Cambodia Aims Higher in Manufacturing Sector

[geovalin]

Daniel De Carteret

February 10, 2016 12:45 PM

PHNOM PENH—

After decades of solid growth driven by its garment industry, Cambodia is seeking to shift its economy into more sophisticated light manufacturing, such as electronics and auto-parts. Most of these manufacturers are Japanese and they are slowly coming online in Cambodia’s special economic zones, aiming to establish another hub in the regional supply chain.

Cambodia’s garment sector helped kick-start the country’s economy following decades of civil war and the atrocities of the Khmer Rouge.

Since the early 1990s, the industry has grown from about 1 percent of gross domestic product (GDP) to more than 10 per cent of GDP today. In 2015, Cambodia’s garment exports, shipped largely to the European Union and the United States, were valued at 5.7 billion, up by almost 7 percent on the previous year. Today, the industry employs more than 600,000 workers, mostly women, nationwide.

Along with agriculture and tourism, garment manufacturing has helped Cambodia’s economy to become one of the fastest growing in the region, averaging close to 7 percent yearly growth over the past 20 years.

But as impressive as it sounds, this economic expansion has come from a very low starting point. Although there has been a significant reduction in the poverty – in 2004 more than half the nation lived below the poverty line, by 2012 it was about 19 percent – much of the population sits just above that poverty line today, meaning Cambodians are vulnerable to economic slowdowns.

To maintain its growth momentum, the government is seeking to expand its manufacturing base, moving away from dependency on garments and aiming to attract more sophisticated manufacturers, like auto-parts and electronics producers, whose know-how leads to an upgrade in local skills and eventually higher wages.

“We have to have development of the industrial sector, meaning manufacturing,” said Mey Kalyan, a senior advisor to the government’s Supreme National Economic Council. “Meaning what ever sectors support the industries in Cambodia, because any country, you can not develop a country on agriculture and tourism alone.”

In order to draw these light-manufacturers the government is aiming to reduce notoriously high energy costs, strengthen the level of skills for those entering the workforce, and improve roads and ports so that Cambodia can play a larger role in a regional supply chain that supports auto-manufacturers, according to Kalyan.

“We have to connect with the production base in Thailand, which is mainly focused on auto, and other light-manufacturing,” he added.

read more: http://www.voanews.com/content/cambodia-aims-higher-in-manufacturing-sector/3184557.html