Cambodia year-end review 2024: Making its presence felt
Cambodia year-end review 2024: Making its presence felt
Cambodia’s economy grew 5.6 per cent in 2023 and is projected to rise to 5.8 per cent in 2024, driven by garment, footwear, and tourism exports.
In June, the World Bank admired Cambodia’s economic activity, which peaked in the first quarter of 2024, driven by a revival of services and goods exports despite subdued domestic demand.
The country’s economic growth has been 5.6 per cent in 2023, which is expected to improve marginally to 5.8 per cent in 2024, strengthen to 6.1 per cent in 2025 and reach 6.4 per cent in 2026. The projections are based on a revival in garment, travel goods, footwear exports, and tourism expected to propel the ongoing recovery.
While the international tourist arrivals improved in the first quarter to 84 per cent of pre-pandemic levels, the exports of garments, travel goods, and footwear rebounded with ASEAN (Association of Southeast Asian Nations) region emerging as Cambodia’s second largest export market after the US.
Rising foreign investment in manufacturing and agriculture also contributed to the recovery. Inflation also declined to zero in March with deceleration in food prices.
Later in October, IMF (International Monetary Fund) projected economic growth in 2024 at 5.5 per cent. However, the growth drivers – strong rebound in garment and tourism as also observed by the World Bank, remained common in both projections. The inflation projection is around 1.5 per cent prior to an expected convergence to the long-term trend of 3 per cent. In the first half, the inflation moderated to an average of 1.6 per cent, y-o-y. IMF recommended structural reforms to diversify growth drivers and improve productivity.
January-September trade
The international sales (exports) of various articles of apparel and clothing accessories – both knitted and non-knitted, footwear gaiters, leather and fur goods, as well as some processed textiles, reached $966.98 million in the month of January, accounting for 49.16 per cent of Cambodia’s total export value of $1,967 million. This was 21.64 per cent up from January 2023 and attributed to the global recovery towards the end of 2023, a decrease in the stock levels of textile products at overseas companies, and revitalisation of global tourism, which boosted the demand for GFT products in key markets of the US, EU, Japan, Canada and the UK.
By February end, Cambodia cumulatively exported more than $1.6 billion worth of textile products to international markets, surging by nearly a quarter compared to the same period in 2023. The increase in exports was also due to an increase in shipments to member countries of the Regional Comprehensive Economic Partnership (RCEP).
Between January and May 2024, Cambodia exported $4.969 billion worth of garments, footwear and travel goods (GFT), growing by 20% y-o-y. In this, combined exports of apparel and textiles accounted for $3.628 billion, rising 22 per cent y-o-y. The positive trend marked a turnaround after 18 months of continuous decline. The GFT sector comprises around 1,680 factories and branches, employing nearly 918,000 workers, mostly female.
Export of footwear was worth $615 million—up by 10 per cent YoY, while the figure for travel goods was $726 million—up by 18.8 per cent y-o-y.
During the five-month period, the country’s total trade volume increased 12.5 per cent over $19.2 billion during the same period last year.
Combining all three quarters from January to September, Cambodia exported textile products, encompassing knitted articles of apparel and clothing accessories (HS Code 61), non-knitted articles (Code 62), other textiles (Code 63), and footwear and gaiters (Code 64), worth $8.758 billion which reflected a 24.51 per cent increase over $7.034 billion (2023). This represented 44.16 per cent of the country’s total export revenue of $19.833 billion.
Code 61 products generated revenue of $5.034 billion (up 21.5 per cent), Code 62 amounted to $2.353 billion (up 31.9 per cent), Code 63 accounted for $155.69 million (up 37.7 per cent), and Code 64 brought in $1.214 billion (up 22.4 per cent).
The growth in exports over 2023 was largely attributed to Cambodia’s political stability within ASEAN, especially in comparison to Bangladesh and Myanmar.
The country’s favourable investment laws, the efficiency of its workers and the availability of skilled labour, the quality and quantity of production, improved transportation infrastructure, and a growing number of international buyers were other major growth drivers. The country also attracted many foreign financiers who are currently investing in textile manufacturing.
In terms of country (not region), Canada remained the fourth largest market, after the top three of the US, Japan and Spain, for Cambodian apparel exports during the first six months of 2024. Cambodia’s total apparel exports totalled $5.548 billion, and Canada accounted for 8.29 per cent of the total.
