Bounceback for Cambodia’s textiles but sparkling labour image not enough

PHNOM PENH – Cambodia’s crucial garment sector has bounced back after the end of a global quota system saw orders dip due to competition from China, but experts warn the industry’s socially responsible image will not ensure its long-term survival.

The 1.9-billion-dollar sector, which provides the destitute kingdom with more than 80 percent of its export earnings and employed 270,000 workers at the end of 2004, feared the fallout from the end of the quota system in January.

Under the 30-year-old multi-fibre arrangement (MFA), Cambodia was given special access to the US market through a 1999 trade deal that granted quotas in return for improved labour conditions monitored by the UN’s labour agency.

The arrangement was hailed by international buyers, such as US company Gap Inc., which helped local manufacturers to mould an image of themselves as responsible corporate citizens who eschewed sweatshop labour.

With the end of the system, the industry hoped its labour-friendly image would help it stand the onslaught of competition from Asian giants China and India, but sector employment spiralled about 10 percent lower to less than 250,000.

"In the first four or five months, orders shifted to China because they were able to export freely," said Ken Loo, secretary general of the Garment Manufacturers Association of Cambodia.

In May, the United States, which buys more than three-quarters of Cambodia’s exports, invoked safeguards contained in China’s WTO accession agreement, which allowed it to impose quotas on seven types of textiles from China.

The European Union, which purchases most of the rest of Cambodia’s production, took similar action in June.

"Now that the safeguards have been reimposed, orders are slowly coming back to Cambodia," Loo said.

Employment is back up to about 268,000 and of the more than 200 factories in the kingdom, 25 have closed but 24 new ones opened.

The International Labour Organisation’s Better Factories Cambodia Project continues to carry out independent monitoring — factories must agree to be monitored to get an export licence — in a bid to help the industry survive.

"What we’re increasingly doing is looking at how do we provide industry, both unions and employers, with support services to help them improve working conditions," Ros Harvey, chief technical adviser to the project, told AFP.

Improved conditions — which growing evidence suggests helps to also improve productivity and quality and therefore bottom lines — are however just one of a slew of issues Cambodia needs to work on to remain competitive.

"Labour standards are obviously a component but other pressing issues to deal with include things like trade facilitation, business environment, backward linkages, improving productivity and improving quality," she said.

"Improving labour standards contributes to the industry strategy but it needs to be part of a holistic policy response."

GMAC’s Loo described the project as "important" but not enough on its own to lure extremely price-sensitive manufacturers to the kingdom, arguing rampant corruption must be reined in.

"I wouldn’t say we’re upbeat but I think the industry will still be around for the next couple of years because of the safeguards," Loo said.

"But we see certain difficulties along the way, (such as) the reduction in the cost of doing business in Cambodia not going down as quickly as we had hoped. In fact, in certain areas it’s gone up."

GMAC is up in arms over government plans to implement outbound scanning of all containers by a private company which will add up to three million dollars a year to the industry’s costs — or 100,000 dollars a year for a big factory.

"A factory in Cambodia would be good if it can make a couple hundred thousand dollars. So taking 100,000 dollars for scanning would erode what, 20, 30 or 40 percent of its profits?"

GMAC is negotiating with the company to lower the price.

Cambodian unions said their conditions have worsened this year with the government cracking down more harshly on strikes. They estimate 47,000 workers have lost jobs without receiving compensation.

Chea Mony, president of the prominent Free Trade Union of Workers of the Kingdom of Cambodia, supports the monitoring system but said buyers should be more proactive in improving conditions.

"The ILO can report but not enforce, and the ministries are corrupt. To help the labour law in practice, the buyers should work closely with the unions," said the unionist.

The ILO’s Harvey said the industry was undergoing a structural adjustment.

"I don’t think we should gloss over that — there is a genuine structural adjustment happening in the industry that is hurting people," she said.

Sok Siphana, who attributed the bounceback in employment primarily to the safeguard measures kicking in, said they had bought Cambodia time to reform.

"We have until the end of 2007 for the end of the US and EU safeguards, meaning that we have two and a half years’ more breathing space. We have to work on costs," he said.

But he described Cambodia’s labour-friendly image as the top ace up its sleeve.

"It will put us one step ahead of the game. The safeguards are of benefit to everyone across the world producing, but here we are one step ahead of the game."

