cambodia country report

2014

COUNTRY

REPORT

CAMBODIA

Nicole DrainProfessor Grace Canepa

FASM 420- Global SourcingApril 28, 2014

EXECUTIVESUMMARY

This report was commissioned to examine

the political, social, and economic climate of

country of the Royal Government of Cambodia

as a potential place of manufacturing for the Nix

swim wear line.

The research conducted focuses on key

elements of the country that are pertinent for

a foreign investor to know when planning to

conduct business in the county of Cambodia. In

the country overview a socio-economic-political

situation is analyzed, with key findings showing an

overall improvement in those certain conditions.

An analysis of the labor force is also included

to provide buyers information on the potential

workers of apparel manufacturing factories. The

textile and apparel industry of Cambodia is also

examined to determine its current situation and

potential growth.

Data on business etiquette of the

Cambodian culture is provided in order to add

insight to potential buyers on what is expected

when conducting business in the country. Key

information in this section includes negotiation

and communication styles which are important

elements when performing business in foreign

countries.

Most importantly, key information on how

Cambodia conducts trade with the United States

is analyzed to provide a better understanding of

Cambodia’s potential as a country of interest for

the Californian swim wear company, Nix.

TABLEOF CONTENTS

INTRODUCTION

COUNTRY OVERVIEWSocio-Economic-Political ClimateLabor & Labor LawsTextile & Apparel IndustryGarment Manufacturers Association of Cambodia

BUSINESS ETIQUETTEType of CultureNegotiation StylesRelationship BuildingSocial Cultural ElementsDiningCommunication

TRADE AGREEMENTS & LAWS

IMPORT CLASSIFICATION

LOGISTICS & IMPORTATION

IMPORT/EXPORT REQUIREMENTS

MANUFACTURING & PRODUCTION

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SOURCING

COSTING

RISKS & BENEFITS

SWOT ANALYSIS

CONCLUSION

APPENDIXCountry TraitsCultureEconomyGeographyLaborImporting/Exporting DocumentsMapsTech Packs

REFERENCES

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COUNTRY REPORT: CAMBODIA

INTRODUCTION Cambodia is a country located on

the Indochinese mainland of Southeast

Asia. The land is made up of plains and

great rivers linking China to India and

Southeast Asia. Many Asian cultures

have significant influence in the country,

including those of the United States and

France, commonly seen in the capital,

Phnom Penh. Many Cambodians identify themselves as Khmers, which are descendants of the Angkor Empire

that spread across over much of Southeast Asia. After the decline of the empire, Cambodia became a colony

of France in 1863. In 1953, following Japanese occupation during World War II, Cambodia attained full

independence from France (Central Intelligence Agency).

However, the country still struggled with political instability when the communist Khmer Rouge forces

captured the capitol, resulting in the death of approximately 1.5 million Cambodians due to execution, forced

hardships, or starvation. In 1993, the United Nations decided to intervene and sponsor elections in order to

mend the appearance of normalcy under a coalition government. After a second round of national elections

in 1998, another coalition formed and government stability was finally achieved. By late 2004, King Norodom

Sihanouk renounced his title and his son, Prince Norodom Sihamoni took his place (Central Intelligence

Agency).

As Cambodia focuses on efforts to end its dependence on foreign, it has captured the attention of

foreign investment from countries like China and Vietnam, interested in the country’s economic potential

and natural resources. The garment industry is the largest industry of the country, employing about 500,000

people and makes up 80% of Cambodia’s exports. Following in second place, is tourism, which continues to

expand as an industry. Although a troubled history and socio-political unrest sometimes plague the country,

Cambodia’s economic growth and potential puts it in the running for a significant player in the apparel/

garment industry (BBC News). This report will discuss the socio-political-economic climate of Cambodia,

along with it’s culture, importing and exporting guidelines, along with possible manufacturers for the swim

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COUNTRYOVERVIEWSOCIO-ECONOMIC-POLITICAL CLIMATE

The social climate of Cambodia, is one that has become

more stable in recent years, with a growing population, and

developing economy, and expanding education system

contributing to its overall growth. The total population of

Cambodia is 15.2 million, with an annual growth rate of about

1.63%. An estimated 1.55 million people reside in the capital,

Phnom Penh (AVIC).

The largest single majority group is that of the Khmer

(also referred to as Cambodians), who are settled mainly along

the Mekong River and the Tonle Sap. This group makes up a

distinctive homogeneity uncommon in Southeast Asia that has

stimulated a strong sense of national identity (AVIC).

After decades of turmoil devastated Cambodia’s main

industries of agriculture, forestry and fishing, inflation quickly

ensued. However, while major cities such as Phnom Penh and

Siem Reap exhibit many signs of new wealth, this has yet to trickle

down to the rural areas, where economic activity continues to be

very basic (AVIC).

COUNTRY OVERVIEW

Social Climate

SERVICES40.7%

AGRICULTURE34.8%

INDUSTRY24.5%

GDP Composition by Sector (2013)

8


Today, Cambodia continues to be one of the world’s least developed countries with little resources

and heavy dependence on foreign aid. Economic growth also remains restricted by basic infrastructural

problems such as inadequate roads, inefficient communications, deficiency of power, raw materials and most

importantly the severe shortage of trained and skilled workers. The education system in Cambodia remains

plagued by many difficulties including a severe shortage of qualified teaching staff, poor morale amongst

teachers and limited suitable teaching materials. Attendance at school continues to be limited in rural areas

as children are often expected to help out their families in the fields. The country also has a low participation

rate in higher education, with a mere 1.2 % of the population enrolled, compared to ab average of 20.7% in

all the ASEAN (Association of Southeast Asian Nations) countries (AVIC).

Economic Climate Cambodia is one of the poorest South East Asian countries

with a Gross Domestic Product (GDP) per capita of about $2,600

as of 2013. The nation’s GDP has attained a real growth rate of 7%

as of 2013. Income distribution is highly uneven and the poorest

20% account for only 6.9% of national income and consumption.

Poverty remains most severe in the rural areas, where 75% of

the poor live and depend on agricultural production and the

consumption of natural resources for their livelihoods (European

Union).

Even though, industrialization during the 1990s has

decreased the agricultural sector’s share of GDP from 55%

in 1990 to 31.4% in 2004, agriculture continues to be a vital

source of income for the majority rural population. On the other

hand, the industrial sector has quickly developed and its GDP

increased from 11% to about 27%. Macroeconomic growth

and fiscal stability improved since the beginning of 1999 and

additionally strengthened under the International Monetary

Fund’s (IMF) Poverty Reduction and Growth Facility (PRGF). Other

efforts include, trade reforms established by the World Trade

Organization (WTO) membership and focus on Trade Facilitation

Source: Central Intelligence Agency

9

and corruption matters is essential in order to help the garment industry compete in a liberalized world

market (European Union).

In recent years, economic growth has been favorable, averaging 9% in the from 2000-2005. The growth

rate rose to 9.5% in 2004 and accelerated to13.4% in 2005, in spite of negative external factors such as higher

oil prices and avian influenza. The economic growth is mainly dependent on the garment, tourism and

construction sectors, with garment exports having declined following the abolition of quotas at the start of

2005 (European Union).

Political Climate The process of democratic

reconstruction began after the signing of

the Paris Peace Agreements in October

1991, following twenty years of conflict

and civil war. This also launched the

beginning of Cambodia’s transition to

a market economy. With King Norodom

Sihamoni as head of state since his father’s

succession in 2004, the country has begun

to experience political stability. The last

national elections took place on 4 February

2012. In comparison with previous elections, the atmosphere during the campaign period was less tense and

there were fewer violent incidents (European Union).

Although Cambodia has made extensive gains in the field of human rights in the last few years, it is still

a country in a post-conflict situation. There are various local and international human rights organizations

and civil society groups actively participating in advocacy, training and protection work in the human rights

field, but much remains to be done. Violence, continues to be a problem. Weak law enforcement increases

the situation, causing significant impunity, fueled by corruption. In order to silence political opposition and

critics, the government has began enforcing criminal prosecutions for alleged defamation or incitement

(European Union).

A women registers to vote in Phnom Penh.

COUNTRY OVERVIEW

Labor Force by Occupation (2010)

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COUNTRYOVERVIEWLABOR & LABOR LAWS

Most Cambodians in the workforce are still

involved in agriculture, forestry, and fishing. Foreign

investment is essential to job creation in Cambodia.

Apprehensions among foreign investors about

political insecurity and corruption have resulted in the

lack of foreign capital inflows and only slow advances

in job opportunities. An additional problem to foreign

investment and job creation has been the country’s

limit of trained and experienced labor force having the

desired productive skills (Overton).

In spite of these issues, the new garment

factories surrounding Phnom Penh have become a

vital source of manufacturing employment, mainly

for women. The amount of women in the labor force—

over the 50% of the total population—is one of the

biggest in the world, a disparity created in part by the

massive destruction of men during the period of Khmer

Rouge rule. By law, women are ensured equal rights,

Labor Force


AGRICULTURE55.8%

SERVICES27.3%

INDUSTRY16.9%

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but traditional views of the proper role of women have obviated women from entering senior management

positions in business (Overton).

Although the country struggles with foreign investment due to political instability and corruption, thus

preventing the creation of jobs, Cambodia still has a workforce dedicated to a variety industries, especially

the garment and textile and industry. With this dedication, Cambodia proves to be a key investment for

companies to choose as its supplier.

COUNTRY OVERVIEW

A law formed in 1992 allowed the formation

of labor unions. The three leading labor federations

are the Cambodian Federation of Independent

Trade Unions, the Cambodian Union Federation,

and the Free Trade Union of Workers of the Kingdom

of Cambodia. The unions have been unsuccessful

largely because the government has determined

public-sector wages, and private-sector employers

Labor Lawshave set wages established on market conditions,

unrestricted by union activities. Wages are usually

so low that most workers hold more than one job

(Overton).

Consumption taxes and custom duties

have been the most vital sources of tax revenue in

Cambodia. In 1993, all tax collection and government

spending was integrated and placed under the

12


control of the Ministry of Finance, substituting the

previous system that enabled individual ministries

to assess taxes and spend the resulting revenues.

Tax collection later became more efficient, and tax

revenues grew. During that period new tax policies,

established to encourage domestic and international

investment, delivered for lower corporate taxes,

tax exemptions of up to eight years for companies

in industrial sectors assigned priority status by the

government, no taxes on reinvested profits, and tax

exemptions on imported capital equipment planned

for export-oriented production (Overton).

Although there is still much improvement

needed in labor laws, the government is gradually

progressing in making improvements for garment/

textile workers. According to a recent article

published by the International Labor Organization,

the RGC has made developments in a variety of

areas. For example, the country has made stricter

regulations on child labor:

“Poverty is a big problem for many families

in Cambodia. This puts pressure on parents to have

their children work. Cambodia has laws regulating

child labor. One challenge faced by the garment

and footwear industries is that workers under the

permitted working age of 15 years old may submit

or borrowed fake documents during recruitment.

In addition, factories may not carry out sufficiently

thorough recruitment processes. In order to avoid

hiring underage workers, recruiters should give

preference to job seekers with a mature appearance

and should cross check documents to ensure that

they are not falsified or borrowed. Minors (people

less than 18 years old) may not sign an employment

contract without the consent of their parents or

guardian. A minor may not be employed to perform

night work. See paragraphs 6.5 and 6.6 below for an

explanation of night work. Minors aged from 12 to 15

years can be hired to do light work provided that: the

work is not hazardous to their health or mental and

physical development, and the work will not affect

their attendance at school or training programs.”

(International Labor Office).

With these improvements, Cambodia has

a better opportunity to gain interest from foreign

companies for investment prospects.

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COUNTRYOVERVIEW

TEXTILE &APPAREL INDUSTRY

COUNTRY OVERVIEW

“The global textiles and garment industry

forms an important component of world trade

flows, particularly for some developing and least

developed countries where clothing accounts for

large proportion of export. Trade pattern in textiles

and garments are similar although textiles tend

to be a capital-intensive business, while garment

making is labor-intensive and usually relies on a

low-cost workforce. EU is the biggest exporter of

textile product, followed by China. However, India,

Turkey, Pakistan, Indonesia, Thailand and Mexico all

rank among the top 15 textile exporter whereas the

developing countries such as Bangladesh, Vietnam,

Cambodia, Indonesia are among the top exporters of

garment products” (PPS).

“On January 1, 2005, the quota restraints

of the Multi-Fiber Arrangement (MFA) expired,

finally bring to an end four decades of restriction

on trade in textiles and garment among World

Trade Organization (WTO) members. Trade in these

products is now governed by normal WTO rules,

which promote free trade agreement among the

members. Cambodia is one of the least developed

countries who benefited from Generalized System

of Preference (GSP) from many developed and

developing countries who are members of WTO. For

instance, “Everything But Arms” initiative that allow

all exported products from Cambodia to EU with

duty free and quota free except armaments” (PPS).

Overview

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“Cambodia’s garment industry is the

country’s biggest industrial employer, and is

now struggling against stiffer global competition

and slowing demand. Many Chinese and Korean

companies have established a presence in Cambodia

for years. Now, more than 10 Chinese-owned

factories have moved to cheaper markets, leaving

hundreds of thousands of garment workers from the

provinces facing destitution, reported Phnom Penh

Times in early 2008. The garment industry earns 80

percent of Cambodia’s foreign exchange earnings

Size

“The United States and the European

Union are Cambodia’s main export destinations,

respectively accounting for 70% and 25% of total

garment exports. Exports to the non-quota-imposing

Japanese market, the third largest in the world, are

Overall Position in Country

and employs an estimated 350,000 people in more

than 300 factories” (Business In Asia).

“Most of the garment factories in Cambodia

are small and lower medium category in size

compared to the factories in Bangladesh and

Vietnam. From a survey, it was found that about

65% of the garment factories in Cambodia employ

500-2,000 workers and the most common size of

factories with 500-1,000 workers. There are only

3% factories that employ more than 4,000- 5,000

workers” (Houssain).

negligible” (Houssain).

