Cambodia’s crucial garment industry braces for end to quota system

Cambodia’s crucial garment sector is bracing for the end of a 30-year-old global textile quota system in December, hoping to position itself as a labour-friendly alternative to China.

The highly mobile garment manufacturing industry contributes more than 90 percent of Cambodia’s export earnings and employs an estimated 240,000 mostly female workers, making it the linchpin of one of the world’s poorest economies.

The expiration of the multi-fibre agreement (MFA), which allocates textile quotas to developing nations for export to rich countries and gave Cambodia its entree into the global market, is expected to see giant China elbow out competitors.

"We are very worried that by the end of the year when the agreement expires, a lot of workers will lose their jobs and see their living standards fall," says Sam Srey Mom, acting president of the prominent Free Trade Union of Workers of the Kingdom of Cambodia.

Workers, most of whom have uprooted from villages in this predominantly agricultural country in the hope of finding work, have few employment options with no other established industry here.

They earn a minimum wage of 40 to 45 dollars per month under conditions monitored via a unique factory inspection system set up by the UN’s International Labour Organisation (ILO).

The system was put in place following a 1999 agreement between Cambodia and the United States which required the sector to improve working conditions in return for receiving quotas to the US market.

Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia (GMAC), envisions survival in some form for the industry and says Cambodia’s reputation could help give it an edge.

GMAC is working alongside the government in pushing for the United States, the destination for two-thirds of Cambodia’s exports, to reduce tariffs on garments exported from the impoverished country.

"With the abolishment of quotas we see that the only way they can continue this system of reward and encouragement is by giving us preferential treatment on tariffs," Loo says.

The gold star may also help the industry in its lobbying for a reduction in the 50 percent local content requirement by the European Union — Cambodia’s other major importer — for garments to be duty exempt.

Fabric and yarn used here is imported, due to a lack of local supply, meaning local content is now 40 percent at the most, Loo says.

More generally, as demand in the West grows for goods produced under decent conditions, investors could be attracted to the Cambodian scheme.

"Certainly the industry sees its compliance with international and national labour law as a significant factor in its positioning in the post-MFA world," says Ros Harvey, chief technical advisor for the ILO garment sector project.

"What the industry’s hope is, is that compliance will mean the industry is attractive to buyers who are concerned with this issue."

Harvey also says that the ILO has collected strong evidence that improving working conditions is more than just a marketing strategy. "It is a way for a factory to improve its productivity," she says.

Importantly, the system may give Cambodia an edge as it seeks to sell itself as an alternative to China for investors nervous about a US "safeguard mechanism", in place until 2008 under World Trade Organisation rules, which if activated would restrict China’s garment exports.

"If buyers are afraid and they want to diversify, they do not want all their orders to be in China just in case something like this happens, then they have to choose another country to place their orders," says Loo.

"We hope we can position Cambodia to be in that position, to be their number one choice."

It is possible that some drift may have already occurred, with around 30 factories operated mostly by investors from China, Hong Kong and Taiwan opening in Cambodia in the past year to bring the total number of active factories here to 209.

GMAC has also been calling on Cambodia’s government, infamously riven with corruption and entangled in red tape, to get its act together or risk seeing investors flee as early as September, when buyers place orders for next year.

"The industry has been shouting, screaming our heads off, at the government over the past two or three years, and we have not seen much movement," Loo says.

"It’s only this year that we’ve seen the hustle and bustle…. We just hope it’s not too little too late."

Cambodia’s fashion designers create tropical chic

Fashion designers in Cambodia are tapping into the kingdom’s stunning fabrics, affordable workmanship and tropical inspiration, making for a vibrant although still-tiny industry.

While the impoverished country is better known for its garment exports fuelled by more than 200 mass-producing factories, a handful of designers are focusing on the domestic market of moneyed Khmers, expatriates and tourists.

Romyda Keth, a Cambodian-born designer who left her homeland in 1973, two years before the genocidal Khmer Rouge regime swept to power and devastated the country, blazed a path for her cohorts with her return here a decade ago.

Already an established name in Paris where she studied design, she first set up a workshop and exported her work back there but a few years later opened her own boutique in a colonial-era house to cater to rising local demand.

"It would have been difficult to make the new start in any country, but in 1994 here, there were coup d’etats every six months — it was quite fragile," she says of the war-torn kingdom which established peace just six years ago.

Now she says she would not dream of relocating back to Paris, although she travels back four times a year to showcase her vibrantly-coloured, feminine collections, which sell there for up to three times their local price.

"It’s much easier here. In Paris, everything is difficult. You run everywhere, you spend half of your day in the car because of the traffic, it’s very frustrating — and of course, it’s very expensive," she says.

Sylvain Lim, a Cambodian who also studied fashion in Paris in the 1970s, returned home in 2000 after three decades abroad as a successful designer to contribute to his country’s gradual rebuilding.

With his son, he opened a showroom in February, and his androgynous and sophisticated pieces are being snapped up by a clientele of young high-society Cambodians and expatriates.

"I had everything in France — success, wealth. So I thought I would go back home, keep my profession and try to do something in a new way, get inspiration from Cambodian traditions," he says.

Lim enjoys working with Cambodian silk but finds the variable quality of the fabric he obtains from manufacturers one of his toughest challenges, a common refrain among the designers.

But he revels in the exquisite handiwork he can now include in his designs.

