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Cambodia’s exports to EU up 14 per cent

The garment manufacturing industry in Cambodia has become the fifth largest apparel supplier to the European Union behind China, Bangladesh, Turkey and India.

Cambodia’s garment exports to the EU grew by 14 per cent in 2016. In comparison Vietnam’s garment exports to the EU grew by 6.8 per cent. Europe today takes up 43 per cent of the Cambodian sector’s exports as opposed to 29 per cent taken by the US market.

However there are some threats. Cambodia’s push into the EU market is largely because of the preferential treatment under the Everything But Arms Agreement, which allows its garment products to enter the EU market duty-free; this preference is expected to end as Cambodia graduates out of Least Developed Country status. Another threat is the implementation of the FTA between the EU and Vietnam, which is set to come into force by the end of 2017. With Vietnam set to take full advantage of the falling tariffs, Cambodia should find ways to stay competitive.

Cambodia’s real growth is projected to remain strong, expanding at 6.9 per cent in 2017 and 2018.

Improving labor productivity would be fundamental for Cambodia to remain competitive, given rising competition from other low-wage garment exporting countries.

 
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