“Cambodia’s exports to Canada have grown

from less than US$20 million in 2002 (when Cambodia

was granted quota- and duty-free access under the

Canada LDC market access initiative) to over US$70

FACTORY SIZES BY NUMBER OF WORKERS

# of Workers % of Factories % of Workers5000+ 2% 8%

4000-4999 1% 4%

3000-3999 5% 12%2000-2999 9% 19%

1000-1999 30% 32%

500-999 35% 20%

<500 18% 5%Source: ACTIF Report

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CAMBODIA AND U.S. APPAREL & TEXTILE TRADE BALANCE REPORT

2011 2012 2013U.S. Imports 2,626,545 2,577,615 2,610,949

U.S. Exports 6,093 6,478 7,808Trade Balance -2,620,452 -2,571,137 -2,603,141

Source: U.S. Department of Commerce, Office of Textiles and Apparel

“The Cambodian government has made

significant progress in creating an enabling legal

framework for the private sector by enacting a

number of important laws, such as the Law on

Banking and Financial Institutions, the Insurance

Law, a new Land Law, the Trademarks Law and

the Law on Enterprise Accounting and Auditing.

The Investment Law was also amended to simplify

the investment licensing process and modify tax

incentives offered to qualified investment projects.

Further, new laws are also being drafted such as Law

on Commercial Enterprises, the Law on Commercial

Arbitration, the Commercial Contract Law, the Law

on Secured Transactions, the Insolvency Law, Anti-

corruption Law, the Law on Customs and the Tourism

and Entertainment Law. Cambodian government

Government Supportsigned a memorandum of understanding with

Asian Development Bank and International Finance

Corporation to set a National Arbitration Center to

help resolve business disputes outside the court

system” (Houssain).

“The government encouraged the creation

of factory association and trade unions in order

to ensure that the sector establishes itself

institutionally and the Garment Manufacturers

Association of Cambodia (GMAC) was established

in March 1996. GMAC has played an important role

in the development of the garment industry in

Cambodia through lobbying with the government to

seek GSP and MFN status. Trade unions also played

an active role in ensuring the respect of the ILO core

labor standards and Cambodia labor law. Although

COUNTRY OVERVIEW

million in 2003, or about 4% of total garment exports,

indicating that Cambodia’s garment industry is

proving responsive to preferential market access

opportunities” (Houssain).

“Cambodia’s garment exports to the EU have

also shown growth of about 15% per annum since

quota and duty-free access was granted by the EU to

all least developed countries under the ‘Everything-

But-Arms Initiative’ in 2001. However, these growth

rates are significantly below those of the pre-EBA

period of 1998-2001 when exports to the EU grew at

over 70% per annum” (Houssain).

NUMBER OF APPAREL FACTORIES IN CAMBODIA

Source: Garment Manufacturers Association of Cambodia 2010

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“In 2011, Cambodia’s garment and textile industry comprised more than 300 factories employing some

335,000 workers, of whom 91 percent were female, according to the Ministry of Commerce” (Thomasson).

Number of Suppliers

“Textile and garment industry in Cambodia does not enjoy cash incentives and direct support from the

government like Bangladeshi textile and garment industries. Some indirect incentives are there in the form

of investment incentives, tax low income and corporate tax rates, exemption of custom duty on import of raw

materials and capital machinery, incentives for special economic zones, etc. and these are also applicable to

the garment industries in Cambodia” (Houssain).

Growth Incentives

there are problems with the labor unions however, they have had notable success in negotiating with the

factory owners and the government in raising minimum wages from US$27 to US$ 40 in 1997 and from US$ 40

to US$ 45 in 2000. Recently, they also negotiated in raising minimum wages from US$ 45 to US$ 61, although

they expected at a higher amount of US$82” (Houssain).

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COUNTRY OVERVIEW

“The industry began to grow after a the

country passed a new labor laws encouraging

labor unions and allowed the International Labor

Organization (ILO) to inspect factories and publish

its findings. In turn, the United States agreed to cut

tariffs on Cambodian garment exports, buying 70

percent of all of the country’s textiles in the 1990s.

Cambodia maintained its higher working conditions

after the deal expired in 2005, and garment-making

has made the national economy one of the fastest

growing in the region” (Business In Asia).

“The rapid growth of apparel industry in Cambodia

has been accelerated by the influx of foreign firms

mainly originated from Asian region. Now a day,

Cambodia is extremely dependent on its export

oriented ready-made garments industries, which

Industry Analysisgenerated around 90% of its total export earnings

and created employment opportunities for 27%

of the total industrial employments and it opened

job opportunities for a large number of illiterate

poor rural women into the labor market. China

continues to be the principal supplier of imported

fabrics, with a share of around 74 percent due to

its price advantage in quality categories. Fabric

consumption in FY 2009-10 is estimated at 6 billion

meters up by around 3 percent from FY 2008-09,

consumption comprising of 2.4 billion meters for the

domestic sector and 3.6 billion meters for the export

oriented RMG sector. Fabric imports in FY 2010-11

are forecast at 2.25 billion meters, marginally lower

that the estimated 2.26 billion meters fabric imports

in FY 2009-10” (Houssain).

GROWTH OF CAMBODIA GARMENT INDUSTRY (2004-2010)

Description 2004 2005 2006 2007 2008 2009 2010# of Garment Factories 219 247 290 292 284 258 242

# of Direct Employees (000)

269.8 283.9 334 353 324.8 289.4 275.7

# of Indirect Jobs (Projected)(000)

229.3 242 283.9 300.1 276.1 246.0 234.3

Total Value of Export (US$ 000)

2,477.30 2,698.28 3,321.76 3,766.89 3,857.13 2,477.30 2,698.28

Total Exports in Pieces (Dozen

N/A N/A N/A N/A N/A 28,375,024 36,238,484

Percentage of Export Value on GDP

46% 43% 46% 43% N/A N/A N/A

Source: Cambodia Investment Guidebook, Published by CDC

Source: Hinrich Foundation

EXPORTS BY MARKET

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The Garment Manufacturers’ Association of

Cambodia (GMAC) was established in the year 1999, and

grown to have 23 current employees and 350 members.

Members of this association receive the following

services: representation at the policy level, capacity

building, information dissemination and sharing, and

networking. Buyers receive services by being matched

to suppliers (Hinrich Foundation).

The GMAC has the mission to collaborate with

all stakeholders in pursuing a beneficial business

environment for the growth and development of the

apparel industry. It also aims to provide quick and

crucial information pertaining to the industry, along

with supporting the Cambodian government and export

Garment Manufacturer’s Association of Cambodia

“Currently, state of apparel industry in Cambodia can be described as below:

• More than 300 garment export-oriented factories are operating and registered with GMAC, with 94%

being 100% FDI, 1% joint venture and 5% locally owned.

• Taiwan tops the list with 68 factories, followed by China, Hong Long, and Korea

• 335,000 workers (92% female) are employed, with average wage of $80 and minimum wages is US $61

• Main markets are US, EU, and Japan” (Houssain)

“The Cambodia’s Free Trade Union (FTU) said that the factory owners are looking abroad for greater

productivity and lower costs. Kaing Monika, Manager at the Garment Manufacturers Association of Cambodia,

commented that many manufacturers could move to Vietnam, Bangladesh or India if they could get lower

costs. Production costs, oil and power, are high in Cambodia, and the demand for higher wages also put the

country’s garment industry in danger, he said” (Business in Asia).

“Despite challenges, investment in Cambodia’s garment and textile industry has increased: Data from the

Council for the Development of Cambodia (CDC) indicate that Cambodia gained 40 new garment factories

valued at US$239 million just in the first half of 2012. Prospects for the industry are good, with the Ministry

of Commerce reporting that garment and textile exports in 2012 increased 14 percent year-on-year to total

US$4.6 billion” (Thomasson).

US/Canada 57%

EU 30%

Other13%

GARMENT FACTORY STRIKES IN CAMBODIA

Source: GMAC

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industry in the development of human capital. Lastly,

its goal is to embrace corporate social responsibility

in management principles so as to develop mutually

beneficial relationship and sustainable business

development (Hinrich Foundation).

“The Garment Manufacturers’ Association of

Cambodia provides garment workers comprehensive

coverage from basic health care to complicated

surgeries in contracted public health facilities.

The coverage is subsidized by the employers. The

project aims to cover up to 20,000 garment sector

workers during the project period before the health

insurance program is transferred (totally or in part)

to the National Social Security Fund (NSSF). NSSF

will then make the participation in this insurance

program by the formal sector workers compulsory

and be in charge of the management of health

insurance program going forward” (CHMI).

“With a premium of US$1.60 per worker

per month, which is 50% co-funded by employers

that are part of the Garment Manufacturers’

Association of Cambodia, the voluntary group

health insurance scheme provides comprehensive

coverage of medical services, from basic health care

to complicated surgeries in contracted public health

facilities, in and around Phnom Penh. As of 2013,

the health micro-insurance scheme is undergoing

operational processes refinements so that it can

be transferred to the National Social Security Fund

(NSSF) for inclusion as a part of the government’s

social security provision for the formal sector. The

Garment Manufacturers’ Association of Cambodia

had served 5,000 clients as of mid 2011” (CHMI).

COUNTRY OVERVIEW

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BUSINESS

“Before 1970, Cambodian culture and artistic expression were informed by the greatness of the past. The

Khmer empire owed much to Indian influence, but its achievements also represented original contributions

to Asian civilization. The magnificent architecture and sculpture of the Angkor period (802–1432), as seen in

the temple complexes at Angkor Wat and Angkor Thom, marked a high point of Khmer creativity. Following

the capture of Angkor by the Tai (15th century) and the crumbling of the empire, the region underwent four

centuries of foreign invasions, civil war, and widespread depopulation. It was not until the establishment

of the French protectorate in 1863 that internal security was restored, the country’s borders stabilized, and

efforts undertaken to revive traditional Khmer art forms. After Cambodia gained independence from France in

1953, the government placed particular emphasis on accelerating that revival. This coincided with the rapid

expansion of primary and secondary school facilities and the emergence of education as the most important

factor of social mobility” (Overton).

“The leadership of Democratic Kampuchea,

inspired in large part by the People’s Republic of China,

subordinated culture to its own interpretations of Marxist-

Leninist doctrines. The government in Phnom Penh after

1979, however, made serious efforts to restore such

traditional forms of artistic expression as Cambodian

classical music, ballet, and popular theatre. Foreign aid

from India and Poland was used to clean and maintain

ETIQUETTE

TYPE OF CULTURE

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BUSINESS ETIQUETTE

some of the temples at Angkor, which had suffered from years

of vandalism and neglect. Those aspects of high culture have

had to compete for people’s attention with popular music

and videotapes imported from Hong Kong, Thailand, and

elsewhere” (Overton).

“Cambodia is a collective society - individuals

take second place to the group whether this is the family,

neighborhood or company. In such societies, etiquette and

protocol guidelines are used to maintain a sense of common

harmony - for example, subtle communication styles are

employed in order to minimize the chances of causing

offense to others. The concept of face also ties in with this

collective outlook. Protecting both one’s own and theirs, face

is extremely important. Face can roughly be translated as a

combination of honor, dignity and public reputation that is

attributed to a person. Face can be lost, given and accrued.

Foreigners in Cambodia need to be aware of the mechanics of

face to ensure they do not cause anyone to lose face as a result

of unintentional actions. Face is lost when someone is criticized, embarrassed or exposed in public. It can be

given by complimenting someone publicly, i.e. for their business acumen or hospitality” (Kwintessential).

“Cambodians have great respect for hierarchical relationships. Almost everything in Cambodian life is

led by hierarchical position: parents are superior to children, teachers to students and bosses to subordinates.

Your Cambodian counterparts will always ask you questions to be able to place you hierarchically to know

how to behave” (Communicaid).

“Gender issues tend to differ a bit on the urban/rural divide, but women are still seen primarily as

caretakers and homemakers although it is beginning to change. Women generally marry younger than

men and are expected to be virgins. If a family needs help running a family business or a home, a daughter,

especially the youngest daughter, may stop studying at school to take on this role. In the countryside, there

are woman teachers, doctors, market vendors, business people, but there is still a pervasive traditionalist

view of gender roles. Because women are expected to be the primary caretakers and homemakers, they

Gender Roles

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are also responsible for managing the money of the household and the education of the children. They are

expected to attend public social functions, and married women may sometimes go alone to represent their

families at gatherings. While young Cambodia men have some social independence, young Cambodian

women do not often go out socially unescorted, especially at night. Expectations seem to be different for

foreign women, and although a foreign woman exercising her independence may not be well understood

by some Cambodians, it will probably be respected. Smoking is generally acceptable for men, but not for

women. For women, smoking seems to associated with prostitution” (Culture Crossing).

“Women or girls should be respected at work or home. They are not allowed to touch, hug or kiss

or sit with men who are not their relatives. Some families are offended when the girls are asked to go out

without their permission. Women or girls are required to be calm and soft mannered, and to stay home, do

housework, cook, and obey their husband. Sometimes they are not allowed to sit and talk with a group of

men. Traditionally, men are the breadwinners in the family. They make all the decisions in the family. They

have power or control over any issues in the families. Children are mostly the responsibility of the mother.

Nevertheless, some women are in the workplace and today, more and more women can be found at the

management level” (FAITC).

“Bilateral kinship and a strong tendency toward matrilocality leave women in a position of relative

strength. The fact that women control family finances may not be regarded as a sign of superiority but

represents real power in practical terms. However, women have much less access than men to the highest

positions of political and economic power” (Arston).

“Traditional codes of behavior for women are more elaborate and strict than those for men. Their role

is often marked symbolically as inferior. While traditional art and contemporary media images of women

show them as active agents, they often are depicted as physically vulnerable to men. Domestic violence

against women at the village level is widespread, and those women have little legal recourse” (Arston).

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BUSINESS ETIQUETTE

“Bargaining is usually expected; don’t get

too emotional, as this will be viewed as a sign of

weakness. Cambodians will generally avoid using no

in answering questions. They tend to say, “maybe”,

or “that would be difficult” or even “yes” or “no

problem” even if the answer is really “no”. In a market

Negotiations

In Cambodia, building a relationship on

mutual trust is imperative so initially time should

be spent on getting to know your counterparts

(Kwintessential). Cambodians often value

relationship building and harmony, so it’s best to

avoid hard selling, pressure tactics, and any type of

conflict or confrontation (Communicaid). Instead it is

better to ask normal neutral questions such as, “how

are you doing today?”, “how is your family?”, “how

is business going?”. Being friendly and trustworthy

as much as possible is key, as well as being aware

of other people’s comfort level. Asking to go out for

coffee or breakfast is acceptable, but be cautious

when asking someone to go out for date.

