{"id":2197,"date":"2023-03-13T13:51:27","date_gmt":"2023-03-13T05:51:27","guid":{"rendered":"https:\/\/www.manhattansez.com\/?p=2197"},"modified":"2023-07-13T11:58:32","modified_gmt":"2023-07-13T03:58:32","slug":"the-growth-and-challenges-of-cambodias-manufacturing-industry","status":"publish","type":"post","link":"https:\/\/www.manhattansez.com\/en\/the-growth-and-challenges-of-cambodias-manufacturing-industry\/","title":{"rendered":"The Growth and Challenges of Cambodia’s Manufacturing Industry"},"content":{"rendered":"\n
Are you looking to learn more about Cambodia’s manufacturing industry?<\/p>\n\n\n\n
Cambodia’s manufacturing industry is expected to experience a significant growth rate of 9.2% in 2023, driven by external demand, particularly in the garment and non-garment manufacturing sectors. <\/p>\n\n\n\n
This growth will be further supported by a projected increase in the country’s economy, which is set to grow by 6.6% in 2023, aided by better trends in global demand and increased investor confidence amidst the relaxed and controlled COVID-19 situation. Despite the positive outlook, the country’s agriculture sector is still facing structural challenges, such as low growth in soil and labor productivity, weak commercialization, and shortage of investment in processing to gain value-added. This article delves into the growth and challenges of Cambodia’s manufacturing industry, using data and insights from the Cambodian government.<\/p>\n\n\n\n
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Cambodia’s manufacturing industry has a significant contribution to the country’s economic development, particularly the garment manufacturing sector, which serves as a key driver of growth. The industry has a rich history dating back to the early 1990s when the Cambodian government implemented measures to boost the competitiveness of the industry in the international market. Today, the garment industry continues to support human capital development, employment generation, and foreign direct investment<\/a>, employing over 600,000 people, making it the biggest employer in the country, and accounting for 16 percent of the GDP and 80 percent of Cambodia’s export earnings.<\/p>\n\n\n\n The garment industry in Cambodia mainly follows the cut-make-trim (CMT) model and is dominated by foreign-owned firms. The industry’s workforce primarily comprises low-skilled, labor-intensive activities, with the majority being women with minimum skills. Geographically, over 60 percent of Cambodia’s garment factories are located within or in close proximity to the capital city, Phnom Penh.<\/p>\n\n\n\n Cambodia offers several advantages to foreign investors<\/a>, such as strategic location, competitive labor force, preferential market access, and supportive government policies. Cambodia’s membership in the ASEAN Free Trade Area and the World Trade Organization has increased its trade integration with the US and the EU, providing duty-free access to export goods<\/a>. However, the country’s poor human rights record has led to the EU launching procedures to withdraw Cambodia’s benefits under the Everything but Arms Scheme (EBA), which allows duty-free access to the EU market for all export goods.<\/p>\n\n\n\n In conclusion, Cambodia’s manufacturing industry, particularly the garment sector, has a rich history of development and growth, serving as a vital source of employment, foreign investment, and export earnings for the country. The industry has several advantages for foreign investors, and despite challenges such as the EU’s proposed withdrawal of the EBA, the industry is poised for continued growth and expansion.<\/p>\n\n\n\n <\/p>\n\n\n\n According to a report by the Asian Development Bank (ADB), Cambodia’s manufacturing industry is expected to continue to play a crucial role in the country’s economic growth. The report states that Cambodia’s economy is projected to grow by 5.3% in 2022 and 6.5% in 2023, driven by strong merchandise exports and foreign direct investment inflows. Industry output is expected to increase by 8.1% in 2022 and 9.1% in 2023, with the Garments, Footwear, and Travel Goods Development Strategy playing a vital role in raising the competitiveness of the industry.<\/p>\n\n\n\n While goods and services exports are also projected to increase, the report calls for the diversification of Cambodia’s economy to ensure sustainable growth. The country can benefit from diversifying into light manufacturing, such as bicycles, electronic components, and wiring products, to make the economy more resilient to external demand shocks.<\/p>\n\n\n\n The reopening of the economy and a high level of vaccination coverage will allow for a gradual recovery in tourism, which will support demand for accommodation, food, transportation, and other in-person services. ADB is committed to supporting Cambodia’s economic development and recovery from the COVID-19 pandemic, with a lending pipeline for 2022-2025 that includes $1.44 billion of concessional lending and $37 million in grants.<\/p>\n\n\n\n <\/p>\n\n\n\n Cambodia’s manufacturing industry faces several challenges that could affect its long-term growth and competitiveness. Some of the key challenges include:<\/p>\n\n\n\n To address these challenges, the government and industry stakeholders are taking several measures. These include investing in infrastructure, promoting skills development and training programs, and improving the business environment through regulatory reform. The government has also established special economic zones to attract investment and support the growth of the manufacturing industry.<\/p>\n\n\n\n <\/p>\n\n\n\nCurrent State of Cambodia’s Manufacturing Industry<\/h2>\n\n\n\n
Challenges Facing Cambodia’s Manufacturing Industry<\/h2>\n\n\n\n
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Opportunities for Growth in Cambodia’s Manufacturing Industry<\/h2>\n\n\n\n