Cambodia’s garment and footwear exports are expected to see a slower growth of around 5 per cent this year compared to 7 per cent in 2016. But the trend is a normal market occurrence and does not indicate an overall decline or is linked to the political situation, say industry experts. Twenty five new factories opened this year in Cambodia, while 53 shut up shop.

As the base number gets bigger, the same rate of percentage growth cannot be maintained forever, Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia (GMAC) told the recent annual Cambodia Textile Summit, according to a newspaper report.

Urging the government to help reduce the cost of doing business, Loo said the increase in the minimum monthly wage from $153 to $170 from January 1 would make Cambodia gradually lose its competitive advantage as a low-cost destination. Manufacturers will soon need to increase productivity to remain competitive in the industry, he added.

The latest economic outlook released by the International Monetary Fund also predicted a slower growth for the country’s garment sector owing to increased competition from neighbouring countries. However, preferential US trade access for specific travel-related items could help prop up the sector in the near term, IMF said.

The minimum wage hike would surely jeopardise the sector if worker productivity does not increase, said Enjoy Ho, president of the textile enterprise association at the Chinese Chamber of Commerce in Cambodia.