Avoid losing face with someone from the

workplace. “The concept of face is essential in

Cambodian culture. The Cambodians will do

anything to prevent loss of face, even if it means

avoiding confrontation or telling others what they

want to hear rather than dealing with immediate

Relationship Building

setting, some bargaining is expected. Some vendors

may see a foreigner and charge several hundred

times the cost of the item, but many will give you a

fair price after some bargaining. A good benchmark

is to try and pay half to two-thirds the price quoted”

(Cultural Crossing).

issues. Criticizing someone in public and not staying

true to promises are various ways that may cause

people to lose face” (Communicaid). Try not to mix

private life and work.

24


“Dress should be normal and clean; no requirement to

have tie. It is recommended that you wear local/traditional clothes

when there will be celebrations or events” (Culture Crossing). Men

should wear nice pants and collared shirts. As mentioned earlier a

tie and jacket are not a must, but it is recommended to have just in

case. Up-kept grooming is appreciated in this culture as well. When

conducting business it is suggested that women wear blouses and

ankle length skirts. Trousers can be worn, but a matching jacket

is a must. Women should avoid short, tight-fitting and sleeveless

garments if possible. Jeans are not recommended but maybe more

appropriate in rural areas (Culture Crossing).

“When you first meet and greet someone at family or work

occasions with the level of respect as described above, you must

stand about half meter/ up to 1 foot away from the person and

salute by placing both hands together palm in front of the chest with the fingers pointing upward. At a home

or temple you need to take you shoes off as well. When greeting a monk, you need to salute them and then beg

a spirit for help, or bow down to the floor and salute. When going to see the King the same rules apply. Avoid

using names at the first contact. In a family setting, use Lok Ta for a grandfather, Lok Yeiv for a grandmother

and Om or Pou, depending on the age of the elder. For a person older than one year you would use Bang.

At work you can use Lok or a person’s title, depending on the work environment. Make sure you bow your

head a little bit when you see a person higher rank, as you would for an elder, a monk or a king). Ask them if

they allow you to use their name; otherwise you

will offend them by using it. Som-peahs are made

during initial introductions, or if people have

not seen one another in a long time, but it is not

necessary to bow every time you meet a friend

or coworker. A simple wave hello is fine” (Culture

Crossing).

“Greetings between Cambodians are

dependent on the relationship/hierarchy/age

between the people. The traditional greeting is a

Social & Cultural Elements

25

BUSINESS ETIQUETTE

bow combined with a bringing of the hands together

at chest level (similar to bringing hands together for

prayer).If one intends to show greater respect the

bow is lower and the hands brought higher. With

foreigners Cambodians have adopted the western

practice of shaking hands. Women may still use the

traditional Cambodian greeting. The simple rule

is to respond with the greeting you are given. In

Cambodia people are addressed with the honorific

title “Lok” for a man and “Lok Srey” for a woman

followed with the first name or both the first and

surname” (Kwintessential).

“Greetings in Cambodia depend on levels

of respect. It is important in the family environment

to be more respectful to elders (grandparents) and

to people who are older than you. The older the

person, the more respect they are given. At work, the

highest respect would be for your boss/president or

manager and you would greet anyone below them

afterwards. At temple or a ceremonial place, the

monks and priests would receive the highest level of respect. Many educated Cambodians will follow Western

customs and offer a handshake, but it can’t hurt to som-peah before shaking hands. Hand-shakes tend to be

more on the gentle side and do not linger long. However you greet, you should remember to smile” (Culture

Crossing).

“Business cards should be exchanged after the initial

introductions. Have one side of your card translated into

Khmer if possible. Present your card so the Khmer side is

readable to the recipient. Use the right hand or both hands

when offering or receiving a business card. If the receiver

is of higher social standing, you should support your right

elbow with the fingers of your left hand. It’s best to never

write on or fold a business card you are given. It is important

to treat business cards with respect as the way you handle

WHITEpeacepurity

humilityinnocence

silenceelegance modesty

YELLOWhappinessfriendship

enthusiasmsuccess

prideluxury

ORANGEstrong love

desireenthusiasmsatisfactionconfidence

REDyouthlove

passioncourage

admirationconstancy

respect

PINKlove

passiondelicacy

gentlenessgrace

gratitudeappreciation

PURPLEroyalty

ceremonydignitysuccess

accomplishment

BLUEserenitypeace

inspirationcreativity GREEN

resilienceyouthhealth

pleasurerenewal

optimism

COLOR SYMBOLISM IN CAMBODIA

Source: Orchid Cambodia

26


the card is indicative of the way you will treat the person” (Kwintessential).

“Titles are somewhat important and to be safe it is best to address people by using their professional

title or Mr., Mrs., or Miss followed by the surname. Cambodians will often use the honorific title “Lok” for a

man and “Lok Screy” for a woman followed by the first name or both the first and surname” (Kwintessential).

“Rotating one or both hands held up in front of the body (similar to the Queen of England’s wave but

faster) means “no”, “I don’t want it”, “we’re closed”, etc. To beckon someone, hold your hand palm downwards

with the fingers pointing towards the ground and waggle them loosely in a scratching motion. Beckoning

with the palm upwards (Western style) is considered rude. Cambodians tend to have two types of smiles.

One indicates pleasure and the other embarrassment. It is sometimes hard for foreigners to tell them apart,

but this is why some Cambodians will smile or giggle nervously when imparting bad news. It is normally

courteous to remove your shoes before entering somebody’s home. It is required when entering a Buddhist

temple” (Culture Crossing).

27

BUSINESS ETIQUETTE

“In a business setting, slightly more than arms

length distance is appropriate. This is the same for

either sex. When interacting with friends or family,

personal often seems to be a question of taste, so its

best follow their lead. Typically an arm’s length is the

norm. In a business setting, physical contact may be

inappropriate, especially between men and women.

When interacting with close same sex friends, close

physical contact is acceptable. Holding hands

and hugging are considered nonsexual displays of

affection. Friends of the opposite sex and partners

should be careful. Public displays of affection tend

to be culturally inappropriate and offensive” (Culture

Crossing).

“Gifts are usually given at Cambodian New

Year (Chaul Chnam). Birthdays are not big events like

in the West and people of the older generation may

not even know their date of birth. Unlike most other

cultures, Cambodians do not celebrate birthdays. In

fact, many older people may not know the exact date

of their birth. A small gift can also be taken if invited

to someone’s home for food. If invited to a home, take

nicely presented fruit, sweets, pastries or flowers.

Avoid giving knives. Gifts are usually wrapped in

colorful paper. Do not use white wrapping paper,

as it is the color of mourning. When giving gifts use

both hands. Gifts are not opened when received”

(Kwintessential).

“Very simple gifts are sometimes exchanged

after a first meeting. They don’t have to be too

elaborate. Floral/fruit baskets are common. If invited

to a Cambodian home it is appropriate to bring

sweets, pastries or good quality fruit baskets. Gifts

should be wrapped, and presented with the right

hand. If the receiver is of higher social standing, you

should support your right elbow with the fingers of

your left hand. If gifts are too large, they can be given

with both hands” (Culture Crossing).

“The view of time tends to vary a bit between

the countryside and the city. In the country, when

someone is busy, they may choose to finish with

their activity and arrive late to a scheduled business

appointment or meeting, although this of course

depends on whether or not someone is being paid

to show up. While it seems not rude to be late, if

someone needs you to help him or her, they will

expect timeliness. Punctuality sometimes seems

only valued by the person who is asking for the

meeting/assistance, but generally in rural areas,

allowances are made and time is flexible, because

unreliable transportation, weather, health services,

etc. demand it” (Culture Crossing). “Smile and joke

as much as you can. It’s the Cambodian way and

people will be more willing to help you” (Frommer’s).

28


“The first challenge is cutlery. There will be

an array of implements in a glass of water on your

table, which can be cleaned by a simple wipe with

a paper towel. What you won’t find, however, is a

knife. Cambodians generally eat with a spoon and

fork, unless there’s a bowl of soup in front of them, in

which case it’s a spoon and chopsticks. It’s impolite

to put the fork into your mouth – instead use it to

Dining

“Meetings do not stick to any schedule or

agenda. Issues may be tackled separately and

altogether if need be - once an issue has seemingly

been resolved it may later be addressed again.

Meetings will continue until the attendees feel

everything has been satisfactorily covered. Building

a relationship on mutual trust is crucial so initially

time should be invested in getting to know your

counterparts. Hierarchy is important in Cambodian

society, so it is always best to defer to the most senior

person in the room when it comes to beginning and

guiding conversations. The most senior person will

usually dictate the duration and flow of discussion

of the meeting” (Kwintessential).

“Small talk should always be employed at

the beginning of meetings. Cambodians are very

indirect communicators so some reading between

the lines is a necessary skill. They will always

consider the implications of making statements

or using particular words especially if it involves

anything negative as this draws in the issue of face.

In fact if Cambodians disagree with someone they

would rather remain silent than make any comment.

If they disagree with an idea, they generally remain

silent. Periods of silence are considered acceptable

and are to be expected. Avoid interrupting, showing

displeasure through facial or eye movements and

talking over someone. Be patient. If unsure about

statements be sure to double check. Cambodians

prefer ideas to be brought forward in a gentle way

and to wait for others to respond. Pushy, pressured

or boastful communication styles are a real turn-off”

(Kwintessential).

push food onto the spoon held in your right hand.

For soup, use chopsticks to pick out the meat and

noodles and the spoon for liquid elements. Cutlery

that has been in your mouth should definitely not

be put into communal dishes, if you’re eating family

style — which means sharing plates placed in the

center of the table” (Gilbert).

“Table manners are fairly formal. If

29

BUSINESS ETIQUETTE

unconfident with the dos and don’ts simply follow

what others do. When invited to the dining table

wait to be told where to sit as you would not

want to upset any hierarchical arrangements. The

oldest person is usually seated first. Similarly the

eldest person should start eating before others.

Do not begin eating until the eldest person starts”

(Kwintessential).

“While dining, feel free to indulge in slurping,

lip smacking and any other noises you can find to

convey enjoyment of the meal. You won’t get your

hand slapped for eating with your mouth open, or

for putting your elbows on the table. Bones and

used paper tissues go straight onto the floor or into

a dustbin provided under the table. Dishes will often

not be cleared from your table until you pay the bill”

(Gilbert).

Cambodians generally do not drink

alcohol. But alcohol consumption has increased

in recent years as it correlates to status and

discretionary income. For women, drinking seems

to be associated with prostitution. Although at large

social gatherings, for example weddings, women

may drink with men (Culture Crossing). It’s best to

avoid talking about business in social settings such

“Verbal communication tends to be non-

confrontational and indirect. Many Cambodians

will offer you the response they assume you want

to hear, regardless of their feelings or plans, rather

than offend you in public. Be prepared to receive

seemingly contradictory information from different

sources, and try to stay calm in these situations.

Showing frustration with people in public does

not usually win you any points. It may be more

helpful to ask various simple yes/no questions of

different people in order to put together a picture

of the situation than to ask complicated how/why

questions that may make someone uncomfortable.

When there is a conflict, it is often resolved through

an intermediary. Don’t expect to discuss the issue

directly with the person who has taken offense. Once

the problem has been resolved, the two parties can

meet congenially without addressing the conflict”

(Culture Crossing).

“Yes” does not always mean “yes” and “no”

may be substituted for “maybe”, “possibly” or

even “yes”. It’s best to pay attention to non-verbal

cues such as facial expressions and body language.

Cambodians tend to have two types of smiles. One

indicates pleasure and the other embarrassment.

This is why some Cambodians will smile or giggle

nervously when imparting bad news” (Cultural

Crossing).

Communication

30


TRADEAGREEMENTS

“Cambodia joined the International

Organization for Standardization (ISO) in 1995

and is also a member of the ASEAN Consultative

Committee on Standards and Quality (ACCSQ).

Cambodia ratified the ASEAN Framework Agreement

on Mutual Recognition Arrangements. It has also

signed numerous trade agreements, including the

U.S.-Cambodia Trade and Investment Framework

Agreement (TIFA) in 2006, which facilitates and

promotes greater trade and investment of the two

countries and provides a forum to address bilateral

trade and investment issues. Two successful

meetings were held under the TIFA in 2007 in which

the U.S. and Cambodian governments discussed

WTO accession requirements, trade facilitation and

economic development initiatives, and progress on

intellectual property rights. In 2008, several bilateral

working level meetings were held to advance the

U.S.-Cambodia Trade AgreementsTIFA agenda” (U.S. Commercial Service).

Another trade agreement Cambodia has

is the Cambodia Bilateral Textile Agreement this

agreement covers textiles relating to trade in cotton,

wool, man-made fiber, non-cotton vegetable fiber

and silk blend textiles. This also includes textile

product between the government of the United

States and the Royal Government of Cambodia (US

Embassy).

“In 1999, Cambodia and the US signed a

Bilateral Textile Agreement (BTA), a unique agreement

that links labor standards to trade. The BTA has been

an unqualified success. It has boosted Cambodia’s

image as a labor friendly country and contributed

significantly to its economic development by

generating employment for over 250,000, mostly

rural women, as well as providing significant

amounts of foreign exchange. The BTA is responsible

31

for a robust and booming garment industry with

exports of $1.6 billion in 2003, representing some

40% of Cambodia’s nominal Gross Domestic Product

(GDP) and 73% of Cambodia’s total exports.

The US has been Cambodia’s single largest trading

partner by far since 1998. Exports to the US totaled

$1.5 billion in 2004, accounting for at least 70% of

Cambodia’s total exports and over 35% of Cambodia’s

entire GDP. US exports to the Cambodia have been

minuscule in comparison, albeit increasing from

approximately $20 million in 1999 to $59 million in

2004” (US Embassy).

“Products of Cambodia shipped in excess

of authorized limits in any Agreement Period may

be denied entry into the United States. Any such

shipment denied entry maybe permitted into the

United States and charged to the applicable limit

in the succeeding Agreement Period. Products of

Cambodia shipped in excess of applicable limits

in any Agreement Period will, if allowed entry into

the United States during that Agreement Period, be

charged to the applicable limit in the succeeding

Agreement Period” (US Embassy).

“The Parties seek to create new employment

opportunities and improve living standards and

working conditions through an enhanced trading

relationship; affirm respect for each Party’s legal

system and seeking to ensure that labor laws and

regulations provide for high quality and productive

workplaces; and seek to foster transparency in the

administration of labor law, promote compliance

with, and effective enforcement of, existing labor

law, and promote the general labor rights embodied

in the Cambodian labor code” (US Embassy).

With the implementation of these trade

agreements between the Royal Government of

Cambodia and the United States, it provides a

better opportunity for our swim wear company

to source from this nation in order to successfully

manufacturer merchandise.

