In the first half of 2017 Cambodia’s garment exports grew four per cent compared to last year’s nine per cent. One reason for dip was stiff competition from Myanmar and Vietnam. Another reason was a rise in minimum wages for textile and allied sectors. This resulted in higher production costs, thereby cutting into manufacturers’ margins.

Some other factors are affecting Cambodia’s trade balance. For one, it has lost its preferential trade access to EU countries owing to an upgrade of its economy by the World Bank. The Bank accorded Cambodia lower middle income country status. The non-availability of preferential rates will last for next three years. Also FDI inflow into the garment sector took a sharp 30 per cent dip in initial quarter of this year. This compares unfavorably with a five per cent dip that took place in 2016.

Despite the slowdown, the garment industry has proved to be a robust force in expanding Cambodian economy. The dent in Cambodia’s poverty rate in recent years has been largely due to the contribution from the textile and footwear industries. These industries together engender revenue to the tune of $6 billion annually and employ nearly 6,00,000 people, many of whom are from an impoverished rural background.