Cambodia's Garment Sector Hits a Snag

As Southeast Asia continues to enhance its role as a global manufacturing hub, Cambodia may find itself lagging behind. Like other emerging destinations in Asia for low-end manufacturing, Cambodia faces a number of challenges — such as regulatory obstacles, insufficient infrastructure, an uneducated workforce and lukewarm global demand — in its quest to cultivate its industry and move up the manufacturing value chain. The country's political atmosphere, largely undiversified economy and weak supply chain only compound its troubles.

On Aug. 24, the country's Garment Manufacturers' Association revealed that orders for Cambodian footwear and clothing had fallen 30 percent this year and that political uncertainty had forced more than 70 factories to close or relocate. Until official export statistics are released, the statement will be hard to verify, but it has already sparked contentious debate in the country. Opposition parties claim that the government-affiliated business organization is propagating specious data to counter efforts by labor groups to raise the minimum wage. Regardless, the announcement highlights how the political tension plaguing Cambodia's garment industry may also impede the country's wider efforts at economic development.