Laws of Impact Laws set up by the United States government

that could possibly affect the importation of Nix

products include the following: the Care Labeling

Rule, Federal Trade Commission Act, and Textile

Fiber Products Identification Act. The following

paragraphs will explain what each law covers.

“The Care Labeling Rule requires

manufacturers and importers of textile wearing

apparel and certain piece goods, in or affecting

commerce, as “commerce’’ is defined in the Federal

Trade Commission Act, to provide regular care

instructions at the time such products are sold to

purchasers through the use of care labels or other

methods described in this rule. Manufacturers and

importers of textile wearing apparel and certain

piece goods are covered by this regulation. This

includes any person or organization that directs or

controls the manufacture or importation of covered

products” (Federal Trade Commission)

“The Federal Trade Commission Act is a

commission is created and established, to be known

as the Federal Trade Commission (hereinafter

referred to as the Commission), which shall be

TRADE AGREEMENTS

32


composed of five Commissioners, who shall be

appointed by the President, by and with the advice

and consent of the Senate. Not more than three of

the Commissioners shall be members of the same

political party. The first Commissioners appointed

shall continue in office for terms of three, four, five,

six, and seven years, respectively, from September

26, 1914, the term of each to be designated by the

President, but their successors shall be appointed

for terms of seven years, except that any person

chosen to fill a vacancy shall be appointed only for

the unexpired term of the Commissioner whom he

shall succeed: Provided, however, That upon the

expiration of his term of office a Commissioner shall

continue to serve until his successor shall have been

appointed and shall have qualified. The President

shall choose a chairman from the Commission’s

membership. No Commissioner shall engage in

any other business, vocation, or employment. Any

Commissioner may be removed by the President for

inefficiency, neglect of duty, or malfeasance in office.

A vacancy in the Commission shall not impair the

right of the remaining Commissioners to exercise all

the powers of the Commission” (Cornell University

Law School).

“The Textile Fiber Products Identification

Act (“Textile Act”) and Rules require marketers to,

among other things, attach a label to each covered

textile product disclosing: (1) The generic names and

percentages by weight of the constituent fibers in the

product; (2) the name under which the manufacturer

or other responsible company does business or, in

lieu thereof, the company’s registered identification

number (“RN number”); and (3) the name of the

country where the product was processed or

manufactured. As part of its ongoing regulatory

review program, the Commission published an

ANPR in November 2011 seeking comment on the

economic impact of, and the continuing need for, the

Textile Rules; the benefits of the Rules to consumers;

and the burdens the Rules place on businesses.

The ANPR also sought comment on specific issues,

including whether the Commission should amend

the Rules to incorporate the revised version of

International Organization for Standardization

(“ISO”) standard entitled “Textiles—Man-made

fibers—Generic names,” 2076:1999(E), clarify

disclosure requirements for products containing

elastic material and trimmings, clarify disclosure

requirements for written advertising, and modify

the Rules’ guaranty provisions” (Federal Trade

Commission, Textile Fiber Products Identification

Act).

33

IMPORTCLASSIFICATION

HARMONIZED TARIFF SCHEDULE

IMPORT CLASSIFICATION

According to the Harmonized Tariff Schedule

(HTS) of the United States, our line of swim wear falls

in to the Chapter 62 code of products, with a specific

code of 6211.12. In addition, swim wear has a general

rate of duty of 11.8%, while other rates go for 90%

(USTIC). According to the HTS document, “certain

garments of chapter 62 assembled abroad from

components formed and cut in the United States

which, after assembly have been subject to bleaching,

garment dyeing stone-washing, acid-washing or

perma-pressing abroad, may be eligible for entry

under a Special Access Program or Special Regime.

Eligibility must be established under a bilateral

agreement, and entry must be in compliance with

procedures established by the Committee for the

Implementation of Textile Agreements. The importer

is required to identify such garments on the entry

summary or withdrawal forms by placing the symbol

“H” as a prefix to the appropriate 10-digit chapter

62 tariff number. Certain garments of chapter 62,

manufactured (cut and assembled) from fabric

formed in the United States, may be eligible for entry

under the Outward Processing Program for textiles

and apparel. Eligibility must be in compliance with

procedures established by the Committee for the

Implementation of Textile Agreements (CITA). The

importer is required to identify such garments on

the entry summary or withdrawal forms by placing

the symbol “S” as a prefix to the appropriate 10-digit

chapter 62 tariff number” (USTIC).

34


LOGISTICS

“Globally, Cambodia stands at 114 in the ranking of 189 economies on the ease of trading across borders.

The rankings for comparator economies and the regional average ranking provide other useful information

for assessing how easy it is for a business in Cambodia to export and import goods” (Doing Business).

Cambodia has approximately 32 freight companies that are will ship products around the globe (Freightnet).

A freight company our company is interested in using for the shipment of our merchandise is Hapag-Lloyd.

This company ships from Sihanoukville to Los Angeles, CA which is a city near our store (SeaRates). For a look

at the shipping route please refer to the Appendix. According to data collected by Doing Business, exporting a

standard container of goods requires 8 documents, these

documents include: Bill of Lading, Commercial Invoice,

Customs export Declaration, Export permit, Inspection

Report (from Camcontrol), Insurance certificate, Packing

List, and Terminal handling receipts. In addition, it takes

approximately 22 days and roughly $795 per container.

Importing the same container of goods requires 9

documents, which include the same documents needed

to export as well as a cargo release order. Importing takes

24 days and costs $930 per container (Doing Business).

“Garments and footwear are the only major export

item. The main market is USA served via Singapore.

IMPORTATION

35

Forecasts are for stable volumes, but business is seasonal – May/June is the slow time. There are over 200

factories. Most imports into Sihanoukville are raw materials in containers coming from China, Taiwan,

Philippines, Indonesia. RCL is the biggest carrier. Some project cargo is handled and pipes are imported for

gas production and mining and exploration in the north. Some cargo is coming through Phu My (Vung Tau), for

instance electrical generator sets. Cement is being imported from Thailand, but now supply may be shifting

to Philippines. On the Mekong, the trade flows are reported to be all containerized. Most is to/from Vietnam

and China via transshipment in HCMC (Vung Tao). Major imports comprise tiles and other roofing materials

from China and Taiwan, empty cans for the breweries and raw materials for the garment factories steel plate

and consumer goods. Some used clothing is also imported. Exports from Phnom Penh are predominantly

footwear (particularly rubber boots) and garments” (PDP Australia Pty Ltd/Meyrick and Associates).

LOGISTICS & IMPORTATION

36


IMPORT/EXPORTREQUIREMENTS

“An individual may make his/her own

Customs clearance of goods imported for personal

use or business. All merchandise coming into the

United States must clear Customs and is subject

to a Customs duty unless specifically exempted

by law. Clearance involves a number of steps:

entry, inspection, appraisement, classification and

liquidation” (UMass Amherst).

“The U.S. Customs Service does not require an

importer to have a license or permit. Other agencies

may require a permit, license, or other certification,

depending on what is being imported. Customs

entry forms do ask for your importer number. This

is either your IRS business registration number, or if

your business is not registered with the IRS or you do

not have a business, your social security number”

(UMass Amherst).

“The importer must declare the dutiable

U.S. Importing Requirementsvalue of merchandise. The final appraisement is

fixed by Customs. Several appraisement methods

are used to arrive at this value. The transaction

value serves as the primary basis of appraisement.

Transaction value is the price actually paid or

payable by the buyer to the seller for the goods

imported. Other factors may also add to the dutiable

value of merchandise, such as packing costs, selling

commissions, royalty or licensing fees, etc. When

the transaction value cannot be determined, then

the value of the imported goods being appraised

is the transaction value of identical merchandise.

If merchandise identical to the imported goods

cannot be found or an acceptable transaction value

for such merchandise does not exist, then the value

is the transaction value of similar merchandise.

Similar merchandise means merchandise that is

produced in the same country and by the same

37

person as the merchandise being appraised. It

must be commercially interchangeable with the

merchandise being appraised. The identical or

similar merchandise must have been exported to

the United States at or about the same time the

merchandise being appraised is exported to the

United States” (UMass Amherst).

“The importer must determine the

classification number of the merchandise being

imported. The Harmonized Tariff Schedule of the

United States (HTSUS), issued by the United States

International Trade Commission, prescribes the

classification of merchandise by type of product;

e.g., animal and vegetable products, textile fibers

and textile products” (UMass Amherst).

“The importer must pay estimated duties

and processing fees if applicable. Customs makes

the final determination of the correct rate of duty.

The duty rate of an item is tied to its classification

number. The HTSUS provides several rates of duty

for each item: general rates for countries with which

we maintain normal trade relations (NTR); special

rates for special programs (free, or lower than the

rates currently accorded NTR countries); and column

2 rates for imports not eligible for either general or

special rates. Customs duties are generally assessed

at ad valorem rates, a percentage of which is applied

to the dutiable value of the imported goods. Some

articles, however, are dutiable at a specific rate (so

much per piece, liter, kilo, etc); others at a compound

rate of duty. If formal entry is required - the importer

may have to post a surety bond” (UMass Amherst).

“It is the importers responsibility to

IMPORT/EXPORT REQUIREMENTS

ensure that his or her goods being imported

meet admissibility requirements - such as proper

marking, safety standards, etc. - and that the proper

permits, if required, have been obtained in advance

of the goods arriving in the United States” (UMass

Amherst).

There are several documents required in

order to import into the United States these include:

Bill of lading, Cargo release order, Commercial

Invoice, Customs import declaration, Import permit,

Insurance certificate, Packing List, Tax certificate,

and Terminal Handling receipts. These will be further

defined in the appendix.

Cambodia Exporting Requirements “All exports goods must be examined by the

General Department of Customs and Excise (GDCE)

as a spot check, primary or in detail. Goods are

released when documents are approved, the export

tax if any is paid for, and examination is completed.

An Export Office at GDCE headquarters takes charge

of garments exports, which examines and seals

cargo with a container bolt seal (at factory premises)

that conforms to international standards. Once

they reach Sihanoukville Port, their documents

and container seal are checked by GDCE and they

are loaded on vessels. Other goods cleared at

Sihanoukville Port such as wood products undergo

Customs formality and examination on company

premises in the Sihanoukville area by GDCE staff”

(CDC).

“The majority of goods exported through

38


Sihanoukville Port are garment exports. Most of

these exported goods are examined by the Export

Office in Phnom Penh, and the containers are sealed

there. Customs at Sihanoukville Port do not reopen

the containers. They generally check the related

documents and verify the seals on the containers. If

everything is in order, containers are loaded on the

vessels for export. There are some goods cleared for

export at Sihanoukville such as wood products and

garments from factories located in Preah Sihanouk

area. The chief of customs of Sihanoukville Port

sends staff to carry out the customs formality and

examination at the investors’ premises” (CDC).

Cambodia Customs has established the

following rules for the free export of goods. “There

are three items of exported goods where taxes have

to be paid: 1) Natural rubber, 2) Uncut (unprocessed)

precious stones, and 3) Fish and crustaceans,

mollusks and other aquatic products. There are

three rates of taxes to be paid for exported goods:

1) 2%, 5% and 10% for natural rubber (Cambodia

temporary uses cascade rates for this product), 2) 5%

and 10% for processed wood (depends on level and

type of processing), 3) 10% for fish and other aquatic

products, and uncut precious stone” (VisaHQ).

There are several documents required in

order to import into the United States these include:

Bill of lading, Commercial Invoice, Customs export

declaration, Export permit, Insurance certificate,

Packing List, Inspection report, and Terminal

Handling receipts. These will be further defined in

the appendix.

39

MANUFACTURING &

Name Wincam CorporationLocation Phnom PenhWeb Address N/A but email available [email protected] Forever 21 Inc., Old Navy (Canada) Inc., Target Canada Co.Expertise Spandex, nylon, nylon spandex, swim wearCapacity Total Shipments Sent 436

Total Volume Sent 2,189,552 kgAverage Shipment 5,021 kg

Lead-Times N/AFounding Date N/A

Source: Panjiva

PRODUCTION

Wincam Corporation has key clients like Old

Navy (Canada), which is located in Toronto, Canada.

This company has received 91 shipments from them

which included Women’s swim wear composed

of Nylon Spandex. Another key client includes

Target Canada Co. located in Ontario, Canada and

has received 25 shipments from Wincam. These

shipments also included swim wear for women as

well (Panjiva). This supplier would be a good option

for our company due to the fact that has experience

in Women’s swim wear and it has well-known clients,

signifying that it is a reliable supplier that produces

high-quality products. In addition, its top countries

for shipments is the United States which is where

our business will be located.


40


Name Reliable Source Industrial Cambodia Co., Ltd.

Location Phnom Penh

Web Address http://www.rsiapparel.com

Customers Under Armour Inc., Dick’s Sporting Goods, Nike Inc.

Expertise Sportswear, swim wear

Capacity Total Shipments Sent 680

Total Volume Sent 5,537,832 kg

Average Shipment 8,143 kg

Pieces exported per year 25M

Lead-Times N/A

Founding Date 1972

Source: Panjiva

Name Quicksew (Cambodia) LtdLocation Phnom PenhWeb Address http://www.quicksew.com.kh/Customers Pacific Sunwear of California, Spanx, Dick’s Sporting GoodsExpertise Ladies Swim wear, Girl’s Swim wearCapacity Total Shipments Sent 727

Total Volume Sent 4,246,850 kgAverage Shipment 5,841 kg


Source: Panjiva

Quicksew (Cambodia) Ltd. has major clients

such as Pacific Sunwear of California (PacSun),

which is located in Anaheim, CA. This company has

received 4 shipments from them which included

Ladies Swim wear composed of Nylon Spandex.

Another key client includes Spanx, Inc. located in

Atlanta, GA and has also received 4 shipments from

Quicksew. These shipments also included swim

wear (Panjiva). This supplier would be a good choice

for our company due to the fact that its expertise

in Women’s swim wear and it has had well-known

clients, signifying that it is a reliable supplier that

produces high-quality products.

Reliable Source Industrial Cambodia Co.,

Ltd. has key clients like Under Armour Inc. which is

located in Baltimore, MD. This company has received

286 shipments from them which included Women’s

sportswear composed of Cotton knit. Another key

client includes Dick’s Sporting Goods located in

Pittsburgh, PA and has received 118 shipments from

RSI. These shipments also included sportswear for

women as well (Panjiva). This supplier would be the

best option for our company due to the fact that has

experience in Women’s swim wear and sportswear

which is a combination of our products and it has

well-known clients, signifying that it is a reliable

supplier that produces high-quality products.