Best lightly fried, Cambodians can’t get enough crickets

PHUM THUN MONG, Cambodia – By day, the expanse of emerald rice fields look like ordinary, peaceful paddies. But when dusk falls, sheets of plastic unfurl from bamboo frames, electric blue neon tubes flicker on, and hordes of Cambodian crickets are lured to untimely, watery deaths.

The humble chirping cricket became a part of Cambodians diet during the famine years of the Khmer Rouge in the 1970s and has remained a part of Cambodia’s cuisine since.

But this year, huge numbers of Cambodians in central Kampong Thom province have jumped in on the business as demand has spiked, leading to innovative ways of catching the critters and sparking interest from the agricultural ministry.

Roadside at the village of Thun Mong, 40-year-old Soun Sang smokes a cigarette in the violet light cast by some of his lamps, awaiting the night’s haul with some trepidation as an unusual drizzle sets in.

"Some nights only a few come, so it’s really not reliable. But when there are a lot, there might be 3,000 kilograms (6,600 pounds) collected in this area," he says, gesturing to the horizon, where blue lights zig zag as far as the eye can see.

Like many in this village, Soun Sang started catching crickets this year when he noticed his neighbours setting up newfangled traps and doing well. They earn 2,000 to 5,000 riel (50 cents to 1.25 dollars) per kilogram.

The traps devised only a season or two ago consist of a rectangular bamboo frame hung with a sheet of plastic, topped by a blue fluorescent tube to attrack the insects powered by a car battery or diesel generator. A pond is dug to catch the crickets after they hit the plastic and hurtle to the ground.

They seem simple but still cost about 170,000 riel to put together, a serious investment in impoverished Cambodia, where more than a third of the population gets by on under a dollar a day.

Soun Sang recalls how he began eating crickets in desperation during the 1975-79 ultra-Maoist Khmer Rouge regime, which oversaw the deaths of up to two million Cambodians, many from starvation.

"We started eating them during Pol Pot’s regime, but back then we caught the crickets by digging holes. We didn’t have these lamps," he says.

"We had to play hide and seek (to avoid capture and punishment) and at that time we toasted them over a fire. Now we can fry them up in oil and they have a better taste. And now I’m not worried at all about being caught."

The former medical officer, who treated government soldiers fighting Khmer Rouge guerillas in the 1980s as the conflict rumbled on, lost an arm and several fingers when he stepped on a landmine in 1988.

Today he keeps cows and draws a 100,000 riel per month pension.

"If the crickets come, I can make a really good profit. Some nights I collect up to 30 kilograms," the father-of-two says.

While the crickets have come for years, Soun Sang says middlemen seeking to buy them turned up only recently. He grumbles that they have the edge, with mobile phones to call each other and estimate the night’s haul before setting a price.

"We don’t have telephones so sometimes they cheat us and say a lot came elsewhere so we don’t get a good price," he complains.

A few kilometres away, middleman and catcher Nong Sovann has 42 lamps ringing his rice paddies like sapphire necklaces. This is his second year in the business and he says demand is skyrocketing.

"This year is much better than last year," he says, estimating that he netted a tonne a day last month. "If we collect a tonne, then we go to the Thai border."

At Arunras Restaurant — considered the best in Kampong Thom city — manager Nari, who declines to give her surname, demonstrates how to consume them, selecting from a tray of crickets fried with green onions, garlic and salt.

She sells about 20 kilograms a day but first offered the insects, until recently seen as unsophisticated street food in Cambodia, only a month ago as her customers started demanding them.

The 45-year-old’s ruby-polished nails pluck a dewinged and gutted carcass off the pile and she snaps off and discards two thick hind legs before biting into the head with a crunch. A plate of about 50 costs 5,000 riel.

"People eat them with beer or just about anything at all. This morning someone ordered them for the first time with rice on the side," she says, popping the rest of the insect into her lipsticked mouth.

Ou Bossphoan, director of the provincial department of agriculture, takes the upsurge in demand seriously, and says the seasons seem to run roughly from May to July and December to January but are not fully predictable.

"People need extra income and this provides Kampong Thom people with a new income," he says in his office, a stone’s throw from the market where sellers are now offloading last night’s disappointing haul.

"Our experts are going to study whether this mass catching will affect the numbers" of crickets in the wild, he says.

He says that generators to power large numbers of lamps have been used for the first time this year and that the ministry of agriculture has asked his department to investigate the source of the crickets. Even farming is an idea being tossed around, but he fears the market prefers "wild" crickets.