During the period, Canada was supplied with apparel worth $452.916 million, with trousers and shorts having the largest share of 36.06 per cent and valued at $163.392 million. Among other apparel categories, jerseys, valued at $74.217 million, had a 16.39 per cent share in total apparel exports; T-shirts amounted to $38.560 million, contributing 8.51 per cent; shirts were worth $31.012 million, had a 6.85 per cent share; and coats, valued at $20.969 million, contributed 4.63 per cent share.
EU-switch garment project
The four-year tenure of the EU-Switch Garment Project, which promoted sustainable energy practices in the Cambodian garment sector, ended in May. The European Union SWITCH-Asia Grants Programme funded the project. It jointly implemented by the Global Green Growth Institute (GGGI), TAFTAC (Textile, Apparel, Footwear & Travel Goods Association), and Geres in partnership with the MoE (Ministry of Environment) and MISTI (Ministry of Industry, Science, Technology & Innovation).
The event was attended by over 100 participants and featured the project’s detailed achievements, and networking opportunities to discuss the future of sustainable garment production in Cambodia.
The EU-Switch Garment project aimed to improve the environmental sustainability of the country’s garment industries by offering technical assistance in the form of energy audits, capacity building, technical guidelines, and improved financing access. During the tenure, the Model Green Factory Program—a voluntary tool to become a greener factory—was developed, acknowledged by MoE and MISTI, and adopted by TAFTAC for implementation. The project also contributed to bringing sector stakeholders together to enhance better access to finance.
The National Steering Committee held its first meeting on June 20, 2024 in Phnom Penh, chaired by the Permanent Secretary of State, MoE. At the meeting, the Committee members listed work streams for 2024-2025 and decided to focus on two priority work streams that are expected to have a significant impact on Cambodia’s green economic transaction efforts:
Enhancing the Government’s technical capacity in economic foresight and fiscal policy: This work stream would support policymakers in using data to make informed decisions and in systematically assessing the economic, social, and environmental impacts of fiscal and economic decisions.
Additionally, integrated planning, modelling, and sustainable budgeting would help the Cambodian Government optimise resources, attract new financing, and align with development priorities.
Promoting a circular economy with a focus on reducing single-use plastics and implementing the 4R principles within the garment industry: This work stream would aim to decarbonise the garment sector by reducing carbon emissions through technological innovation, aligning with the UNFCCC Fashion Charter principles. It focuses on reducing fabric waste, promoting circular fashion, and supporting the government’s target to reduce plastic use and promote the 4R principles as part of the Circular Strategy on Environment 2023-2028.
On the occasion, PAGE (Partnership for Action on Green Economy) also presented a summary brief, developed based on the last year’s policy scoping study conducted in collaboration with the Cambodian Development Resource Institute, outlining five priorities that serve as a roadmap for policymakers and stakeholders to identify the obstacles and opportunities for fostering a green economic transition in Cambodia.
Workshop on green initiatives
A workshop ‘Reporting on Human Rights Due Diligence (HREDD) and Sustainability Requirements for International Buyers’ was organised on September 19, 2024, by GOPA Consulting Group’s team leading the GIZ-funded project “Services to strengthen capacities for sustainable management in the textile sector” in association with TAFTAC. The workshop marked the end of the project.
Held in the headquarters of TAFTAC, the workshop lauded the efforts of 45 TAFTAC member factories for the successful completion of the Model Green Factory Program. The training at the workshop had three main objectives – environmental data management, energy efficiency, and job and data management, which are integral to international sustainability standards.
Minimum wages revised
The National Council on Minimum Wage (NCMW) – a tripartite body comprising equal representation of labour unions, employer’s associations, and the government, increased the minimum wage for the textile, garment, footwear and travel product industries for 2025, through Prakas 211 which will come into force with effect from January 1, 2025. The new minimum wages will be $208 pm (per month) and $206 pm for regular and probationary workers, respectively. Earlier wages were $204 pm and $202 pm.
Prakas 211 also outlined the minimum wage provisions for piece rate workers, who are compensated based on their level of output. These workers have the potential to earn more than the minimum wage if their production yields a higher pay rate. However, if their production results in earnings lower than the minimum wage, their pay is adjusted to meet the minimum wage threshold of $208 pm for regular workers or $206 pm for probationary workers.
In addition to the minimum wage, workers will also receive the attendance bonus of $10 pm; travel and accommodation expenses of $7 pm; meal allowances of $0.50 per day; and overtime and seniority bonus of $2 to $11 pm for those between their second to the eleventh year of work.