41


Name Agx Lines Inc.Location Phnom PenhWeb Address N/A

Customers ClearFreight, Inc., AE Eagle America Inc., Pier 17 Honduras

Expertise Polyester, cotton, knitted, ladies, spandex

Capacity Total Shipments Sent 272

Total Volume Sent 4,240,652 kg

Average Shipment 15,590 kg

Lead-Times N/A

Founding Date N/A

Source: Panjiva

Name Quint Major Industrial Co., Ltd.Location Kandal ProvinceWeb Address N/A but email available [email protected] Nautica Men’s Sportswear, Kohl’s Department Stores Inc., Taylor Made

Adidas Golf Co.Expertise Men, polyester, wovenCapacity Total Shipments Sent 299

Total Volume Sent 1,704,212kgAverage Shipment 5,699kg


Source: Panjiva

Agx Lines Inc. has important clients like AE

Eagle America Inc. which is located in Jamaica, NY.

This company has received 3 shipments from them

which included Women’s knit jumper (Panjiva).

This supplier would be a possible alternative for

our company due to the fact that has experience in

Women’s knitted swim wear and it has worked with

American clients, signifying that it knows how to

work with U.S. companies. In addition, it also has a

high capacity rate meaning that companies see it as

a reliable and stable supplier.

Quint Major Industrial Co., Ltd. has important

clients such as Nautica Men’s Sportswear which is

located in New York, NY. This company has received

79 shipments from them which included men’s swim

trunks composed of nylon fabric. Another client is

Kohl’s Department Stores Inc. which is located in

Menomonee Falls, WI. This company has received

16 shipments from Quint which include men’s

windbreaker jackets made of woven nylon (Panjiva).

This supplier could be a possibility for our company

due to the fact that has worked with well known

clients and experience working with nylon which is

one of the fabrics we use in our products. In addition,

Quint has experience with manufacturing swim wear

which is our product category.

42


SOURCINGGUIDELINESNIX CODE OF CONDUCT

Nix and its employees must, at all times,

comply with all applicable laws and regulations.

Nix will not condone the activities of employees

who achieve results through violation of the law

or unethical business dealings. This includes any

payments for illegal acts, indirect contributions,

rebates, and bribery. The company does not permit

any activity that fails to stand the closest possible

public scrutiny.

Nix has developed a workplace code of

conduct that the company, its employees, and its

suppliers will voluntarily adopt and abide which

includes:

• The prohibition of child labor

• The prohibition of forced labor

Overview. Nix is dedicated to sourcing

products from suppliers who conduct their business

in a just and responsible manner and share our

belief in protecting human rights and maintain

the environment. All Nix suppliers are expected to

make every effort possible to avoid any abusive,

exploitative or illegal conditions in their factories.

Below are some of our efforts to ensure that our

suppliers are honoring their promise to uphold our

principles.

Management System. The factory will

have a publicly available policy dedicated to social

accountability and compliance with applicable laws

and other requirements.

1. The factory is to operate in full compliance

43

with the laws of their respective countries and with

all relevant laws, rules, and regulations, including

those concerning labor, worker health and safety

and the environment.

2. The factory will allow the Social Compliance

Officer unrestricted access to all areas of the facilities

and to all related records at all times, whether or not

advance notice has been provided.

Child Labor. No person shall be employed

at an age younger than 15 or under the age for

completion of compulsory education or country

legal working age, whichever is higher.

Forced Labor. There shall not be any use of

forced labor, whether in the form of prison labor,

indentured labor, bonded labor or otherwise.

Harassment or Abuse. Every employee

shall be treated with respect. No employee shall

be subject to any physical, sexual, psychological or

verbal harassment or abuse.

Discrimination. No person shall be subject

to any discrimination in employment, including

hiring, salary, benefits, advancement, discipline,

termination or retirement, on the basis of gender,

race, religion, age, disability, sexual orientation,

nationality, political opinion, or social or ethnic

origin.

Health & Safety. Employers shall provide

a safe and healthy working environment to avoid

accidents and injury to health arising out of, linked

with, or occurring in the course of work or as a result

of the operation of employer facilities. The factory

shall appoint a senior management representative

who is responsible for the health and safety of all

personnel and is responsible for the implementation

of the health and safety elements of this standard.

Wages & Benefits. Employers shall ensure

that wages paid for a standard working week shall

meet at least the legal or local industry minimum

standards, which ever is greater and shall always be

sufficient to meet the basic needs of personnel and

to provide some discretionary income.

Customers. To continue to succeed, we need

to win and retain customers by building partnerships

with them. Supply products and services that offer

consumers good value in terms of price, quality,

performance, style, safety and environmental

impact. Ensure that any quality or performance

problems that occur in our products are dealt with

expeditiously with the minimum inconvenience to

our customers and consumers.

Employees. Manage people with

consideration and respect t, providing feedback

on their performance. Not ask any employee to

do anything that is illegal or immoral or that fails

to comply with the standards of any recognized

professional body of which he or she is a member.

Encourage employees to speak up about any

instances of wrongdoing or breaches of this Code

that they become aware of.

Environment. Nix requires all supplier

factories and their subcontractors to comply with

all local and international laws regarding the

protection and preservation of the environment.

Our supplier audits also verify that factories have

obtained all required operating permits to handle

SOURCING GUIDELINES

44


California Transparency Act In addition to following the code of conduct

listed previously, Nix Swim wear will also abide to

the California Transparency in Supply Chain Act.

“As of January 1, 2012, the California

Transparency in Supply Chains Act (SB 657) requires

companies doing business in the state of California

to disclose their efforts to eradicate slavery and

human trafficking in their supply chain. This law is

designed to increase the amount of information

made available by companies on their efforts to

eliminate slavery and human trafficking, thus

allowing consumers to make more informed choices

regarding the products they buy and the companies

they choose to support. Nix believes that workers

at our supplier factories have the right to freely

choose where they work and be treated with dignity

and respect. Our efforts to ensure that slavery and

human trafficking are not used in the production of

our goods include the following:

Supplier Certifications. Through our supplier

agreements, Nix vendors and their factories certify

that their factories adhere to all terms and conditions

of the agreement which includes prohibiting the use

of forced labor. Nix has also created a Vendor Code

of Conduct, in line with international standards,

conventions and laws which forbids the use of all

forms of forced labor in the manufacture of our

products. Our definition of forced labor is inclusive

of slavery and human trafficking.

Verification and Evaluation of our Supply

Chain. Nix requires all suppliers to complete and

sign a questionnaire disclosing information on

all factories producing Nix’s proprietary branded

merchandise. Part of this questionnaire requires

that factories agree to a third party audit to verify

compliance with Nix’s Vendor Code of Conduct.

Additionally, whenever possible, our sourcing teams

will conduct factory walkthroughs to evaluate

their suitability to produce Nix goods. Part of this

evaluation includes assessing workplace conditions

and notifying our social compliance team of any

human rights issues observed during the walk-

through.

Third Party Audits. Nix uses independent

third-party monitoring firms to audit factories

manufacturing Nix’s proprietary branded

merchandise to verify compliance with our code of

conduct. Audits are conducted on a semi-announced

and announced basis. In some cases Nix will accept

global certifications such as WRAP, SA 8000 or recent

audits from apparel companies whose code of

conduct include the prohibition of all forms of forced

labor including slavery and human trafficking.

Accountability. Nix has a zero tolerance policy

for violations involving any form of forced labor,

slavery and human trafficking. Vendors or factories

found in violation of this policy will be immediately

hazardous materials and waste. Factories are also

required to have waste management systems in

place to ensure the proper handling and treatment

of wastewater and hazardous materials as well as to

prevent any catastrophic release of chemicals in the

environment.

45

terminated as a supplier. Our social compliance

team works closely with our senior leadership and

General Counsel to ensure that our suppliers are in

compliance with our Code of Conduct. Our executive

management is accountable to the Nominating and

Governance Committee of Nix’s Board of Directors

who are provided updates on our social compliance

program on a regular basis.

Training. Nix has conducted training with

our sourcing teams on adherence to our Code of

Conduct. Additional training with stakeholder groups

within Nix is planned for 2012 that will focus on

monitoring the risk for human trafficking and slavery

within the supply chain. We have also met with our

key suppliers and reiterated Nix’s zero tolerance

policy for factories engaged in slave labor or human

trafficking. Suppliers have been informed that they

must make every effort possible to guarantee that

workers in their factories and the factories of their

subcontractors are employed at their free will. Any

supplier or subcontractor found in violation of this

policy will be terminated.

Nix takes issues involving human rights

seriously and we expect our suppliers to do their

best to ensure that forced labor in any form is not

used in the production of our goods. We will continue

to update our policies and procedures as needed to

make certain that the appropriate safeguards are

in place to prevent any mistreatment of persons

involved in our supply chain” (PacSun).

SOURCING GUIDELINES

46


COSTING

The Nix cost sheet consists of: fabric cost, component cost, packaging and packing cost, labor, and

shipping cost. After determining the overall cost it takes to produce Nix’s Murex One-piece swimsuit, the retail

price was calculated.

The total cost to produce one unit of the Murex one-piece swimsuit is $5.57, however Nix plans on

selling this product for a retail price of $220. A In order to determine the gross margin percentage, we took

the selling price (revenue)/unit and subtracted the manufacturing cost/unit. This solution is our profit which

equals $214.43. The profit is then divided by the selling price, which leads to a gross margin of 97.47%. The

markup percentage for the Murex one-

piece is 3,849.73%, which was found

after dividing the profit by the cost. The

wholesale price will be half of the selling

price which is $110.

Pricing

47

COSTING

48


49

RISKS &BENEFITS

RISK ASSESSMENT

RISKS & BENEFITS

“There is still a huge trade deficit due to high

capital goods imports, inputs for the textile industry

(24% of imports) and oil products (15%) and especially

because of export growth, mainly of textiles and

clothing (78% of exports), remains moderate due to

ongoing weakness in the U.S. and European demand.

The increase in tourism, higher international aid

and income transfers by expatriate workers will

largely offset the rise in dividend repatriations by

foreign companies. FDIs are expected to cover the

current account deficit and their recovery since 2011

is mainly directed to major energy infrastructure

construction projects (hydroelectric dams and coal

power stations) launched by the government based

on public/private partnerships” (Global Edge).

“Meanwhile, weakness persists in the

banking sector due to lack of supervision (limited

and declining number of qualified employees)

at a time when the sector is growing rapidly. The

number of banks has doubled since 2006, with a

50% increase in assets and loans between 2010 and

mid-2012. Moreover, the banks remain vulnerable

to currency risk, due to strong dollarization, and

especially because the Central Bank’s foreign

exchange reserves are insufficient to cover foreign

currency deposits which accounted for 99% of total

deposits in July 2012” (Global Edge).

“The political stage is dominated by the

Cambodian People’s Party, led by Prime Minister Hun

Sen. At the January 2012 elections to the Senate, the

Party won 46 out of 57 seats and the June 2012 local

elections confirmed their dominance with a victory

for the party in 1592 out 1633 municipalities. Given

the opposition’s weakness, along with repeated

harassment by the CPP, the latter will probably win

the next legislative elections (lower chamber) in

Risks

50


2013. If the party wins two thirds of the seats, it will

be in a position to amend the constitution, making

democratic progress less likely. Meanwhile, tensions

between Cambodia and Thailand are still high, due to

the border dispute between the two countries (near

the Preah Vihear temple) linked to key economic

issues. Finally, the business environment will remain

marked by lack of transparency, considerable legal

uncertainty and high levels of corruption” (Global

Edge).

After analyzing the risks previously

mentioned, it can be concluded that Cambodia

still has certain problems in its government and

economy, however actions are being initiated in

order to improve these conditions.

Although the economy is less than ideal,

growth is expected to occur. “As in 2012, growth is

expected to be driven by domestic and external

demand (linked especially to public investment

in major energy infrastructure projects) in 2013.

External demand is expected to increase, although

this increase will be moderate, with the still weak

demand coming from the U.S. (main trading partner)

and the EU. In this context, manufacturing, highly

focused on the external market (clothing, textiles)

is likely to remain steady, though less robust than

before the crisis. The textile sector will no doubt

benefit from the delocalization of Chinese factories

due to rising wages in China. However, growth in the

sector will still be limited by lack of infrastructure,

Benefits

especially energy infrastructure (frequent power

cuts). Growth is also likely to be driven by the

construction sector, which is benefiting from a

rebound in residential property, boosted by rapid

private sector credit growth (20% of GDP in January

2008 and nearly 37% in July 2012). Tourism will also

expand thanks to the start of new direct flights from

several countries in Asia” (Global Edge).

Despite the fact that Cambodia has a

deficit, it “ is expected to fall slightly thanks to the

steps announced by the government (“revenue

mobilization strategy with IMF technical assistance)

to improve tax collection and gradually cut spending.

For example, the 2013 budget makes no provision for

civil servant wage rises. However, social spending

will remain substantial to cover efforts to combat

poverty. In this context, the public finances will

remain heavily dependent on foreign aid (3% of

GDP)” (Global Edge). This information shows that

even though the country still faces problems with its

economy, steps are being taken in order to improve

it and make it a better option for foreign investors.

STRENGTHS WEAKNESS

• Flexible textile industry and highly promising tourism sector

• Potential offshore hydrocarbon reserves (oil and gas)

• Country benefiting from financial support of bilateral and multilateral donors

• Political stability since 1997• Regional integration (ASEAN)

• Considerable share of agriculture in GDP; vulner-able to climatic vagaries

• Underdeveloped electricity industry• Lack of skilled labor• Dependent on concessional finance due to weak

fiscal revenues• Significant governance shortcomings• High poverty levels

OPPORTUNITY THREATS

• Oil and gas exports• Higher crop yields• FDI potential• Tourism development• Better governance• Emerging private sector

• “Oil Curse”• Worsening governance• Loss of aid• Garment exports competition• Growing unemployment/insecurity

Source: United Nations Development Program

51

SWOTANALYSIS

SWOT ANALYSIS

52


In conclusion, Cambodia, is a land mainly

covered in plains and great rivers which connect to

major trade routes to China to India and Southeast

Asia. It is a land full of many influences of a variety

of Asian cultures, along with those of France and the

United States in its urban capital of Phnom Penh.

Possible risks of manufacturing in Cambodia

could result from the country’s past experiences

with political, economic, and social instability,

however the future outlook of Cambodia seems to

be positive. Although the nation is developing and

assimilating Western culture, there is the possible

disadvantage of miscommunication due to culture

differences.

