Manufacturing destinations across the globe have had a tough time in the last few months and it’s still continuing. The global outbreak of COVID-19 left a trail of devastation in its wake, impacting all the apparel manufacturing and sourcing hubs, big and small, alike.
One such up-and-coming hub that holds a lot of promise is Cambodia. Nestled between Thailand and Vietnam – a dominant force in the world of apparel manufacturing and exports – Cambodia’s more than 800,000 people in a country of 16 million are employed in this industry, which coincidentally generates around 40 per cent of Cambodia’s economic output and 80 per cent of its exports.
However, the large-scale order cancellations by the global buyers did a lot of harm to Cambodia’s apparel sector, akin to what they did to other established players like China, Bangladesh and Vietnam, the repercussions of which, industry insiders feel will be felt in Cambodia for a long, long time to come.
“We only get paid when the clothes are delivered. We have zero income and zero cash flow now,” said Ken Loo, Secretary-General of the Garment Manufacturers Association in Cambodia, adding, “Buyers are not following the terms of the contract. How many companies do you think can last long with a cash flow of zero? Even the largest airlines in the world say they can go bankrupt without Government support. That is what we are facing.”
Around 500 garment manufacturing units will have to suspend operations soon, which is in addition to the 100 units that have already shut shops, Ken expressed apprehensions, if things don’t improve soon.
And for those that have work orders to act upon, availability of raw materials has also emerged as a big concern. Around 60 per cent of raw materials coming in from China, the months long disruption of work in China following the outbreak of the pandemic there, virtually disrupted the entire supply chain that had left garment manufacturing units in Cambodia in a limbo.
Business aspect aside, the livelihood of the garment workers is also at stake now! The saving grace is work has resumed in China and things might soon turn for good for Cambodia. But that does not seem to hold much promise for the workers, at least for now.
As per the Government’s mandate, most of the garment workers have to make do with US $ 70 monthly wages still, which is around one-third of the minimum wages. According to instructions issued by the Government on 7 April, workers from factories that temporarily suspend their production with authorisation will receive US $ 70 per month (US $ 40 from the Government and another US $ 30 from the employer) for 2 months, from 10 April 2020.
“I don’t have any savings… I don’t know what to do when I’m not working,” lamented a female garment worker who works for a factory that caters to some prominent retailers in the West.
Exacerbating the problems is work order cancellations by the buyers, felt groups like Human Rights Watch, which has called upon the buyers from across geographical locations to support workers in the major garment-producing nations such as Bangladesh, Myanmar and Cambodia.
As per Heng Sour, the spokesperson for the Cambodian Labour Ministry, around 130 footwear and apparel factories have already laid off around 100,000 workers. Now it has emerged that more than 2,000 garment workers further have been suspended from a factory in Svay Rieng province for 2 months, with the company saying it cut employees because the factory had received no orders from buyers amidst the COVID-19 economic downturn. Pum Sokunthy, Deputy President of the local chapter of the Collective Union of Movement of Workers, said You Li International (Cambodia) Garment in Bavet City suspended the workers from 1 May to 30 June.
The challenge for Cambodia could not have come at a more trying situation than when it is threatened with the withdrawal of trade privileges under the “Everything But Arms” scheme that gives them preferential access to the EU market for products other than weapons. As per reports, the EU plans to withdraw those advantages for Cambodia, which are worth about one-fifth of the billion euros (US $ 1.1 billion) of its exports to the bloc each year, because of concerns about its poor record in human and labour rights.
Meanwhile, amidst the reports of more and more garment workers being laid off from work, Meas Soksensan, the spokesman for the Ministry of Economy and Finance (MEF), said that the exact amount of expenditure for the unemployed has yet to be calculated.
“We are making new assessments and we will announce the results soon,” said Meas, adding that the MEF is ready to provide money upon request. “We have enough of a budget to solve the issue, so there is no need to worry. We will release it on time when requested.”
We hope that the Government and the stakeholders are able to find out a solution soon; else, it could be a case of too little, too late for the industry.