dependent on foreign aid, Cambodia is among the poorest of the poor in
Southeast Asia. But with workers in China, Thailand and Vietnam,
demanding and obtaining heftier paychecks, Cambodians are getting a
residual lift. Rising wages, labour unrest, as well as currency
instability and political turmoil in some cases, elsewhere in the
region's traditional manufacturing centers are improving the prospects
of Cambodia, an industrial minnow.
The country's garment exports have soared in the past year, increasing
by nearly 40 per cent, according to the government. Independent
observers might put the figure lower, but they would agree with Ken
Loo, the secretary general of the Garment Manufacturers Association of
Cambodia, when he points to rising wages and work stoppages in China
as one of the main causes of Cambodia's increased share of the market.
It's an important boost in a sector that has been Cambodia's main
engine of growth since the late 1990s, when the country stabilized
after years of debilitating civil strife. The garment and footwear
industry employs some 400,000 people in this country of just over 14
million (the Gap, H&M and Nike are among the major brands that have
suppliers in Cambodia) and account for more than two-thirds of
Cambodia's exports.
But the spillover effects of higher labour costs in China and
elsewhere aren't limited to the textiles sector. Slowly but surely,
Cambodia's industrial horizons are expanding as well, with Japanese
companies leading the charge. Minebea, a Tokyo-based producer of micro
motors, for example, started operations in Cambodia at the end of last
year. The Japanese company began outsourcing manufacturing to Thailand
25 years ago, where it has grown to employ over 30,000 workers.
Because of rising wages there, it's now assembling some of its
products in a special economic zone in Phnom Penh, Cambodia's capital.
Other manufacturers—making headphones and wetsuits, among other
products—have opened plants there too, lifting the sophistication of
the Cambodian manufacturing sector above T-shirts and sneakers.
"It's unrealistic to say Cambodia is adding huge value-added chains,"
said Peter Brimble, chief economist of the Asian Development Bank in
Cambodia. But growing hurdles in Asia's main production centers are
"enough to tip the scales" to attract investor interest in Cambodia.
Gordon Peters, an investment adviser with Emerging Markets Consulting,
which operates in Southeast Asia, said the number of international
companies contacting his consulting firm about business scoping
opportunities in Cambodia has grown exponentially this year. More
investors are looking at Cambodia as an attractive "long-term bet,"
one with limited dividends now but high-growth prospects in the near
future, he said.
Observers often criticize the heavy-handed influence of Beijing on
Cambodia. But if rising wages in the regional powerhouse can lift
business and employment prospects in Cambodia, this is a spell under
China's shadow that the Southeast Asian country is likely to enjoy.
http://www2.macleans.ca/2011/11/22/cambodia-enjoying-chinas-long-shadow/
Cambodia: enjoying China's long shadow
Brendan Brady
November 22, 2011
