impacts of economic recession on cambodia garment industries

BUILD BRIGHT UNIVERSITYBUILD BRIGHT UNIVERSITY

Prepared by Ninth Group Members Prepared by Ninth Group Members

Stung Treng Campus, CambodiaMBA Program, Promotion I

Lectured by Professor Dr. T.R Dash

IMPACTS OF ECONOMIC RECESSION ON CAMBODIA’S

GARMENT INDUSTRIES

IMPACTS OF ECONOMIC RECESSION ON CAMBODIA’S

GARMENT INDUSTRIES

Group MembersGroup Members

1. Mr. Por Narith, Team Leader

2. Mr. Dara Angkeapheakdei, Member

3. Mr. Mov Poly, Member

ContentsContents

1. Introduction2. Research Methodology 3. Research Finding -Global Economy-Cambodia Economy-Cambodia garment industries-Impact of economic recession on Cambodia garment industries4. Conclusion and Recommendation

1. Introduction

1.1 Problem StatementsHow about the global economy- recession?

Global recession of 2007-2009

How about the Cambodia global economic recession?

In 2007, Cambodia's GDP grew by 18.6%.

2008 economic crisis, it 23% drop in exports to the United States of America and Europe

60,000 workers were laid offLast quarter of 2009 and early 2010,

Cambodian economy is recovering

1.2 Research questions•What is the global economic trend?•What is the Cambodia economic trend?•What is the situation of garment factory in Cambodia?•What is the impact of the economic recession on Cambodia’s garment industries?

1.3 Research Objectives •To find out the Global and Cambodia’s economic trend and its economic recession;•To assess the impact of the economic recession on garment industries in Cambodia;•To provide recommendation

1.4 Significance of the research•Students to understand the context of economic in Cambodia and effect on the Cambodia’s garment industries

•Data collection•Data Analysis • Report Writing

2. Research Methodology

3. Finding

What is Recession, Economic, Garment Industry?- Recession-falling GDP- Economy- the production, trade, and use of goods and services- Garment Industry -makers and sellers of fashionable clothing apparel industry, fashion business, fashion industry, rag trade industry

• Global Economy- in 2011, largest economies- United States, China, Japan, Germany, France, the United Kingdom, Brazil, and Italy

• Global Economic Recession- global recession of 2007-2009, financial crisis of 2007–2008

Global Economy

Cambodia Economy

Cambodia EconomyOpen market system,Rapidly increasing but low compared with most

neighboring countriesLargest industries are textiles and tourismAgricultural activities Service sector Economy slowed in 1997-98 due to the regional

economic crisis, civil unrest, and political infighting1998 the main harvest was hit by droughtIntegrate itself into regional (ASEAN) and global

(WTO) trading systems

• Economic recession- –2008 economic crisis- 23% drop in

exports to the United States of America and Europe–60,000 workers were laid off

GDP GDP per Capita

GDP Distribution

GDP growth rate by economic activities

Growth Rate of GDP (%)

2005 2006 2007 2008 2009 2010 2011e

Agriculture, Fisheries & Forestry 15.7 5.5 5.0 5.7 5.4 4.0 3.6

Crops 27.6 5.3 8.2 6.6 5.8 5.7 3.7

Livestock & Poultry 5.6 8.2 3.7 3.8 5.0 5.6 3.9

Fisheries 5.6 3.8 0.8 6.5 6.0 0.4 3.8

Forestry & Logging 5.1 7.0 1.1 0.9 1.1 0.2 1.1

Industry 12.7 18.3 8.4 4.0 -9.5 13.6 8.5

Manufacturing 9.7 17.4 8.9 3.1 -15.5 29.6 9.0

Textile, Apparel & Footwear 9.2 20.4 10.0 2.2 -9.0 18.5 10.4

Construction 22.1 20.0 6.7 5.8 5.0 -25.5 6.4

Services 13.1 10.1 10.1 9.0 2.3 3.3 6.3

Trade 8.5 7.1 9.5 9.4 4.2 7.5 6.0

Hotel & Restaurant 22.3 13.7 10.2 9.8 1.8 11.2 10.7

Transport & Communication 14.5 2.1 7.2 7.1 3.9 8.0 6.8

Real Estate & Business 7.8 10.9 10.7 5.0 -2.5 -15.8 5.1

Other Services 18.3 17.2 12.1 12.0 2.9 4.2 4.6

Taxes on Products 6.1 7.6 45.7 9.1 6.1 0.1 4.1

GDP 13.3 10.8 10.2 6.7 0.1 6.0 6.0

Breakdown of industry in GDP

Gross Domestic Expenditures

GNI per capita 2009

Consumer Price Index

CPI Year on Year Change

Cambodia Garment Industries

Nationality of Ownership Ownership by percentage Number of factories owned

Taiwan 28% 66

China 19% 44

Hong Kong 17% 39

South Korea 13% 31

Malaysia 6% 14

Cambodia 5% 13

Singapore 4% 10

USA 4% 9

Others 4% 10

US Garment Imports by Country Dec 2009-Dec 2010

Cambodia’s Garment Exports, 2001-2010

Number of Factories, 2000-2010

Impact of Economic Recession on Garment

Industry

High Vulnerabilities in Slumping US Retail Sales

Reduction in Factory Numbers

Reduction in Numbers of Workforces

Reduction in Total Wages

Source : MoC, 2009

Decline in Daily Earning

Reduction in Workers’ Remittance

Conclusion and Recommendation

Conclusion•including high vulnerabilities in slumping US retail sales•Reduction in factory numbers•Reduction in numbers of workforces, reduction in total wages•Declining in daily earning and reduction in workers’ remittance

Recommendations•Diversify the current market destinations, i.e. Japan, Russia, Middle-Eastern countries and ASEAN members•Help factory management secure 0.3% of workers’ wage per month of the 0.8% to be submitted for safety net pensions•Create fund for vocational training for laid-off workers

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