The Ministry of Economy and Finance has officially launched the “Cambodia Garment, Footwear and Travel Goods [GTF] Sector Development Strategy 2022-2027”, with which it hopes to set common development goals, establish independence and develop the sustainability and inclusiveness of the sector.
At the meeting introducing and formally implementing the strategy, finance ministry secretary of state Phan Phalla said that the overarching vision for this strategy was to “develop the GTF sector in Cambodia to become environmentally sustainable, resilient, focused on high-value products, unique and highly competitive, as well as a basis to support economic diversification in Cambodia by 2027”.
The ministry will launch five strategic measures to achieve the vision, he said. This includes further strengthening human resource capabilities to increase productivity and create viable career paths for workers, continuing to improve working conditions and worker welfare, improving domestic and foreign investment with a focus on being high value-added and on high-end products, and promote market diversification in sector exports.
Minister of Commerce Pan Sorasak said that this strategy will contribute significantly to the economic recovery of the Kingdom and complements the “new normal” economic recovery strategy being implemented in the 2021-2023 period.
“The Ministry [of Commerce] is ready to work together to implement this strategy effectively to spur domestic investment and enhance the GTF sector in Cambodia, which will enable it to add more value in the regional price chain,” he said.
Minister of Labour and Vocational Training Ith Sam Heng said that this policy document will be a roadmap in “defining a common vision, objectives, goals and strategic plans to manage and strengthen this sector in a ‘Cambodian context’”.
“This strategy will enable Cambodia to seize opportunities as well as respond to the rapid changes in regional and global architecture, aiming to transform the sector into an industry that is environmentally sustainable, resilient and high value-added,” he said.
Minister of Economy and Finance Aun Pornmoniroth noted that this is the first strategy that “spurs the growth of the garment sector both in the short and medium-to-long term”.
During that period, “the garment sector will continue to be a potential economic mainstay by expanding and strengthening local industrial bases for exports, and improve on the regional and global value chain”, he said.
Garment Manufacturers Association in Cambodia (GMAC) chairman Kong Sang said that improving trade facilitation through international trade channels and reducing logistics costs are “indispensable factors” with which business costs could be reduced.
Cambodia’s logistic cost is higher than many countries in the region, according to Sang.
Logistics costs are divided into trucking and clearance costs, the latter of which consists of often exorbitant and untraceable fees, including payment to the shipping company, the port as well as an official customs fee.
“While trucking costs are mostly affordable and acceptable, the clearance cost fee is unmatched, and almost half of them do not have supporting invoices,” Sang said. “This is an important issue that needs to be addressed in the short-term action plan.”
He added that energy prices and the lack of use of renewable energy remain major challenges, with rates still high compared to other countries in the region.
The private sector has considered the option of using solar energy, but it still does not offer cost effectiveness due to the high capacity charge, and is not yet seen as an attractive option for companies in Cambodia.
“Having the development strategy documents and the implementation of this strategy is a good starting point, but for this strategy to be successful, it requires the willing participation of the relevant ministries and institutions in effective implementation under the inter-institutional mechanism led by the Economic and Financial Policy Committee,” Sang said.