Despite the pending partial withdrawal of the Everything But Arms (EBA) scheme, Cambodia’s footwear manufacturing industry is still seeing a rise in exports and investment in 2020.
Investment in Cambodia
In July 2020, the Council for the Development of Cambodia (CDC) issued a final certificate of registration for Mann Long Shoes Co Ltd which will open a US$10.3 million footwear factory in Kampong Cham province. The new project is expected to provide 3,379 jobs to Cambodians.
L.Y. Footwear (Cambodia) Co., Ltd. was also given the green light by the CDC to invest in the manufacturing of all forms of footwear in Cambodia in April this year. The factory, to be constructed and located in Ang Snuol district of Kandal province, has an investment capital of US$5 million and was expected to generate 1,200 jobs reported the Khmer Times.
Everything But Arms (EBA) withdrawal
The withdrawal of the Everything But Arms (EBA) scheme, is expected to affect 20%, or €1 billion (US$1.14 billion) of Cambodia’s annual exports to the EU’s 27-nation bloc. The EBA withdrawal should take effect on August 12th 2020 and will impact selected garment and footwear products.
New Cambodian Trade Deals
The Royal Cambodian Government is looking to secure a number of FTA (Free Trade Agreements) with China, India and Korea in response to the potential effect of the EBA decision.
Cambodia Chamber of Commerce vice-president Lim Heng said: “I don’t think there’ll be any obstacles for the Cambodian footwear products market. Down the line, Cambodia’s market will balloon even further, especially with Eurasia, as well as China and South Korea once free trade agreements with them come into effect.”
Cambodia Footwear Association (CFA)
The CFA was launched in September 2019 with Chairman Ly Khunthay at the helm. At the time, he said, “We will focus on the important tasks of improving market flow by maintaining a favourable trade environment and mobilising investors from all over the world to come and invest in the Cambodian market through trade deals and partnership dialogues.”
The CFA is also a member of the Confederation of International Footwear Associations and in 2019, there were 83 footwear factories and 70 footwear material suppliers registered in Cambodia reported the Phnom Penh Post.
In total, the industry employed 130,000 workers, with factories based in:
- Phnom Penh
- Kampong Cham
- Kampong Speu
- Kandal province
- Svay Rieng province (Bavet town)
Cambodia was among the world top ten 10 footwear producers at the end of 2019.
Cambodia’s footwear exports: January – June 2020
As we reported earlier in July, Cambodia’s exported garment products (which include clothes, footwear, and travel goods) had a total value of $3.78 billion between January and June 2020. This represents a decrease of 5.4% compared to the same period in 2019.
Footwear saw an increase of 2% in exports, while overall the garment sector saw a decrease.
The Ministry of Labour and Vocational Training said as of June 2020, 450 factories suspended production in the garment, footwear and travelling bag sector, and 83 factories were formally closed.