The advantages of manufacturing in this

country include its improved economy, and the

country seems to be living by the words of the

Cambodian proverb, “Fear not the future, weep not

for the past.” (Overton).This has helped to make it

a place of potential for foreign investment once

the issues in the country are better resolved by the

Royal Government of Cambodia. In addition, with

the garment industry being one of the country’s top

industries, it provides a better opportunity for Nix to

manufacture its products there.

After performing a full country analysis, it

can deduced that this country provides a great

opportunity for our business of Nix swim wear to

choose as a manufacturer for our products with its

gradually improving apparel and textile industry.

CONCLUSION

53

APPENDIX

In 1962, Cambodia took its first national

census as an independent country and reported

a population of approximately 5,700,000.

Unfortunately in the years after 1970, population

figures of the country are complicated to measure

due to the vast amount of people who died or were

displaced during this time. Once stability returned

to the country in the 1990s, a second national census

was conducted measuring the population at more

than double that in 1962 (Overton).

Subsequently, Cambodia’s population has

continued to grow at rate above the world average.

The largest group of the population is made up

of children under the age of 15, which is common

in many developing countries. However, the age

distribution began to become more balanced as the

country began to recover from the losses from the

Khmer Rouge regime. During the 1970s, the country

suffered political and economic disruption which

Populationcritically affected the geographic distribution of the

country’s population.

Furthermore, hundreds of thousands of

citizens living in urban areas were forced to relocate

to rural areas in order to cultivate rice and maintain

irrigation works. Still, the towns and cities began to

grow, and most have regained or surpassed their

pre-1970 population levels. Once peace agreements

were made neighboring countries, the population

continued to expand throughout the years (Overton).

As of June 2013, Cambodia’s population was

measured at 15,205,539 people. This number also

takes into account the effects of additional mortality

due to AIDS; often resulting in:

• Lower life expectancy

• Higher infant mortality rate

• Higher death rates

• Lower population growth rates

Without the previously mentioned taken into

COUNTRY TRAITS

APPENDIX

54


account, the population distribution would vary by

age and sex, forecasted at 1.67%. While still majority

a rural population with 80% (as measured in 2011) of

Cambodian inhabitants living outside urban areas,

the rate of urbanization is gradually increasing now

Age Structure According to the Central Intelligence Agency, the Cambodian age structure was most recently measured

at the following for the year of 2013:

AGE STRUCTURE IN CAMBODIA

Age Range Percentage Male Population Female Population0-14 31.7% 2,428,507 2,397,327

15-24 21.2% 1,597,990 1,627,161

25-54 38.2% 2,828,752 2,985,226

55-64 4.9% 287,073 464,991

65+ 3.9% 221,356 367,156Source: Central Intelligence Agency

This data displays that

majority of the Cambodian population

falls into the age range of 25-54 years

old, with the second highest age

group being those from the ages 0-14

years old. The overall median age for

the country’s population (as of 2013)

is 23.7 years old, with males having

an average age of 23 years old, and

females measured at 24.4 years old.

The average life expectancy at birth

for the total population of Cambodia

is measured at 63.41 years old, with Source: Central Intelligence Agency

estimated at 2.13% annually. The largest area of

urban population is the nation’s capital, Phnom

Penh, which was last measured at 1.55 million

people in 2011 (Central Intelligence Agency).

Vietnamese 5%

Khmer 90%

Chinese 1%

Other 4%

DISTRIBUTION OF ETHNIC GROUPS

55

males only making it to the average age of 61.01 years, and females live to be a little bit older at 65.93 years

old (Central Intelligence Agency). Nevertheless, this measurement is far below that of developed countries,

reflecting the impact the socio- economic struggles has on the nation’s population and life expectancy.

Ethnic Groups The Khmer (also referred to as Cambodians)

make up the large majority of the population,

creating a distinctive homogeneity unique in

Southeast Asia that has stimulated a strong sense of

national identity. Ethnic minorities include Chinese,

Vietnamese, Muslim Cham-Malays, Laotians, and

different indigenous peoples of the rural highlands

(Overton).

The Khmer, those of which belong to the

Mon-Khmer ethnolinguistic group, inhabit in the

lowland regions around the Mekong River and the

Tonle Sap, on the transitional plain, and along the

coast. After centuries of intricate cultural and ethnic

fusing, the Khmer migrated southward before 200 BC

into the lush Mekong delta from the Khorat Plateau

(now Thailand). From there they were exposed to

large amounts of Indian influence and,during the

8th century, and then to Indo-Malayan influence,

possibly due to the immigration from Java. During

the 10th to 15th century, the emergence of the Tai

people took place, and then the Vietnamese amid

the beginning of the 17th century, and finally the

Chinese in the 18th and 19th centuries (Overton).

Within the ethnic minorities in Cambodia

before 1975, the Chinese were the most significant,

since they regulated the country’s economic life.

Indingenous Cambodian


APPENDIX

Buddhist 96.4%

Muslim 2.1%

Other 1.3%

Unspecified 0.2%

DISTRIBUTION OF RELIGION

56


However, during the revolution of the 1970s, they

were pushed aside and made to become ordinary

peasants. Once the revolution ended, those who

remained in the country or later returned, eventually

gained some of their previous influence as the urban

centers Those who did not seek refuge abroad after

1975 and other who subsequently returned regained

some of their former influence as urban centers were

recovered (Overton).

On the other hand, the Vietnamese minority

had a slightly lower status than that of the Chinese,

especially after majority of them relocated to

Vietnam after 1970. However, during the 1980s, a

considerable amount of Vietnameses immigrants

(many of them former residents of Cambodia)

resettled in the country. Following centuries of

reciprocated dislaike and distrust, Vietnamese and

Khmer interaction and relations has been clouded,

creating infrequen intermarriage (Overton).

Religion Although, predominantly Buddhist, other

religions do exist in Cambodia. Majority of the

ethnic Khmer are Theravada Buddhists, this sect

of Buddhism belongs to that of an older and more

traditional of the two great schools of Buddhism,

with the other being Mahayana. Buddhism was

recognized as the official state religion of Cambodia

until 1975, following this year the Khmer Rouge

banned all religious practices. However, once the

Khmer Rouge was replaced by the pro-Vietnamese

communist regime during the 1980s, the religion

was allowed but limited until it was restored as

the state religion in 1993. After almost 20 years of

neglect, Theravada Buddhism has not been able to

repossess the popularity and prestige it once had

before 1975 (Overton).

After the Vietnamese, the next most important

minority is the Cham-Malay group. In Cambodia

they are also referred to as Khmer Islam or Western

Cham. This ethnic group has preserved a high degree

of ethnic homogeneity and was often discriminated

against under the Democratic Kampuchea rule.

Even the indigenous people received slightly better

treatment than the Khmer Islam. These indigenous

communities are collectively known as the Khmer

Loeu or “Upland Khmer”. They include the Katu,

Stieng, Mnong, Rhade, and Jarai, among others,

and live in the northeastern provinces neighboring

Vietnam and Laos (Overton).


Khmer 90%

Chinese/Vietnamese 4.16%

French 5.2%

Other 1.56%

DISTRIBUTION OF LANGUAGE

57

Nevertheless, the social and psychological

characteristics commonly attributed to the Khmer

such as individualism, conservatism, patience,

gentleness, and little concern for material wealth;

depict Buddhist ideals that are still aspired by

Cambodians, especially in rural areas. However,

Buddhist doctrines do not have as much of an

influence in Cambodian education and ideology as

it did before the Khmer Rouge in 1975 (Overton).

Languages Nearly all of the Cambodia population

speaks Khmer, which is one of the major tongues

of the Mon-Khmer subfamily of the Austorasiatic

language family. Even the Cham-Malay (Khmer

Islam) speak Khmer as well. Since the country also

has Vietnamese and Chinese inhabitants, these

languages are spoken in the nation as well, but on

a much smaller scale. The indigenous communities

such as the Katu, Mnong, and Stieng speak Mon-

Khmer languages, whereas the Jarai and Rhade

speak languages of the Austronesian language

family (Overton).

Khmer is the official language of Cambodia

and is practiced in most social contexts such as

the government administration, education, and

mass media. Almost 90% of the population speaks

the language. However, there are slight differences

in various regions and typically comprehensible.

Modern Khmer is based on the dialect of the capital

city, and is practiced throughout the country and

understood by most of its inhabitants. The bulk of

Khmer vocabulary used in literature, the military, and

administration is influenced by Sanskrit, or Pali. Yet

due to the colonization by the French, many French

words have been assimilated into the language as well

(Kwintessential).


APPENDIX

58


Arts “In the past, the traditional visual arts of

Cambodia revealed the conservatism of the Khmer.

Ancient themes were preferred, and rarely was there

an effort to improve or adapt. The principal crafts

were weaving, silver- and gold-smithing, jewelry

making, and wood and stone sculpture. In the 1970s

and ’80s, visual arts were often made to serve the

purposes of government propaganda, and little

original art has developed in Cambodia since then”

(Overton).

“Although broadly valued as symbols of

national and ethnic identity, Cambodian classical

performing arts have little practical appeal for the

younger population. Cambodian, Thai, and other

Asian popular songs have a much wider audience,

as do locally made video compact discs (VCDs)—

the typical medium through which movies are now

produced and distributed in Cambodia. Among

urban Cambodian males, karaoke bars are a major

source of entertainment” (Overton).

“Dancing and drama were also important

forms of artistic expression. The Royal Ballet in

Phnom Penh specialized in the classical, highly

stylized apsara dances, as well as dance-dramas

recounting the Reamker (Ramayana) epic and other

tales. These forms were adapted over the centuries

by both the Khmer and the Thai from the ancient

dances of Angkor. In the countryside other dramatic

genres and folk dances were performed at festivals

and weddings by wandering troupes. The national

classical ballet, reconstituted in the early 1980s by

a handful of surviving dancers, has become highly

professional and has toured successfully abroad.

King Norodom Sihanouk’s daughter, Princess

Bopha Devi, a former star performer in the royal

troupe, vigorously supported the revival of classical

dance during her tenure as minister of culture at the

beginning of the 21st century. The Royal University

of Fine Arts has been integral to the resurrection

of Cambodian classical music and dance following

their virtual extermination in the 1970s. Cambodian

59

communities abroad have also established schools

and cultural institutions to help perpetuate these

traditions” (Overton).

Monuments “An Angkorian style tower, the inimitable

place in the whole city, located in the heart of the

capital. It was built in 1958 to Sybilles Cambodian

Independence Day after winning back their

independence from the French protectorate on

the 9th of November 1953. The monument attracts

many tourists for its peculiar looking but unique

style distinguishes it from all the buildings in the

city. It is also used as a memorial place dedicated to

the Cambodian patriots who died for the country”

(Tourism of Cambodia).

“The Independence Monument (Vimean

Ekareach) was inaugurated on November 9, 1962 to

celebrate the independence from the French in 1953,

but now also serving as a cenotaph to Cambodia’s

fallen patriots. The 20-meter high monument was

designed by Cambodian architect, Vann Molyvann,

and is shaped in the form of a lotus, which also can

be seen at Angkor and other Khmer historical sites”

(Tourism of Cambodia).

Cuisine “The history of the Khmer is written in their

food. Many dishes and sauces are similar to those

of their neighbors in Thailand. Stir-frying from

the Chinese culture and curry dishes from India

have all added to the taste of Cambodian cuisine

throughout the centuries. There are also traces of

French cuisine from the time when Cambodia was

part of French Indochina. (The baguette, or the long

French bread, is a part of the cuisine and has come

to be Cambodia’s national bread.) A typical meal

consists of at least three or four separate dishes.

Each meal usually includes a sweet, sour, salty,

and bitter sauce, to satisfy each taste bud. Rice is

a staple eaten at most meals. When prahok is not

used as either a paste or dipping sauce, it is most

likely to be replaced with kapi, a fermented shrimp

paste” (Starr).

“By blending subtle flavors and spices, Khmer

cuisine sets itself apart from the many other styles

of food in Southeast Asia. It is similar to Thai cuisine,

but is distinctive in creating full flavor without the

use of chili. (Khmer cuisine was established before

the introduction of chili.) The Khmer culture has

mastered the use of herbs and spices to create

flavor without the use of fats and meats as well. The

hallmark of Khmer cuisine is prahok, a fermented Independence Monument

APPENDIX

60


paste made from a small fish called trey riel

(Henicorhynchus siamensis). The grey or brown

color, strong odor, and intense flavor can intimidate

the uninitiated, but prahok is the cornerstone of

Khmer cuisine: even the national currency is named

after the trey riel. It is so desirable that farmers from

outlying provinces will travel great distances to

trade rice for it. Prahok is used both as a condiment

and as a main element in a variety of Khmer dishes,

and it accounts for a large portion of protein in the

Khmer diet” (Starr).

“Traditionally, the production of prahok is

a community affair. Surrounded with hundreds of

pounds of tiny fish, men and women remove the

heads, guts, and scales, while children use their feet

to crush the bodies of the small fish. The fish can

also be processed by a machine, rather than crushed

underfoot, but machines fail to remove the bad fish

and tend to not process all the fat, which is crucial

to prahok flavor. Once processed, the fish pulp is set

out to dry in the sun for a day; then it is packed in

plastic bags or jars to ferment over weeks or months

to produce the signature pungent punch. The result

is a spicy mash-like paste of which a little goes a long

way. The best quality prahok may be fermented for

as long as three years” (Starr).

61

Government The conventional long form for Cambodia is

the Kingdom of Cambodia. In the past it has been

referred to as the Khmer Republic, Democratic

Kampuchea, People’s Republic of Kampuchea, and

the State of Cambodia. The country’s government

is described as the multi-party democracy under

a constitutional monarchy (Central Intelligence

Agency).

However, it took several decades for

Cambodia to reach a defined type of government. In

1981, the Vietnam backed communist government

in Phnom Penh set up a government based on a new

constitution. Yet, in 1982, three factions opposed this

government and assembled a coalition government-

in-exile. Even though the coalition was unable to

rule in the country, it attained global recognition

maintained Cambodia’s seat at the United Nations,

and was able to negotiate with the Phnom Penh

government (Overton).

Elections Under this new constitution, is Cambodia’s

bicameral legislature, which consists of the directly

elected National Assembly as its lower chamber and

the indirectly elected Senate as its upper chamber.

