Newsletter: February 2002

Cambodia’s Low Costs Continue To Attract Business

ambodia has over 250 registered factories that manufacture wearing apparel and some made-ups (e.g., tents). Some factories in Cambodia are owned by foreign companies, which tend to utilize exclusively ex-patriate workers visiting on work permits. However, other apparel factories are owned by Cambodians and some of the factories are joint ventures employing primarily Cambodian workers. In such a poor country production of wearing apparel is one of the easiest industries to establish.

The government of Cambodia relies on revenue from textile factories and their products for many of its operations. Revenue from quota sales supports a major portion of the government and provides employment for hundreds of employees on the government payroll. In addition, sales of wearing apparel bring money into the country and provide employment opportunities for Cambodian workers. The wages of Cambodian workers in garment factories are generally less than $100 per month including benefits (food, medical assistance, etc.) Even though the wages seem extremely low, these wages are well above the average in Cambodia and provide a reasonable standard of living for the workers and their families. To lose these jobs would be devastating to the workers and their families.

Because Cambodia factories are fairly new entries into the global wearing apparel market, the quality is not very high, but is improving. Factories in most industrialized countries cannot possibly compete with the production costs in Cambodia of simple wearing apparel to be sold in the low-end markets in the United States and Europe.

One of Cambodia’s greatest successes has been the U.S. market. Exports during the January through September time period are up nearly 50 % from year ago levels. This follows a 51 % increase during 2000. Over 92 % of all exports to the U.S. are apparel.

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