Phnom Penh Post
Workers assemble garments in a factory on the outskirts of Phnom Penh. Photograph: Pha Lina/Phnom Penh Post
TK Garment Co Ltd, a leading Thai original equipment manufacturer for
fashion lines in Thailand, is relocating its largest production site to Cambodia to escape high wage costs, the Bangkok Post reported yesterday.
The
company’s chairman Thaveekij Jaturajaroenkhun was reported as saying
that 10 other garment companies are also in the process of relocating to
neighbouring countries, especially Cambodia and Vietnam.
Last
month, the Thai government approved a proposal to implement a minimum
wage of 300 baht (US$9.77) per day nationwide from January 1, according
to the Bangkok Post.
When contacted yesterday for further
information, the company declined to confirm or give further details to
the Bangkok Post’s report.
Minister of Commerce Cham Prasidh said
there are a lot of garment factories moving from China and other
countries to Cambodia due to the rise in labour costs.
“You know why they are moving here because their labour costs are increasing,” he said.
“It
is also high in Thailand and Vietnam while we are still low so that
they are coming to invest here. In addition to that, if you are
producing garments and textiles for export to European markets, you need
to pay tax in those countries. But we don’t. When you are producing in
Cambodia exports to those markets are duty free. At the same time, we
also have cheap labour costs.”
According to Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia (GMAC), generally there is interest in all labour intensive industries to relocate to countries that are cheaper.
“And
you know, with the recent implementation of the minimum wage in
Thailand of course that provides... disincentives for manufacturers to
stay in Thailand and naturally they will look to more to neighbouring
countries,” he said.
Jill Tucker chief technical advisor for Better Factories Cambodia, a program of the International Labour Organisation
(ILO), said it is not only limited to Thailand. “Cambodia is
benefiting, you could say it that way, from minimum wages rising in many
countries but especially China, actually,” she said.
“So, a lot
of the production from China is leaving and going to cheaper countries
including Cambodia, Bangladesh, Indonesia and Vietnam.
“So we’ve
seen an enormous increase in the amount of production this year. BFC
have had 70 new factories register this year alone.”
She also
said it is important that when the production comes here, Cambodia can
still maintain standards for compliance even with all this new
production.
To contact the reporters on this story: Anne Renzenbrink at anne.renzenbrink@phnompenhpost.com ; Erika Mudie at erika.mudie@phnompenhpost.com
With assistance from May KunMakara and Buth Reaksmey Kongkea
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