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Cambodia’s garment, footwear exports follows strong growth trajectory

Cambodia's garment and footwear exports continued to see strong growth during 2015, though it grew at a slower rate than the year earlier. Despite an increase in exports, garment prices overall remain on a downward trajectory, although those shipped to the European Union went up for the first time in four years.

The latest data on industry exports, employment and factory openings are included in the most recent Cambodian Garment and Footwear Sector Bulletin released by the International Labour Organization (ILO). They also appear to show that a rise in wages has not dented trade. Not only did minimum wages increase from $128 to $140 at the beginning of the year, workers' average monthly wages jumped 20.7 per cent to $175 in 2015, up from $145 the year before, once a range of mandatory allowances were factored in.

However, the ILO warns: "While there do not appear to have been negative effects from past increases, Cambodia's minimum wage was low by international standard. For the year as a whole, total garment and footwear exports reached $6.3 billion, up 7.6 per cent over the $5.8 billion booked a year earlier. Even so, this is slower than the 9.6 per cent growth seen between 2013 and 2014.The footwear sector continued to accelerate with a 21.8 per cent surge in shipments to $538 million, while exports of garments rose by 6.5 per cent to $5.7 billion.

The European Union (EU) remains the largest market for Cambodia's garment and footwear exports, with a 46 per cent share, while the US accounts for 30 per cent. The remaining 24 per cent were destined for other markets, mainly Canada and Japan.

Despite the strong export performance, Cambodian garment producers faced the challenge of a continuing decline in the prices paid by their buyers, especially in the US and Japan. The average price of garments (per dozen) sold to the US in 2015 was 29 per cent lower than in 2005. Similarly, prices for garments sold to EU markets were 18 per cent lower in 2015 than in 2005.