The shift of the garment industry from Japan to Newly-Industrialized Countries
(NICs) and eventually to developing countries in Southeast Asia, including Cambodia,
reflects a variety of factors that affect global firms’ strategies, international wage
differentials, national government policies and trade negotiations. Over the past two
decades, the Cambodian garment industry has grown significantly, ranking tenth among
the world’s garment exporters in 2014. The development of the Cambodian garment
industry was initially assisted by the Multi-fiber Arrangements (MFA) quotas and other
preferential trade agreements imposed by developed countries like the United States and
the European Union. In addition, the country’s average wage has been low enough to
attract garment firms’ and their (sub) contractors’ production units away from other
developing countries, including China and Vietnam. The incentives offered by the Royal
Government of Cambodia have also played a key role in attracting foreign investment in
its garment industry. Those incentives include Special Economic Zones, profit-tax
exemption, and Technical and Vocational Education Training among others. In the 1990s,
the Cambodian garment industry started out with a simple process named “Cut-MakeTrim”,
which required minimal training for workers and little sophisticated technologies
to operate. According to personal interviews with garment factories’ representatives in
Cambodia, however, there has been a gradual upgrade to Full-package Format, which
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involves fairly advanced technologies and qualities. Although the country’s garment
industry is still facing challenges in its competition against other major garment exporters,
its exports to developed markets are quickly growing and its position in the global
garment value chain is certainly improving.