APPENDIXGOVERNMENT

In 1991, a new national government was

formed after opposition groups and the government

signed peace accord. A transitional authority

was established by the UN, which oversees the

implementation of the accords, as well as elections

in 1993 that created a coalition government led by

Prince Norodom Sihanouk. Later that year, a new

constitution was established in order to restore to

the pre-1970 Kingdom of Cambodia, assembling

the constitutional monarchy and multi-party

liberal democracy. After King Sihanouk vacated the

throne in 2004, his son Prince Norodom Sihamoni

succeeded him (Overton).

APPENDIX

62


The executive power dwells with the cabinet,

governed by a prime minister—who is selected

by the king, based on the recommendation of the

chairman of the National Assembly. Other ministers

of the government are chosen from all parties

presented in the assembly (Overton).

The elections in 1993 formed the coalition

government led by Prince Norodom Sihanouk,

yet the United Nations established a transitional

authority so that they could oversee the implantation

of accords and elections (Overton). Elections for the

executive branch are conducted by the Royal Throne

Council who also chooses the king from qualified

males of royal descent. After legislative elections, a

member of the majority party or majority coalition

elect a prime minister by the Chairman of the

National assembly who is appointed by the King.

Similar to that of the legislative and executive

branches, the judicial branch holds elections by

having candidates for the Supreme Court and

Constitutional Court judge being advocated by the

Supreme Council of Magistracy. This council is a

body served by 9 members and headed by the king

and includes other high-level judicial officers. The

king appoints judges of both courts, which are the

Supreme Court and the Constitutional Court (Central

Intelligence Agency).

Stability Cambodia’s domestic political status

continues to be stable. Local elections were held

in 2012 while national elections were conducted in

2013. Due to the large majority vote, prime minister

Hun Sen and the Cambodia’s People’s Party will

remain as the leading political party and return to

power. The risk of a coup are few and dwindling,

however, violence affiliated with the election

campaigns are likely to

continue (Asia Risk).

The government’s policies are consistent

and, thus, easy to foretell. They encourage

an economy guided by the private sector and

foreign investment for most industries. Cambodia’s

domestic political status is stable so far as the current

Cambodian People’s party leader Chea Sim (center)

63

Head of Government As mentioned previously, Cambodia is a multi-party

democracy under a constitutional monarchy, which is headed

by King Norodom Sihamoni, the constitutional monarch

and head of state, who has been in power since 2004. Prime

minister Hun Sen is head of government and has been since

1985 (Central Intelligence Agency). The monarch is chosen by

a Royal Throne Council, while the prime minister is appointed

by the monarch after a vote of confidence by the National

Assembly. The executive branch also has a cabinet or Council

of Ministers, which is selected by the king but actually named

by the prime minister (Country Watch).

King Norodom Sihamoni

government is likely to maintain power

and be reliable in its policies. These

policies are yielding real economic

growth, inviting foreign direct

investment in a various industries, and

thus stimulating development that

is benefiting bulk of the population.

The stability of government policies

lessens the risk of shocks or changes

that could be distressing for business

(Asia Risk).

Those measures in the risk

model that evaluate longer-tem

political trends like the stamina of the

political system are progressing with time. Cambodia has made improvements in developing democratic

institutions and practices. The risks of a coup or extra-constitutional changes in government are much less

likely now than in previous decades. Violence related to elections is declining, and the results of elections are

progressively seen a true reflection of public inclinations. Cambodia rates better than many other countries

in Asia, based on these measures (Asia Risk).

APPENDIX

64


U.S. RepresentativeAmbassador William E. Todd has been the United

States Ambassador to Cambodia since 2012.

According to an article from the U.S. Embassy, the

responsibilities of the Ambassador include:

• Speaking with one voice to others on U.S.

policy—and making sure the mission staff to do

likewise—while delivering to the President and

the Secretary of State expert advice and honest

counsel;

• Guiding and organizing all executive branch

offices and personnel;

• Liaising with the U.S. legislative and judicial

branches so that U.S. foreign policy goals are

superior; security is upheld; and executive,

legislative, and judicial duties are carried out;

• Examining communications to or from mission

elements;

• Taking direct responsibility for the security of

the mission—including security from terrorism—

and guarding all U.S. Government personnel on

official duty and their dependents;

• Wisely operating mission resources through

consistent reviews of programs, personnel, and

funding levels;

• Reforming the mission to serve American interest

and values and to safeguard that all executive

branch agencies involved to the mission do

likewise; and

• Serving Americans with professional superiority,

the utmost standards of ethical conduct, and

diplomatic discretion.

65

Economy Cambodia’s economic growth has largely

been driven by garments, construction, agriculture,

and tourism, since 2004. During the years 2010 and

2013, the Gross Domestic Product (GDP) increased

more than 7% per year. Cambodia’s garment

industry is its most significant, accounting for 70%

of the nation’s total exports and employs more

than 400,000 people. In 2005, usable oil deposits

were found beneath Cambodia’s regional waters,

presenting a possible revenue stream for the

government, if commercial extraction becomes

viable. In addition, mining has lured interest from

and the government has publicized opportunities

for the mining of bauxite, gold, iron and gems

(Central Intelligence Agency).

The tourism industry has sustained rapid

growth with foreign arrivals beyond 2 million

per year since 2007 and reaching over 3 million

visitors in 2012. However, Cambodia remains as

one of the poorest countries in Asia. The nation also

continues to face long-term economic development

as a formidable challenge, prevented by prevalent

corruption, few educational opportunities, high-

income inequality, and poor job outlook. Roughly, 4

million people live on less than $1.25 per day, and

37% of Cambodian children under the age of five

suffer from lingering malnutrition. Over half of the

population is younger than 25 years old. In addition

to these problems, many Cambodians lack proper

education and skills to succeed, specifically in the

destitute rural regions, which also lacks simple

infrastructure (Central Intelligence Agency).

In order to improve these conditions,

the government of Cambodia is working with

bilateral and multilateral donors, such as the Asian

Development Bank, the World Bank and IMF, to

focus on the country’s many demanding needs.

These donors contribute to more than 50% of

the government budget. Cambodia will face the

APPENDIXECONOMY

APPENDIX

66


challenge of developing an economic environment

in which the private sector can generate enough jobs

to manage Cambodia’s demographic imbalance,

over the next decade (Central Intelligence Agency).

Brief History Cambodia’s economy was one of the least-

developed in Southeast Asia, even before 1975.

The country massively depended on rice and

rubber and subsequently was susceptible to annual

fluctuations caused by impulses in the weather

and world market prices. The economy was largely

dominated by agriculture, with many rural families

involved in rice cultivation. Although the tradition of

landownership was solid, family landholdings were

comparatively small, and the rural population was

mainly self-sufficient. Two and a half acres of rice

paddy supported for the needs of a family of five

people, and additional requirements were usually

satisfied by fishing, cultivating fruit and vegetables,

and raising livestock. Famine was uncommon in

Cambodia, however the self-sufficiency of the

rural family created a conservatism that opposed

government efforts before 1975 to improve the

country’s agricultural methods (Overton).

When the pro-Vietnamese government came

into power in 1979, it disassembled the collectivized

agriculture that had been ferociously imposed on a

national scale by Democratic Kampuchea in 1975–

79. Yet, part of the collectivization continued to be

an ideal of the new administration, in an effort to

develop efficiency. The Krom samaki (voluntary

cooperative groups) later replaced collective farms

in several areas, however majority of Cambodian

farming was continued by family units who grew

crops for sustenance and for cash or barter. In 1989,

a law was passed that allowed Cambodians to buy

and sell real estate for the first time. This law had

an immediate effect on the economy by causing a

rapid growth in urban areas along with an increase

in investment, particularly in the capital. Laws were

also put into effect to restore traditional rights of

land tenure and inheritance in rural areas (Overton).

In 1992–93, tourism became (and also remains) a key

source of national revenue, but the rural economy

continues to be hindered by poor communications,

bad weather, widespread poverty and disease. In

addition, it is frequently outdated and ineffective

farming techniques. While the nation’s per capita

67

Current Economic Condition In 2013, vigorous growth in services and

export industries improved the economy by 7.2%

(Figure 3.32.1). Services continue to be the main

source of growth from the supply side, increasing

by an estimated 8.4% in 2013. This stemmed largely

from advancement in wholesale and retail trading,

real estate services, and tourism related services.

Bank credit to wholesale and retail trading grew by

24.5% to $2.5 billion and to real estate by 36.5% to

$250.5 million. Tourist arrivals increased by 17.5%

to 4.2 million (Brimble).

Due to the strong demand for Cambodia

garments and footwear in the European Union,

industry grew by an estimated 10.5%. According to

income has increased, it still is among the world’s

lowest (Overton).

During the 1990s, the country’s external debt

suddenly increased, with foreign aid continuing to

be a key source of revenue. Many of the international

donors, with Japan being number one, have used aid

to urge the Cambodian government to implement

reforms directed to promote economic development

and democratization. Targeted areas include

refugee reconstruction and resettlement, education

and training, health and sanitation, agriculture, and

community development. Creditors have postponed

and in some cases canceled repayment of loans, but

they have also cut aid disbursements when they

have differed with government policies or actions

(Overton).

customs data, exports of garments and footwear

to that market grew by 26% to $2.0.billion in 2013

and those to the United States surged by 6.0% to

$2.1 billion. Industry growth also increased due

to construction and rice milling. Bank credit to

construction expanded by 29% to $577 million, and

exports of milled rice nearly doubled to 366,000

tons, valued at $262 million. However, the floods of

later 2013 damaged crops and lowered growth in

agriculture to 1.8% last year (Brimble).

GDP growth was fueled by an increase in

private consumption, sustained by higher household

incomes. Investment also made a considerable

contribution. Domestic investment remained secure,

particularly in small-medium size enterprises (SME).

Influxes of net foreign direct investment (FDI)

were resilient at $1.3 billion, though that figure

reflected a decrease from the previous year, partly

due to political tensions after Cambodia’s national

elections in July 2013 (Brimble).

APPENDIX

68


Economic Forecast Due to political tensions of the national

elections last July, along with strikes for higher

wages by garment workers, investor confidence

has been strained and the production of garments

and footwear has been disrupted in late 2013 and

early 2014. The uncertainties could affect tourism

and real estate activity as well. Therefore, economic

growth is projected to ease to 7.0% this year before

increasing to 7.3% in 2015 (Figure 3.23.5) (Brimble).

The economic recovery forecasted for the European

Union and U.S. will benefit the garments and

footwear industry, which grants Cambodia’s exports

duty-free access. Together these markets purchase

76% of the country’s exports of garments and

footwear. The forecast for the industry as a whole

is expected to grow by 8.7% and services by 7.1%,

which both have decelerated from 2013 (Brimble).

Agriculture is beginning to recover from the

floods of the previous year, and expected to grow

by 4.7% in 2014. Crops and livestock are advancing

from a growth in the area under cultivation and by

investment in irrigation. Growth in merchandise

exports could be hampered by the disruptions

to garment and footwear production and by

descending pressure on global rice prices. Strong

domestic demand will maintain growth in imports,

so that the current account deficit, discounting

official transfers, is forecast to increase to 11.3% of

GDP in 2014 before decelerating to 10.9% next year

(Figure 3.23.7) (Brimble).

The government developed a policy for 2013–

2018, which focuses on average annual economic

growth at 7% and a reduction in the poverty rate

by at least 1% point a year. This latest policy places

emphasis on commercializing agriculture, building

urban infrastructure, supporting the development

of the private sector, expanding vocational training,

and strengthening social protection, which includes

health and nutrition. Notably, the government’s

commitment to economic reform appears to have

strengthened (Brimble).

69

Growth Incentives Overall, economic growth of Cambodia

is directed by four pillars: agriculture, garment,

tourism, and construction. The Royal Government

(RGC) of Cambodia has developed a Rectangular

Strategy, a National Poverty Reduction Strategy

(NPRS) and National Strategic Development Plant

(NSDP) which is based upon a policy position of

Exchange Rates Cambodia’s official exchange rate as of 2012

was $14.24 billion of its GDP. According to the Central

Intelligence Agency, an exchange rate is defined as:

“This entry gives the GDP or value of all final

goods and services made within a nation in a given

year. A nation’s GDP at official exchange rates (OER)

is the home-currency-denominated annual GDP

figure divided by the bilateral average US exchange

rate with that country in that year. The measure

is simple to compute and gives a precise measure

of the value of output. Many economists prefer

this measure when gauging the economic power

an economy maintains its neighbors, judging that

an exchange rate captures the purchasing power

a nation enjoys in the international marketplace.

Inflation Rate According to reports from researchers, the

inflation rate reached its peak during the second

quarter of 2008 to 25.72%. This resulted from high

oil prices, food prices, and the fluctuation of the U.S.

dollar. By the end of the year it was contained to

APPENDIX

economic growth and poverty reduction. The reform

agenda of RGC basically focuses on a developing of

economic reforms and macroeconomic stability,

including fiscal and monetary reform, trade and

investment promotion, administrative reforms,

military demobilization, and improved forestry and

fisheries management (Savath).

Official exchange rates, however, can be artificially

fixed and/or subject to manipulation - resulting in

claims of the country having an under- or over-valued

currency - and are not necessarily the equivalent of

a market-determined exchange rate. Moreover, even

if the official exchange rate is market-determined,

market exchange rates are frequently established by

a relatively small set of goods and services (the ones

the country trades) and may not capture the value

of the larger set of goods the country produces.

Furthermore, OER-converted GDP is not well

suited to comparing domestic GDP over time, since

appreciation/depreciation from one year to the next

will make the OER GDP value rise/fall regardless

of whether home- currency-denominated GDP

changed” (Central Intelligence Agency).

13,46% (Savath).

As of January 2014, Cambodia’s inflation rate

was recorded at 4.54% (Trading Economics). Year

on year inflation averaged 1.8%, in January-June,

indicating minor increases in food and fuel prices.

Growth in credit to the private sector lessened

70


INFLATION RATE FORECAST

Actual Forecast Quarterly Forecast

Long-Term Forecast

Prices Value Date Value Date Q2 Q3 Q4 Q5 2015 2020 2030

Inflation Rate (%) 4.54% Jan-14 1.25% Feb-14 1.76 1.78 1.56 1.42 3.98 3.96 4.02

Source: Trading Economics

to 29.0% in June, from 34.1% in 2012. In light of

suddenly low inflation, the average for the year

is forecast to ease to 2.5%. Predictions for current

account deficits are kept from April. Gross official

reserves increase by 9.9% to $3.6 billion in the first

half of the year, which is enough to cover 4 months

of imports of goods and services (Brimble).

