalyst. The association would like to see more local fabric production, but the government has not supported us in attracting investment. I don’t think local production of fabrics will happen anytime soon as it costs up to $15 million to set up a fabric factory and investors have to be pretty confident. If we can produce fabrics locally, we can make huge profits without having to import fabrics from other countries.
A secretary of the Cambodian Ministry of Commerce said that imported raw materials account for only a small proportion of the cost of locally produced clothing. “I think our imports are still very low compared to our exports of US$2.6 billion. We are trying to persuade investors from China and South Korea to build factories in Cambodia for production. At the same time, Cambodia needs to improve the quality of local clothing, which means producing high-quality fabrics. .”
Cambodia has a fabric factory in Kampong Cham Province, which was established by Chinese investors, but it only produces medical fabrics.
