Cambodia takes steps to boost competitiveness

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An International Finance Corporation (IFC) program to help Cambodian garment suppliers slash their energy and water consumption is bearing fruit just as the Southeast Asian country is looking to boost its competitiveness and productivity in the textile trade.

Ten cut-and-sew and garment-washing manufacturers that implemented resource efficiency measures in 2019 and 2020 as part of the IFC’s Cambodia Improvement Program (CIP) have reduced their energy and water consumption by 18 percent and 29 percent respectively, according to the agency , which lends to companies in developing countries.

Despite the disruptive nature of the pandemic, participating manufacturers were able to adopt 60 percent of the program’s recommendations over a period of 22 months, from low-cost measures that avoided steam loss to more complex schemes that included the installation of highly efficient washing systems.

Once all recommendations are completed, the interventions could collectively reduce their annual energy consumption by 29 percent, water by 44 percent and greenhouse-gas emissions by 25 percent over 2018 levels, the IFC said.

The news followed the unveiling of Cambodia Garment, Footwear and Travel Goods Sector Development Strategy 2022-2027, a five-year roadmap by the Cambodian government to transform the country’s production of garment, footwear and travel goods into an environmentally sustainable and high-value- added operation.

The apparel sector is Cambodia’s largest employer with roughly 800,000 mostly female workers. Europe, its biggest customer, receives roughly 40 percent of the country’s clothing exports, which rose by 15.2 percent year over year to $11.38 billion in 2021 as orders spilled over from post-coup Myanmar and locked down Vietnam.

Still, high energy costs and low productivity continue to blunt Cambodia’s edge in the region.

“High energy costs and poor productivity have impacted the competitiveness of Cambodia’s garment industry,” Rana Karadsheh-Haddad, IFC Asia Pacific regional director for manufacturing, agribusiness and services, said in a statement.

“It’s why IFC has been supporting the greening of global textile value chains at the local level to promote sustainable private sector growth and improve the competitiveness of local manufacturers. Building on these positive results, IFC will leverage its partnerships with leading global brands to drive sustainability in Cambodia’s garment sector, boosting the recovery and build resilience.”

Suppliers with higher sustainability profiles are able to receive pricing incentives from IFC’s Global Trade Supplier Finance (GTSF) program, which offers short-term financing to export manufacturers by discounting their invoices once they are approved by their buyers. In 2021, the GTSF program mustered $276 million for Cambodian factories.

The CIP, which the IFC launched in 2019 with support from Korea’s Ministry of Economic and Finance, aims to boost the garment industry’s competitiveness, productivity and sustainable growth while helping Cambodia hit its 40 percent greenhouse-gas reduction target by 2030.

Part of the agency’s wider ambition to decarbonize manufacturing industries across Asia through knowledge and expertise sharing, it runs alongside similar programs in Bangladesh, Pakistan and Vietnam.

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