ILO: footwear ‘increasingly more important’ to economy

  • Thmey Thmey
  • August 14, 2019 11:02 AM

‘Workers and managers in Cambodia seem confident in the footwear sector’s future profits and orders,’ UN agency says

PHNOM PENH--Footwear is gaining significance in the Cambodian economy as garments become relatively less important, the International Labor Organization says.

In a sectoral bulletin released Wednesday, the ILO’s Better Factories Cambodia program said footwear's share of garment, textile and footwear exports grew 4.4 percentage points between 2013 and 2018.

The garment sector’s share fell by almost 10 percentage points in the same period, it said.

Cambodia among top ten producers

"Cambodia joined the top 10 producing countries for footwear for the first time in 2016,” the bulletin said. It added that the country's share of the global market rose from 0.4 percent that year to 0.6 percent in 2017.

In 2017, the top 10 producers made 62 percent of footwear. "In terms of export value growth Turkey and Cambodia have seen the strongest growth rates,” the report said.

While Cambodian footwear exports grew 19 percent from a year earlier to $1.04 billion in 2018, the report noted that growth was slower compared to previous years.

“However, this is not uncommon given the rapid growth in earlier years,” it said. 

Leading export markets in 2016 were the EU (46 percent) — mainly the UK, Germany and France — followed by the US (17 percent) and Japan (12 percent).

83 factories

The report said Cambodia had 83 “effectively operating” footwear factories last year, six more than in 2017. 

"The number of footwear factories in Cambodia has increased steadily since 2003, with the majority of factories located in Phnom Penh (25), Kampong Speu (18), and Kandal (11) provinces,” it said.

“Eight footwear factories are owned by Cambodian investors. The other 75 factories are mainly owned by investors from China and Taiwan … The ten largest factories with up to 7,112 workers are owned by investors from Cambodia and Taiwan.” 

More stable than garments

In ILO interviews with selected factories, “the majority of management and workers stated that they feel less competition among footwear factories and have more stable orders than the garment sector.”

At the same time, lead times “seemed to be adequate and seemed more negotiable” than in the garment sector.

“Overall,” the report concluded, "the footwear sector has become increasingly more important in Cambodia.”

The EU and the US will remain “very important” export markets for Cambodia due to current tariff exemptions.

“And based on interviews, workers and managers in Cambodia seem confident in the footwear sector’s future profits and orders.”

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