Cambodia’s Exports To The US Rebound In First Quarter

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Cambodia’s garment exports to the US increased in the first quarter of the year. KHMER TIMES / MAI VIREAK

Exports to the United States rebounded in the first quarter of the year, an increase of almost two percent on the same period last year, despite fears over protectionist trade policies to be ushered in by US President Donald Trump.

Garment, textile and footwear products made up the bulk of exports. According to figures from the Office of the US Trade Representative, total exports from Cambodia were more than $719 million in the first quarter of the year compared with more than $706 million in the same period last year – an increase of 1.86 percent.

However, the rise represents the lowest growth in exports for several years. Kaing Monika, deputy secretary-general for the Garment Manufacturers Association in Cambodia yesterday told Khmer Times the increase marked a significant turnaround after a big drop in exports at the end of last year. He said the US is still a big market for Cambodia despite rising competition.

“The market has bounded back after quite a significant drop last year. However, it’s still lower than it was in 2015,” added Monika. “It’s also important to note that percentage share of exports to the US among total exports has reduced from about 75 percent in the past to just over 25 percent last year, due to increasing exports to other markets.”

In early April, Trump issued an executive order to crackdown on trade imbalances between the states and 16 other countries, including Thailand, Vietnam, Malaysia and Indonesia. Cambodia was not on the list.

Monika said the trade order had not affected Cambodia’s exports to the US. “There’s no change in export procedures due to the Trump administration, but there is a significant change in the way the markets operate. The industry is moving toward fast fashion and small quantity orders,” he said.

Monika said both buyers and investors are under huge pressure from shorter lead-times and demands for quick responses. The previous 12-18 week lead-times have been reduced to only seven to eight weeks. “The unavailability of raw materials, especially fabric, poses a big threat to Cambodia.

“Both buyers and investors have expressed the need for Cambodia to introduce a vertical set-up with its own fabric mills if the industry is to survive. The pressure of shorter lead-times also requires more efficient import-export procedures,” he explained.

Last July, Cambodia was granted duty-free benefits for exports of travel goods such as luggage, backpacks, handbags and wallets to the US under the Generalised System of Preferences (GSP) for Least Developed Countries. US Ambassador to Cambodia William Heidt said at the time it would lead to the largest expansion for Cambodian products into the US market in 20 years.

In September, the Ministry of Commerce, GMAC, the Council for the Development of Cambodia and the US embassy in Phnom Penh organised a two-day roadshow in Hong Kong to attract investors to set up travel goods factories in Cambodia.

According to figures from the Office of the US Trade Representative, total exports from Cambodia to the United States were more than $2.8 billion last year compared with more than $3 billion in 2015 – a decline of about seven percent.

This article was originally published in the Khmer Times.