4 Million People In Kampuchea Rely On The Textile Industry To Support Their Families. Kampuchea Textile Industry Has Mixed Prospects

He Enjia, President of Kampuchea Textile Association of China Chamber of Commerce, said that Kampuchea's textile industry has mixed prospects.

1/4 of Kampuchea's population depends on the textile industry to support their families.

According to He Enjia, the textile industry in Kampuchea is dominated by clothing, and there are bags, shoes and fabrics. This is the most basic textile industry in Kampuchea. Among them, there are about more than 80 shoe factories in China, about more than 60 in bags and about 500 in garment factories. In addition, there are five or six factories in the cloth factory, and there are also statistics about the total number of accessories factories, trademarks and button factories in the garment factories, about more than 200. Among them, Chinese mainland enterprises accounted for about 41%, plus China, Hongkong, Macao and Taiwan, textile enterprises in Greater China accounted for 70% of Kampuchea textile enterprises, leading enterprises in Kampuchea.

He said that the largest industry in Kampuchea is the light industry and textile industry, which accounts for more than 75% of Kampuchea's total exports and 700 thousand of its employees (according to the data provided by the government's insurance workers), but in fact about 1 million of the direct practitioners, about 4 million people rely on this industry to feed their families, accounting for 1/4 of the national population. The textile industry, Kampuchea, has brought the greatest economic benefits far beyond the rapidly developing real estate industry, because there are not many beneficiaries of real estate.

Young labor force and international trade preferences are the advantages of Cambodia. Nearly 1000 textile enterprises are investing in Kampuchea.

He Enjia pointed out that the advantages of attracting foreign investment in Kampuchea are mainly reflected in two aspects:

First, it is rich in young labor force and attractive to foreign investment.

Two, as one of the developing countries and low-income countries, Kampuchea enjoys the preferential treatment of the EU's "all except weapons" (EBA) and the United States universal system of preferences (GSP) and other major countries and regions in the world.

But he also said that at present, the two advantages of Kampuchea's "young labor force" and "International Trade Preferences" are slowly losing. There are three main reasons:

First, the wages of workers in recent 6 years have increased too fast, from the minimum wage of 61 dollars in 2012 to 182 US dollars this year, while the minimum wage in 2020 was 190 US dollars, an increase of more than 2 times. This increase has even exceeded Vietnam. Vietnam's workers' wages in 2020 were the highest of 190 dollars, the lowest was more than 140 dollars, but the productivity of Kampuchea workers was 30% lower than that of Vietnam.

Second, the total labour force in Kampuchea is only about 15000000. When the factory develops to a certain extent, the supply of labour will inevitably fall short of demand.

Third, Kampuchea has high production costs, high and unstable electricity prices, high logistics costs, imperfect industrial chains, raw materials that need to be imported, and textile industry can only be exported after processing in Kampuchea, making investment encounter bottlenecks.

The wages of workers are increasing year by year. If the minimum wage rose to $250 in 2023, Kampuchea's textile industry would be finished.

In September 20th this year, the chamber of Commerce, trade unions and labor department held a three party meeting on the minimum wage of workers in 2020, and finally voted to make the minimum wage standard for clothing and shoemaking factories next year to be US $187. Premier Hong Sen decided to add an additional $3, finalized at $190. He Enjia also attended the wage negotiation conference at that time. He thought the wage adjustment was more reasonable. Frankly speaking, the increase was the lowest this year. Last year it increased from $170 to $182 this year, an increase of $12, and this year it increased by only $8.

He said that the government has realized the pressure caused by the constant wage increase, and once the factory moved to other countries because of the pressure increasing, the employment pressure in Kampuchea will also increase. Workers' wages account for a relatively high proportion of production costs, accounting for 60%, while Kampuchea next year requires workers to buy endowment insurance, which will further lead to cost growth. Although the government is determined to reduce other expenses, including reducing the 6 day holiday, the reduction rate is still less than the growth rate. He also said that without improving the industrial infrastructure and supporting the industrial chain and failing to reduce production costs, if the wages of workers went up to $250 in 2023, there were not many factories that were expected to survive.

In addition, trade unions are also one of the main factors that impede factory production efficiency. The productivity of Kampuchea's workers is 30% lower than that of Vietnam. The reason is that the trade unions in Vietnam are under the control of the government, not as free as the unions in Kampuchea. The free participation of trade unions directly affects the management and efficiency of factories. The demands made by the trade union are too outrageous. If all of them are done according to the requirements of the trade union, all factories will have to migrate. This is the outcome that all people do not want to see. Therefore, the government needs to take effective measures and management mechanisms to ensure the survival of the factory.

It is a challenge for Kampuchea factories to cancel EBA and increase annual wages of workers. At the same time, the fate of the factory still depends on the EU's EBA preferential policy. Recently, the European Union has threatened to cancel EBA. The relevant report will be released at the end of this month. If the result is severe, the EU will cancel EBA, which is not optimistic for Kampuchea. He Enjia pointed out that the EU is the largest area of Kampuchea's exports. 45% of Kampuchea's factories are EU orders. If EBA is cancelled, 40% of Kampuchea's factories will be forced to move or close, which is a big blow to Kampuchea.

And once the EBA is cancelled, the US GSP system is likely to be abolished, which will have a huge impact on Kampuchea and the result will be unthinkable. Whether the EBA will be abolished depends on the European Union's report and the wisdom of Kampuchea and how to explain it comfortably to the EU. In any case, He Enjia is optimistic about the European Union. After all, the original intention of the EU EBA is to help Kampuchea's economic development and improve the livelihood of the poor people in Kampuchea. If EBA is abolished, it will be equivalent to sanctions against Kampuchea's people and the way of life of the common people. This result is contrary to the original intention of EBA. Therefore, He Enjia believes that the EU will not cancel the EBA. However, He Enjia also believes that political matters can not be grasped. Enterprises can not decide and everything can only wait. To invest in Kampuchea, we must abide by and carry out the laws of Kampuchea. Any changes in the surrounding environment will continue to exist. Those who can not survive will find another way. This is the mentality of investors.

It should be mentioned that Kampuchea Prime Minister Hong Sen and government officials made many corresponding statements on the issue of EBA: "EBA will not make Kampuchea rich, no EBA will not let Kampuchea die." Premier Hong Sen once said, "EBA will not make Kampuchea rich. Without EBA, Kampuchea will not die." He Enjia believes that if the threat of EBA from the national level is the interference of sovereignty, it is impossible for US investors to decide politics. He emphasized again that if EBA is lost, the impact will be great, because the infrastructure, energy and industry in Kampuchea are not perfect, and the production process needs to pay high cost, so it will affect other industries.

It is hoped that more Chinese enterprises will invest in Cambodia. Kampuchea Textile Association of China Chamber of Commerce hopes that more Chinese funded enterprises will come to Kampuchea to invest in the industry, especially those upstream enterprises such as textile, clothing and manufacturing, so as to perfect Kampuchea's production structure and reduce production costs, so as to offset the effect of EBA cancellation. These can help Kampuchea, but the premise is that the Kampuchea government should also formulate corresponding countermeasures to help these enterprises and factories. He Enjia said that China and Kampuchea are very friendly countries. Since the establishment of the Kampuchea Textile Association of China Chamber of Commerce, efforts have been made to introduce a lot of Chinese investors to invest in Cambodia, to guide them to understand Kampuchea's customs, laws and regulations, ensure the safety of investment and ensure the sustainable development of Kampuchea's economy. This is the result most desired by the Kampuchea Textile Association.