Gov’t plans non-garment industrial export expansion

THE government plans to boost nongarment manufacturing exports this year on the back of strong market demand as the availability of viable Covid-19 vaccines jumpstarts a global economy hungry for recovery.

Non-garment manufacturing products in 2020 accounted for 26 per cent of Cambodia’s total industrial exports by value, a rise of 8.8 percentage points from its 17.2-per-cent share in 2019, data from the Ministry of Economy and Finance show.

The ministry includes milled rice, furniture, bicycles and electronic components in its “non-garment manufacturing products” designation.

Ministry permanent secretary Vongsey Vissoth told a press conference in Phnom Penh on January 27 that the government will further push nongarment manufacturing this year in a bid to stimulate the economy.

He claimed that Cambodia exported $600 million worth of bicycles last year, up 130 per cent from 2019, and $600 million in furniture, with the US as the main buyer for the year.

“We will continue to assist businesses in the manufacturing sector, in view of all their export potential, even as the Covid-19 pandemic goes on.

“We will reform the business environment, coordinate with businesses on matters related to corruption-control and improve our economic atmosphere to reel in investment and increase competitiveness,” Vissoth said.

Cambodia has many tools in its toolbox to woo in non-garment factory operators, he noted, listing the bilateral Cambodia-China Free Trade

Agreement (CCFTA), the upcoming free trade agreement with South Korea, the Regional Comprehensive Economic Partnership and the UK’s Generalised System of Preferences.

He said: “China is a source of investment transfer to ASEAN, including Cambodia, especially the labour-intensive manufacturing industry. China will be using more advanced technology in industry by 2030, so the tech that’s not so modern will be transferred to us, and we need to seize this opportunity.”

Cambodia Rice Federation president Song Saran told The Post that the government’s non-garment manufacturing drive was a step in the right direction, noting the significant gains chalked up in the sector during the global health crisis.

He said: “Boosting exports in the manufacturing sector will have a positive impact on Cambodia’s economic growth.

“In order to be competitive in the area, we need to maintain a competitive stance, keep our production costs low and facilitate exports.”

Chheang Vannarith, director-general of the ministry’s General Department of Policy, said the Cambodian economy would bounce back to four per cent growth this year from 2020’s 3.1 per cent contraction.

He attributed last year’s slowdown to declining investment and trade flows in garments, construction, real estate and especially tourism.

The garment sector dipped 6.4 per cent in 2020 due to a drop in external demand and disruptions to production lines, but a 4.6 per cent recovery is expected this year, he said.

Meanwhile, the construction sector fell 2.4 per cent as foreign investment inflows and demand for construction materials for tourism and trade declined.

However, the government expects the construction sector to recover, growing by 2.9 per cent in 2021, buoyed by high demand in affordable- and medium-cost housing and strong economic activity.

He said the number of international tourists fell 80 per cent last year due to restrictions and fears of contracting Covid-19 during travel.

Statistics from the Ministry of Tourism show that 1,286,074 international tourists visited Cambodia in the first 11 months of last year, down 78.2 per cent from 5,898,130 in the corresponding period in 2019.

And according to the finance ministry, Cambodia’s garment exports in 2020 dropped 9.9 per cent after having posted a 13 per cent surge in 2019.