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 29 Mar 2009

Cambodian garment exports hit hard by global downturn

Many garment factories in Cambodia are closing as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis, reported Reuters.

Garments are Cambodia’s biggest export earner and its economy may shrink this year due to the drop in demand.

More than 1,000 workers were owed pay when South Korean-owned Da Joo (Cambodia) Ltd. closed. It has become an all too familiar story.

At its peak, Cambodia’s garment sector boasted almost 300 factories employing 340,000 workers, many of them women from the countryside.

Foreign companies started to move into the impoverished Southeast Asian country after UN-sponsored elections in 1993, fuelling an economic revival after 30 years of civil war and the horrors of the Khmer Rouge ‘’killing fields’’ in the 1970s.

The monitoring of work conditions by the International Labour Organisation helped lure brands such as Adidas, Nike and Gap, keen to avoid bad publicity from sweatshops. Cambodia’s membership of the World Trade Organisation from 2004 provided another boost.

Factories sprang up where once there were green rice fields around the capital and garments became Cambodia’s biggest export earner. They brought in $2.78 billion in 2008, but that may drop about 30 percent this year, said Kaing Monika, spokesman of the Garment Manufacturers Association in Cambodia (GMAC).

Exports of garments to the US market dropped nearly 40 percent in January compared with a year earlier. Some 70 percent of the clothes go to the United States, 25 percent to Europe and the rest mainly to South Korea and Japan.

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