Recently, the Cambodian Labor Bureau and labor unions jointly announced that they will raise the minimum wage for workers from the current US$100 per month to US$128. Kaing Monika, head of the Garment Manufacturers Association of Cambodia (GMAC), revealed that from January to September this year, Cambodia’s total clothing exports to the US market fell by 9%. After Cambodia raises its basic wage standards, the cost of Cambodian-made clothing will rise significantly, making it less competitive in the U.S. market. This may lead to a further decline in Cambodian clothing exports to the United States.
At the same time, data released by the U.S. Department of Commerce showed that the total value of U.S. imports from Cambodia from January to September was US$2.161 billion, compared with US$2.017 billion last year, with slow growth. The United States has been the largest export market for Cambodian-made products, with the majority of exports coming from the garment industry. The increase in the basic wages of Cambodian workers will undoubtedly mean an increase in production costs for American companies.
At present, Cambodia’s clothing exports to the EU are about the same as those to the United States. However, exports to the EU will inevitably exceed those of the United States in the future, because the EU implements a tax-free policy for Cambodian products and is not as sensitive to the sharp increase in the basic wages of Cambodian workers as the US market. KaingMonika said that because the United States does not implement preferential tax-free policies for Cambodian clothing, and Cambodian clothing has to face competition from Vietnam in the US market, Vietnam’s production efficiency is higher than Cambodia’s, and the cost of clothing is lower, which makes Cambodia’s export of clothing in the US market at a disadvantage. However, some people in the industry are optimistic about this. As the U.S. economy gradually recovers, the total trade volume between the two countries will inevitably show a stronger growth trend. If domestic consumer demand in the United States increases, Cambodian clothing exports to the United States are still expected to rise.
