Potential growth in the Japanese market

Potential growth in the Japanese market

The Japanese apparel market presents another opportunity for apparel export growth in Cambodia. As a result of the increasing cost in China, coupled with the Japanese exit strategy to reduce its high dependency on China, Cambodia is preparing itself for this golden opportunity.
Over the past year, Japanese business missions and individual buyers have been visiting Cambodia to explore further opportunities in sourcing more garments for the Japanese market. The demand for good quality products and flawless services by Japanese buyers naturally prompt manufacturers in Cambodia to perform far better than its current level. Figures at the end of 2010 suggest an almost 100% increase in exports to the Japanese market.
Cambodia has been good friends with Japan, which has provided largest official development assistance to Cambodia. In the garment industry in particular, the Japanese government through Japan Overseas Development Cooperation, assisted the Cambodian Garment Training Centre technically and financially for a period of 10 years from 1999-2009. Though with certain policy changes, the Japanese government represented by the Ministry of Economy, Trade and Industry is looking to resume such support and Cambodia is highly appreciative of this good gesture.

Cambodian Labour Situation
Over the last few years, the Cambodian labour situation has arrived at a point where mature industrial relations work to the benefit of the industry in which both employer and worker/employee work together in a more harmonious environment. Remarkably, the number of disputes has reduced year by year, as has the number of lost man-days and level of violence.
Cambodian employers and unions in the garment industry ended 2010 with a landmark agreement (Memorandum of Understanding) which was reached freely and in good faith. The MoU consists 9 points where most importantly both parties agree to fully adhere to the national labour law and support Collective Bargaining Agreement in order to achieve certainty and predictability; and to protect rights and terms and conditions of work for both parties where no strike or lock-out should be permitted and no further claims lodged by any party during the term of the CBA. Any dispute that arises during the term of the CBA will be settled in accordance with a shortened dispute procedure with binding arbitration on rights disputes. No strike shall take place over rights disputes.
The industry also welcomes the creation of the long-awaited trade union law, the draft of which has already undergone many rounds of consultation with all stakeholders and is scheduled to be enacted by the National Assembly by mid-2011. The law will help streamline union activities making sure they are operated in a professional fashion for the true benefits of workers.
While other countries have started to face problems of labour shortage, Cambodia seems to continue to enjoy an abundance of labour as around 250,000 young people enter the labour force every year. Yet the Cambodian economy remains undiversified. And while the Cambodian garment industry continues to be one of the only four driving forces of the country’s economic growth, the Cambodian government will continue to support this industry for a number of years to come.

Why invest in garment sector in Cambodia?
• Access to world markets (GSP and MFN by virtue of LDC status).
• High political stability.
• Macroeconomic stability.
• Pro-business government.
• Competitive investment incentive (Mini 3-year tax holiday).
• Low corporate tax.
• One-stop service investment promotion agency.
• Cheap and abundant labour force.
• No currency controls.
• Duty-Free import of raw materials.
• Good labour conditions.
• Low costs in training.

Text provided by GMAC
www.gmac-cambodia.org

Better Factories Cambodia... Better Factories Cambodia (BFC) aims to improve working conditions in Cambodia’s export garment factories. It combines independent monitoring with finding solutions, through suggestions to management, training, advice and information. BFC's garment industry update 2009 (PDF 122Kb) Publication date: 01 Sep 2009 Better Factories Cambodia brochure (PDF 1092Kb) Publication date: 08 Jul 2009 Better Factories Cambodia #9, St 322, Beng Keng Kang 1 Phnom Penh, Cambodia Tel: (855-23) 212-847 Fax: (855-23) 212-903 Email: betterfactories@ilo.org www.betterfactories.org