Numbers are difficult to estimate, but Ou Bossphoan believes about half of the insects not eaten in Kampong Thom end up in Phnom Penh, half in Thailand.

The crickets also flock to neighbouring Kampong Cham and Siem Reap provinces, but in smaller numbers, and people say the Kampong Thom crickets are the most delicious, he claims.

And the senior official confirms the cricket obsession is going upmarket.

"Our officials here in the past were not interested in crickets but this year, we are eating a lot. When I go to a restaurant, I too order crickets."

Cambodia’s great asset swap angers many, leaves government on the fringe

PHNOM PENH – As bulldozers slam down huge trees outside, Tann Sinthou brandishes a meticulously highlighted copy of Cambodia’s land law, hoping it will save her home, the latest public asset to go under the hammer in a slew of government land swaps.

"This land is state land," the defiant 54-year-old cries from her veranda at Cambodia’s fine arts university campus, where some of 28 families yet to leave after receiving an order to vacate in March have gathered.

"This is the land law, and the land law states that public schools and land cannot be sold unless the land cannot be used," the philosophy lecturer says.

But the campus has already been handed to a private company in just one particularly high-profile swap in Cambodia, where land prices are clawing upwards and legal changes that will make such deals more difficult loom.

The private sector has already received an estimated 100 properties — some historical and already demolished — in the past year from ministries seeking to line their own coffers, activists claim.

Buildings such as prisons, hospitals and ordinary offices have all been swapped or are in the process of changing hands.

"They say the government does not have the money to pay for a new building and there are companies who are willing to take the old property and replace it at a different location," opposition member of parliament Son Chhay charges.

But he says companies are receiving prime real estate in return for marginal properties on the outskirts of the city, adding that "it doesn’t make sense".

"Why don’t you auction the land, get the money and use the money to purchase another place, and have another bidding process to construct the new building?"

The vocal critic of the swaps alleges that ingrained corruption means money from the sale of assets — or the profits — never reaches the kingdom’s almost-empty coffers.

"Where is it going? They are pocketing it most of the time," he says, claiming the Finance Ministry ignores what’s going on when high-ranking officials approve the swaps.

Even lakes in the low-lying capital are being filled in and sold off, the lawmaker alleges, leaving those who used to collect wild plants and flowers from them without an income.

"It’s become a competition," Son Chhay says.

The rush to swap comes ahead of the expected passage of a law this year that will demand more transparency in such transactions, which was demanded by international donors during their annual meeting last December.

"If this subdecree is passed, they will have no chance to keep carrying out this corruption," says Vann Sin, a program officer with Oxfam Great Britain who closely monitors land issues.

Prime Minister Hun Sen acted last month to stem the flurry of swaps by passing a low-level order to halt them, but Vann Sin says it is too little too late.

"A few months after they have sold off the buildings, they issue it!" he exclaims, adding that he doubts the swaps will actually stop. "They’re smart. Even if they sell now, they’ll date the transactions back further. It’s not finished."

Koul Panha from election monitoring group COMFREL estimates that about 100 buildings, small and large, have been swapped since Hun Sen began his third government mandate in July 2004.

The figure is "not well recorded and that’s the problem — it’s our observation. You can go to the Ministry of Finance and ask them, do you have this number? They say no, we don’t have it," he says.

Government spokesman Khieu Kanharith insists the deals are transparent and legal.

"Every country does this, but it is important that the exchange is transparent," he says, adding that critics "should look at the law before they comment".

He says the swaps are part of a deliberate plan to shift government services to the perimeter of the city, home to 1.2 million people, to relieve increasing congestion.

Such decentralisation is making it tougher for ordinary Cambodians to access services, Koul Panha argues. The new fine arts university, for instance, is about a 45-minute drive from its current location.

"Some places are on the outskirts in this corner, other places are on the outskirts in another corner. So they are not organised. It’s very confused, there’s no masterplan at all."

History is also being lost. A notorious colonial-era prison known as T3 has been shifted far outside the capital — making it difficult for prisoners’ families to reach — while the original has been demolished.

"I am very much concerned about the historical side. If I was in the government, I would have kept it as a museum … For the future, there’s no information about T3 prison."