"Look at this, it’s handmade," he exclaims, pointing to detailed stitching on a dress made of Italian wool. "In France, you could not do this."

A combination of passion for Cambodia and its affordable labour led Frenchwoman Nathalie Parize, a former office worker, to move here last year and open a casual clothing boutique with her business partner last month.

Parize has no design background and says she would not have attempted such a bold undertaking in Paris.

"This is something I wanted to do but with no previous experience, I would not have dared to invest. There it’s so complicated, here it’s very easy," she says, adding that in particular contract work is simpler to commission here.

Cambodia offers great opportunities for expatriate designers willing to commit a substantial period of time here, argues Australian Cassie McMillan, a resident for nine years who designs clothes and homewares for her own boutique.

"I do recommend it, because I think it’s possible to set up a business without having to stake your whole life savings or making yourself bankrupt for the next 20 years," she says, noting that a sample costing around 15 dollars here could cost up to 200 dollars in Australia.

Significant challenges have to be tackled, however, such as a war-time legacy of a largly unskilled pool of workers, meaning entrepreneurs need to be prepared to invest in training employees themselves, she says.

McMillan, who had her own lingerie and sleepwear label in Australia, is creatively inspired by her travels in Asia but in particular by Cambodia.

"The majority of everything I do has a Cambodian element in it. Even if it’s a jewellery roll, there’ll be a little bit of Cambodian silk in there," she says, adding that she’s also a fan of Cambodian organza, which has become widely available in recent years.

As for Cambodia’s notoriously difficult political climate — the country is without a government more than nine months after elections — McMillan, who once shut up shop for months during a period of unrest, is sanguine.

"Everyone is just over it. They just want to get on with it and eventually hope that the government will sort itself out."

Ill-prepared Cambodia grapples with mounting drug crisis

Slumped across a bag of rubbish near a busy Phnom Penh market as he awaits his first heroin hit of the day, Yim is one of a soaring number of drug addicts in Cambodia.

He is the human face of a crisis threatening to unwind development progress in this war-scarred society.

Wearing a long-sleeved shirt covering his trackmarked arms, long pants and plastic thongs encrusted with dirt, the 23-year-old street dweller says he began injecting the drug three years ago with friends.

"It made me feel good and sleepy. Now I want to stop but it’s difficult. I’m not patient enough," he said.

For now he endures his habit, scavenging to earn the five-dollar price tag of three or four hits per day, or stealing when the opportunity arises.

A doctor and counsellor from non-government organisation Mith Samlanh (Friends), the only agency in Cambodia running a comprehensive drug programme, check on his health and chat with him and a dozen other children hanging around.

Because of the group’s intensive harm reduction efforts, Yim has stopped sharing needles and knows how to safely inject. Remarkably, he reveals trackmarks that show no sign of infection.

Addicts like Yim were non-existent in Cambodia just a few years ago, with substance use largely limited to older men smoking marijuana or opium, said Friends technical assistant David Harding.

But in 1998, when decades of war here finally ended, solvent abuse first emerged. A year later Friends began annual surveys of the street-living population which have shown evidence of "skyrocketing" drug use, Harding said.

Methamphetamines, mostly originating from Myanmar but now produced locally as well, overtook glue as the drug of choice last year.

Heroin, also trafficked in from Myanmar, arrived three years ago and is growing in popularity among the estimated 25,000 street-children in Phnom Penh.

An increasing number of middle and upper-class children are moving onto the streets due to their drug habits, with some becoming gangsters and using their well-connected families to protect them from prosecution.

According to Friends’ 2003 survey, 70.4 percent of the street-living population were regular drug users, around 15 percent of whom are injecting, mostly heroin.

"What effectively you’re talking about is zero to a pandemic in seven years," Harding said, adding that addiction patterns were also highly accelerated compared to the west due to the ease of procuring the drugs and a near complete lack of education on their dangers.

"You’re seeing 14-year-old kids who have been using heroin for two years injecting six or seven times a day who don’t have any veins left apart from their groin. You don’t see that chaotic process in most other countries," he said.

Of particular threat is the spread of HIV-AIDS.

"We have the establishing of injecting drug use, we have a very well-developed sex industry here and we have the highest prevalence of HIV infection in the world outside of Africa," Harding said.

"The combination of those three factors could be disastrous."

The reason for the explosion in drug usage are complex, but one major explanation is simply boredom: As aid-dependent Cambodia struggles to rebuild its infrastructure, spending on services for young people is non-existent.

Playing computer games or snooker, gambling, going to a brothel or taking drugs are the main options, Harding said.

"And really, taking drugs is the most cost effective. It’s very cheap and it’s becoming cheaper all the time."

Cambodia’s health system is unprepared for the crisis, meaning families of addicts have nowhere to go to seek help, said the UN drug agency’s Graham Shaw.

"If you are a destitute young person there are one or two NGOs you may be able to get assistance from.

"If you have a family with a lot of money, there is one private treatment and rehab clinic. But for all those in between, the vast majority, there is nothing," he said.

The government, which signed a contract with Friends for it to provide support for new projects in two provinces last month, is at last recognising the gravity of the issue but donors need to step up to the plate, noted Shaw.

"We would like to see the international donor community recognise the severe threat of drug abuse to social and economic development," he said, noting the billions of dollars they have poured into Cambodia in recent years.

"All of that development is going to be undermined and destroyed if the country does not get to grips with the drug problem."