Tariff Relief To Draw In 100 New Shoe Factories

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cambodia footwear factory tariff relief
GMAC wants the US government to give Cambodia duty-free status on footwear exports.

The president of the Garment Manufacturers Association of Cambodia (GMAC) expects that the country can attract about 100 new footwear factories if it gets tariff relief under the United States’ Generalised System of Preferences.

Van Sou Ieng said the tariff relief was given last year on travel goods, which was a good result for the industry in attracting a lot of investment and absorbing a large labour force – both skilled and unskilled. He hoped the US would consider duty-free access to the footwear industry which had played a critical role in boosting exports and developing Cambodia’s economy.

“We got duty-free access to the US on travel goods in June last year, and in the year since we have attracted about 20 factories,” he said. “This means we had a new factory every two weeks. This is a good thing and we will continue to attract more investment in the sector. 

“Now, we are in talks with all footwear garment owners to lobby the US government to give us duty-free status on footwear. If we can get the duty free access, I am confident that we can attract at least 100 new footwear factories to open here. This would be a big benefit to our economy because just one footwear factory can absorb at least 5,000 workers.”

Pen Sovicheat, director of domestic trade, said earlier that government officials would join hands with GMAC to lobby the US government to grant GSP to Cambodia. “Whether or not the GSP reduces the tax to zero or not, we still want to get it,” he said. 

Presently, GMAC has 59 footwear manufacturing factories which exported goods worth $700 million last year. GMAC deputy chief Kaing Monika said on Monday the US was carrying out a review of GSP tariffs on footwear and this would end in December.

“We hope that with our good performance in term of labour compliances, the US government will consider granting Cambodia this trade preference to help Cambodia’s economic development especially to help the recent rise of minimum wage which is making Cambodia gradually losing competitiveness,” said Monika.

The Asian Development Bank in a report released last week pointed out that since Cambodia is a highly dollarised economy, it must be careful to align minimum wage adjustments with productivity increases to keep wage costs in check and stay competitive as a manufacturer for export markets. The ADB urged Cambodia to stay competitive by improving the quality of basic education and promoting vocational and technical skills.

This article was originally published in the Khmer Times.