Introduction

In recent years, Cambodia’s emerging economy has established itself in the Asian market

  • Cambodia’s economy is highly reliant on a few sectors, including clothing, gems, and leather
  • In particular, the clothing industry has shown consistent growth over the past few years
  • During the first half of 2020, Cambodia’s garment exports stood at $3.78 billion, which is slightly lower compared to the first half of 2019
    • However, this decline is being seen as a temporary one, since this year’s production and exports have been hurt by the COVID-19 crisis
    • It is expected that the industry’s exports will be back to normal during the second half of the year
  • Cambodia is looking to cement further its position as a leading exporter of clothing in the international trade markets

This blog discusses Cambodia’s export of clothing and related items as well as the key reasons behind its success

The Importance of Clothing in Cambodia’s Exports

During the year 2019, Cambodia’s clothing exports (knit or crochet) stood at nearly $8.8 billion

  • This particular industry accounted for nearly 35% of the total exports from the country
  • The second most dominant industry in terms of exports was also related to clothing. It was the clothing exports that are not knit or crotchet. These exports accounted for nearly 16.3% of the total exports from Cambodia in 2019
  • During 2019, Cambodia’s clothing exports in the non-knit and crotchet segment grew by as much as 230% per annum
  • This huge growth indicates the high demand for clothing items that are manufactured in the country
  • Some of the leading importers of Cambodian items are the US, Germany, and Japan

Despite these impressive numbers in 2019, all has not been well with the clothing exports of Cambodia. The year 2020 has brought along several challenges for the clothing industry in general. The ongoing pandemic has resulted in a situation where shipments have dropped to an extent

  • Another major challenge is that hundreds of factories in the country have been shut down to stop the spread of the virus
  • This development has also meant that thousands of workers have lost their jobs in the clothing industry
  • The private sector has been struggling in particular, in the absence of any concrete government support
  • The clothing exporters in the country are hopeful that the crisis will end shortly and the industry will bounce back in late 2020 or 2021

One of the biggest plus points for the industry is the strong demand from countries such as Japan

  • Japanese importers import garments and other clothing items from Cambodia on a large scale
  • The two governments have also been working together to ensure that any export hurdles are removed as soon as possible
  • In fact, the Cambodian government has already implemented an online system that helps traders in processing export documents quickly and easily

Overall, the clothing export industry of Cambodia has established itself in the global market

  • The cost of these products continues to be low compared to some other parts of the world
  • Despite this, there is no compromise in terms of the quality

To conclude, it is clear that there are several reasons why Cambodia’s clothing exports are continuing to grow steadily. Institutions such as Euro Exim Bank offer customized support to traders in the form of financial instruments and bespoke trade advisory services. Euro Exim Bank offers financial instruments such as Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its key product offerings is available here.