At the university of fine arts, Tann Sinthou’s community wins a temporary reprieve from the bulldozers as the company agrees to continue negotiations. She wants to keep a quarter of the land for the community to rebuild.

"Does the government care about the hearts of people who love arts? We are preserving the soul of Cambodia. If they kill us, they kill the soul of Cambodia," she says.

Cambodia’s first soya milk factory eyes nourishing nation’s children

PHNOM PENH – Taking a break from her job of sifting through sacks of soya beans, Cambodian Chea Bunna sighs as she remembers foraging for frogs and crabs in rice paddies to fill her family’s stomach. Now she supports them by working in the kingdom’s first long-life soya milk factory.

The 59-year-old with cataract-clouded eyes is among 52 employees at the plant in the capital. Many lived in shelters or homes run by a Swiss-based charity, Hagar, before it turned its hand to business and provided them jobs.

"I have saved some money, so my life is getting better. I rent a house and my children go to school," says Chea Bunna, using a pseudonym.

Chea Bunna did not make it past first grade, survived the horror of Pol Pot’s killing fields and now has her three children and two grandchildren living with her. It was women like her that Pierre Tami had in mind when he set up Hagar Soya, originally a micro-enterprise producing fresh soy milk, in 1998.

Today the company is spearheading a drive to get a fortified version into the hands of malnourished schoolchildren and is also set to diversify into other beverages by the end of the year.

The micro-enterprise started out selling about 500 litres a day of soya milk and tofu locally, giving dozens of poverty-stricken women work and a newfound purpose. But Tami, Hagar’s executive director, thought they could go further.

He wanted to provide Cambodian children — who suffer among the highest malnutrition rates in Southeast Asia — with a healthy drink that would encourage them to attend school.

"When the idea came to actually being able to put fortified soya milk in the hands of every child in rural areas, I was told: ‘You’ve got to have proper packaging … otherwise how would we ever get your milk out to the provinces?’"

That meant a serious transformation — including a 1.3-million-dollar investment — with assistance and financial help from the World Bank’s Mekong Private Sector Development Facility among an array of backers.

"When you insist on a high-quality product and high-quality management, top governance and transparency, then knowing the context of Cambodia, you are bound to find a lot of obstacles," Tami says of the war-torn nation, where peace arrived only in 1998 after nearly three decades of conflict.

"It’s been like taking a rough ride on an oxen cart from here to the provinces where basically the road is filled with big potholes and big stones and it takes a lot of effort to remove those stones."

The stones have represented everything from the kingdom’s notorious corruption to its low skill base and a complete lack of home-grown materials, barring the soya beans themselves which are bought from local farmers.

"Everything is imported — sugar has to be imported, the packaging, and of course all of the machinery was imported," says Tami, adding that tradesmen even had to be brought from Vietnam to do welding.

In 2003, the company was fully commercialised and it now has a daily production capacity of 12,000 litres (more than 3,000 US gallons). Employees earn 70 to 110 dollars a month, a decent salary in a country where average annual per capita income is just 290 dollars.

"People are usually impressed by the machinery — it’s state-of-the-art technology — but actually we should be very impressed that former street women, former street kids and abused women in brothels are running that machinery right now," Tami says.

The model for Hagar Soya has the thumbs up from commerce secretary of state Sok Siphana, who argues it provides an example for hundreds of non-government organisations here to generate employment producing top-notch products.

Cambodia’s youthful population of 13 million faces a bleak employment future, with about 250,000 new entrants to hit the labour market each year over the next decade and only two sizeable sectors: garments and tourism.

"They have been able to make a product that is internationally competitive. I cannot say that about many other Cambodian products, which are struggling not to produce, but to be up to international standards," Siphana says.

"It’s not enough to have a product, it’s not enough to just develop your raw, natural resources."

Hagar Soya’s flagship product So! Soya is now supplied to more than 500 wholesalers and retailers while eight new beverages — being kept under wraps for now — are slated to hit shelves later this year.

And, finally, a fortified milk for children has been developed.

Hagar donated 5,000 cartons to a rural school last month while a pilot program for 50,000 schoolchildren to regularly receive milk is on the drawing board. An ultimate dream of supplying two million children waits to be fulfilled.

The concept has the backing of workers such as Chea Bunna.

"It’s a very good idea because it could help the poor," she says. Plus, she confesses, she loves the drink herself: "I drink the soy milk a lot so I’m getting fat. In the past — I used to be so thin!"