Cambodia has long been synonymous with its garment industry. Said garment industry already employs over 750,000 people and generates more than a third of the country’s gross domestic product. Unfortunately, the industry is built upon the hard work of low-skilled and low-cost labor, which has the potential to cause widespread economic issues for the nation in the long-run. This is not lost on the nation and the industry however. Recently, the industry has ben making moves to attract skilled talent, most in the form of college graduates, to over senior positions throughout the sector.
In the short term, the stars have aligned for local garment factories. Thanks in part to a rather successful vaccination campaign, Cambodia and its apparel manufacturers have managed to pull-through the massive economic disruption that rocked the world thanks to the Covid-19 pandemic. Even with the broken fabric supply chains that begins in China, Cambodia’s garment industry was able to endure and is now emerging with a tailwind.
Garment exports have risen 11 percent year-on-year, according to Customs Department figures from October. U.N. Comtrade data shows the country has increased its market share in most of its export destinations.
The issue now is that Cambodia is incredibly reliant on China’s supply chain for fabrics. Without investment in domestic textile production, Cambodia remains exposed to costly supply chain shocks. It will also struggle to comply with new trade conditions should it graduate from United Nations-assessed least developed country (LDC) status in 2024.
Should this LDC status be lost, its apparel exports must contain more locally made textiles in order to enjoy duty-free market access to key markets like the EU, Japan and Canada. It is because of this that the nation’s garment industry is pivoting towards developing and utilizing local talent. Cambodia’s Minister for Labor last year pledged to spend $500 million on technical and vocational education and training (TVET) over the next five years.