Fiscal Policies In 2009, the Royal Government of Cambodia

conducted a larger budget. Overall the deficit

increased to 2,653 billion Riels ($662,939), up

from 1,198 billion Riels ($299,360) in 2008 and 987

billion Riels ($246,634) in 2007.The deficit grew

considerably to 6.2%, as a percentage of GDP in

2009 from an average of 3.1% during the time of

2004 to 2007. This increased deficit was caused by

a decrease in government revenue as result of the

global financial crisis and a growth in government

expenditure caused by larger spending on military

and security and increased salaries for public

servants (Runsinarith).

The goals of the Royal Government’s fiscal

policy are to preserve a sustainable fiscal balance

with steady increases in budget distribution for

social and economic divisions by regulating and

rationalizing public expenditure and by expanding

the tax base, averting leakages, and by bolstering

the customs and tax administration to gather

additional revues. The economical fiscal policy

has allowed the Royal Government to sustain price

stability in Cambodia’s highly dollarized economy

(CRDB).

The Royal Government’s fiscal policies are intended

to ensure a level of spending that is reliable with

macroeconomic stability. The expenditure program

is being reorganized as part of a systemic reform

package designed to promote domestic savings,

productive investment, and efficient resource

allocation. The fiscal performance in 2004 and

2005 was good, with improved domestic revenue

collection and public expenditure control (CRDB).

Structural Reforms Given limited scope of monetary policy, the

government used fiscal policy to advance cumulative

demand during the crisis. Due to its limited fiscal

space, the Cambodian government is unable to

start a large scale economic. During 2008 to 2009,

the government pursued fiscal expansion through

71

a mixture of state spending and targeted tax relief

to hard-hit segments. This resulted in doubling the

budget deficit, which increased from less than

3% of GDP pre-crisis to nearly 6% in 2009 (See Figure

5) (International Labor Organization).

Gross Domestic Product The Gross Domestic Product (GDP) in

Cambodia was worth $15.64 billion in 2013. It

currently holds a GDP value of 0.2% of the world

economy. The World Bank Group accounts for

reports on the nation’s GDP. From 1960 to 2013, the

country’s GDP averaged at $3.9 billion reaching an

all time high of $15.64 billion in 2013, and a low of

$0.5 billion in 1972. “The gross domestic product

(GDP) measures of national income and output for

a given country’s economy. The gross domestic

product (GDP) is equal to the total expenditures

for all final goods and services produced within the

country in a stipulated period of time.” (Trading

Economics).

CAMBODIA GROSS DOMESTIC PRODUCT

GDP (Purchasing Power Parity

$39.64 B (2013)

Country Comparison to the World

$37.04 B (2012)

$34.52 B (2011)

GDP (Official Exchange Rate)

$15.64 B

GDP Real Growth Rate

7% (2013)


7.3% (2012) 7.1% (2011)

GDP per capita $2,600 (2013)


$2,400 (2012) $2,300 (2011)

GDP-composition by end use (2013)

Household 74.7%

Government 7.7%Investment in fixed capital

16.4%

Investment in inventories

2.1%

Exports of goods and services

65.3%

Imports of goods and services

-66.2%

GDP-composition by sector of origin

Agriculture 34.%

Industry 24.5%

Services 40.7%


APPENDIX

72


Industries The Cambodian economy expanded at a

rate of 10% between the year of 2004 and 2007. This

was mainly caused by industries such as garment,

tourism construction and agriculture. Other major

industries that contribute to the gross domestic

product in the Cambodia industry divisions

beverages, food and beverage, and wood processing

(EconomyWatch Content).

With 59% of the Cambodia population

involved in agriculture, this is the main industry

of the country. Rice is the major food crop, while

rubber is the key commercial crop in Cambodia.

Many international aid organizations are aiding

farmers through crop diversification programs to

cultivate other crops. Agriculture division provided

29% of the country’s GDP in 2007 (EconomyWatch

Content).

“Tourism is the second largest source of

foreign exchange for Cambodia for decades after

textile. Tourism saw a setback during 1997-1998 due

to internal troubles in the country. However, the

number of visitors rose to 1,055,000 in 2004, from

219,000 in 1997. In 2008, 2 million foreign tourists

arrived in Cambodia which was 5.5% more than

the 2007 level. The major tourist destinations in the

country are Siem Reap, Phnom Penh, Sihanoukville,

Kampont, and Kep. The tourism industry fell by

2% in early 2009. The Cambodian government

is seeking help from the U.S. to give a boost to its

tourism sector” (EconomyWatch Content).

“Traditionally, Cambodia’s garment industry

has been the biggest foreign exchange earner.

According to Cambodia’s Ministry of Commerce,

the global economic downturn had a huge impact

on this sector. The value of garments exported

in January 2009 fell to US$70 million from $250

million in January 2008. During 2008-09, Cambodia

had to shut down over 30 garment factories due to

recession and lay off more than 30,000 laborers in

the garment industry. In 2008, the country imported

raw material worth US$1 billion, as revealed by the

Garment Manufacturers Association of Cambodia.

The government is taking steps to cut costs

by encouraging local production and improving

access to the Western markets” (EconomyWatch

Content).

“In 2005, Cambodia attracted immense

foreign investment due to new found reserves of oil,

bauxite, gold, iron and gems. Major investors were

the US, Thailand, Australia, South Korea and China.

Unfortunately, its mineral resources remained

unexplored to a great extent in 2006. Moreover,

commodity prices plunged in the late 2000s due to

economic depression putting a impeding the nascent

mining industry of the country” (EconomyWatch

Content).

Imports & Exports Cambodia’s foreign trade has improved

enormously after the civil and political disorder

receded in 1999. The per capita income has grown

rapidly although it continued to be lower than other

South East Asian countries. Cambodian imports

declined in value from $6.534 billion in 2008 to

73

$5.374 billion in 2009. However, as a result of the global economic recession, the economy had to suffer

through a substantial downfall in its exports. The value of exports came down to $3.582 billion as of 2009,

from $4.708 billion in 2008 (EconomyWatch Content).

For decades, Cambodia has been exporting primary products and importing finished goods. There

was a sharp decrease in exports during the war and the country had to survive on US-subsidized imports.

Trade went through a period of virtual cessation during the reign of Pol Pot, the leader of the Khmer Rouge

communist movement. In 1977, the country exported $3 million worth of goods, while it imported $22 million

worth of products (discounting trade with China) as per Western estimations (EconomyWatch Content).

Cambodia’s foreign trade saw some ascending movement after the implementation of PRK

government. In 1985, the country exported goods worth about $10 million and imported goods worth $120

million, approximately. Cambodia was trading mostly with the former USSR and its allies in the mid 1980s

(EconomyWatch Content).

Until 1992, agricultural products, such as rubber and timber, were the key export items of Cambodia.

Considering the high export of logs, the forest cover of the country fell to 40% of the land area, as estimated

by the United Nations Development Program (UNDP) (EconomyWatch Content).

TOP 5 PRODUCTS EXPORTED BY CAMBODIA

Postage Stamps 15%

Knit Sweaters 14%

Knit Women’s Suits 8.7%

Leather Footwear 6.1%

Non-Knit Women’s Suits

5.4%

TOP 5 PRODUCTS IMPORTED BY CAMBODIA

Knit Sweaters 15%

Refined Petroleum 10%

Knit Women’s Suits 9.4%

Leather Footwear 6.1%

Non-Knit Women’s Suits

5.9%

TOP 5 IMPORT DESTINATIONS OF CAMBODIA

United States 28%

Thailand 9.8%

Germany 6.7%

Vietnam 6.9%

Singapore 6.0%

Source: Observatory of Economic Complexity

APPENDIX

TOP 5 EXPORT DESTINATIONS OF CAMBODIA

United States 31%

Hong Kong 12%

Germany 7.7%

United Kingdom 6.9%

Singapore 5.8%

74


Geography “Cambodia, about one-third the size of France and somewhat larger than the U.S. state of Missouri,

is bordered to the west and northwest by Thailand, to the northeast by Laos, to the east and southeast by

Vietnam, and to the southwest by the Gulf of Thailand. The country’s maximum extent is about 280 miles

(450 km) from north to south and

360 miles (580 km) from east to

west” (Overton). Cambodia has a

total area of 181,035 sq km, with

176,515 sq km, and 4,530 sq km

(See Appendix). Comparatively, it

is slightly smaller than Oklahoma

(Central Intelligence Agency).

Phnom Penh is the country’s

capital, and largest urban center.

As a result, many of the textile and

garment manufacturers are located

here. Other cities include Kandal

Province and Sihanouk Ville (GMAC).

APPENDIXGEOGRAPHY

75

Climate “Cambodia’s climate is governed by the

monsoon winds, which define two major seasons.

From mid-May to early October, the strong prevailing

winds of the southwest monsoon bring heavy rains

and high humidity. From early November to mid-

March, the lighter and drier winds of the northeast

monsoon bring variable cloudiness, infrequent

precipitation, and lower humidity. The weather

between these seasons is transitional.

Maximum temperatures are high throughout

the year, ranging from about 82 to 83 °F (28 °C) in

January, the coolest month, to about 95 °F (35 °C)

in April. Annual precipitation varies considerably

throughout the country, from more than 200

inches (5,000 mm) on the seaward slopes of the

southwestern highlands to about 50–55 inches

(1,270–1,400 mm) in the central lowland region.

Three-fourths of the annual rainfall occurs during

the months of the southwest monsoon.” (Overton).

Natural Hazards “Severe destructions resulted from the above

decade conflicts still cause Cambodia vulnerable.

Natural disaster, on the other hand, which lately

emerged consequently from the above experiences,

has caused Cambodia highly potential- exposed

to both economical and social vulnerabilities; as

a result, Cambodia is highly susceptible to natural

disasters, primarily floods” (ADRC).

“Currently Cambodia is particularly prone to

Annual River Flooding during the monsoon-raining

season while other phenomena also frequently occur

such as; tropical storms, droughts and forest fires etc.

Those hazards are major factors cause occurrence of

natural disasters that lead to contributory reduction

of the pace of sustained economic development

in this country. Many Cambodian communities,

mainly communities situate along the two major

watersheds; Tonle Sap and Mekong Rivers, have

proven to be extremely vulnerable to the effects of

those natural hazards. Localized flooding caused by

monsoon thunderstorms is a serious threat as they

periodically sweep the country” (ADRC).

“These natural phenomena are both a curse

and a blessing as the farmers depend on the annual

rainfall for crop production and have developed an

extensive water management system to trap and

store water to be utilized during periods of drought.

In this way, many parts of the country are capable

of harvesting a primary rice crop and a secondary

harvest of vegetables or other cash producing

commodities. But in the series of consecutively

extreme flood years, high water of flood wash away

dams, dikes and distribution structures, destroy

crops and livestock, damage homes, temples,

schools, clinics, roads, and other community

infrastructure and even cause loss of human life.

This increasingly lead Cambodia to food shortage,

loss of economic output, health contamination and

consequently hunger and poverty” (ADRC).

APPENDIX

76


Natural Resources “In general, Cambodia’s mineral resources appear to be limited. In the late 1950s and throughout

the 1960s, however, exploration by Chinese experts in Kampong Thum Province disclosed commercially

exploitable deposits of iron ore amounting to about 5.2 million tons. Western sources indicated possible

reserves of high-grade iron ore, ranging from 2.5 million to 4.8 million tons, in the northern part of the country.

Chinese explorations also revealed manganese ore reserves, estimated at about 120,000 tons, in Kampong

Thum Province” (Mongabay).

“Deposits of phosphate, limestone, and clay of exploitable quality and quantity have also been

reported. A few thousand tons of phosphate are extracted annually in Kampot Province and are processed

locally or at a small plant in Batdambang Province. In addition, salt and coal also may be present in Cambodia’s

geological strata. Rubies, sapphires, and zircons have been mined since at least the late 1800s, mostly at Ba

Kev, Stoeng Treng Province, and at Pailin, Batdambang Province. Limited gold and silver deposits have been

reported in several parts of the country” (Mongabay).

77

APPENDIX

APPENDIXLABOR

Labor Force Most Cambodians in the workforce are still involved in agriculture, forestry, and fishing. Foreign

investment is essential to job creation in Cambodia. Apprehensions among foreign investors about political

insecurity and corruption have resulted in the lack of foreign capital inflows and only slow advances in job

opportunities. An additional problem to foreign investment and job creation has been the country’s limit of

trained and experienced labor force having the desired productive skills (Overton).

In spite of these issues, the new garment factories surrounding Phnom Penh have become a vital

source of manufacturing employment, mainly for women. The amount of women in the labor force—over

the 50% of the total population—is one of the biggest

in the world, a disparity created in part by the massive

destruction of men during the period of Khmer Rouge

rule. By law, women are ensured equal rights, but

traditional views of the proper role of women have

obviated women from entering senior management

positions in business (Overton).

Although the country struggles with foreign

investment due to political instability and corruption,

thus preventing the creation of jobs, Cambodia still has

a workforce dedicated to a variety industries, especially

the garment and textile and industry. With this

dedication, Cambodia proves to be a key investment

for companies to choose as its supplier.

78


Unemployment Rate However, despite problems faced with

foreign investment and job creation, Cambodia still

holds the leading place as far as unemployment rate

comparison to the rest of the world, with 0% as of

2011 (Central Intelligence Agency). As mentioned

earlier, the non-existent unemployment rate proves

the nation’s dedication to working therefore being

an excellent location for manufacturing.

Products Cambodia’s agricultural products that are

completely traded within the region’s countries,

while Cambodia’s industrial exports (garment and

footwear exports) are typically delivered to the main

markets U.S., E.U., Canada, Japan among others.

Garment and textile has unlocked a new age

of international trade integration for the country.

Since the mid-1990s when garment and textile

exports began in Cambodia from practically nothing

(until the mid-1990s only a small-scale production

for domestic market existed) this sector has nearly

steadily grown in position. Despite numerous

warnings that Cambodia’s garment industry

success will collapse once the MFA ends due to the

lack of domestic input suppliers, it the garment

industry proved to be much more sustainable than

predicted (Cambodian Top Ten Products). This

allows Cambodia to export regardless of higher

production costs to buyers who are apprehensive of

labor standards are to order at least some of their

supply from labor-friendly production sources.

A decrease in Cambodia’s garment export

ensued only with the outbreak of the world financial

crisis when the demand weakened particularly in

the U.S. However, even without this drop in world

demand for Cambodian garment which is projected

to be a temporary problem, the government is well

mindful that the export structure needs to be set on

a broader basis in order to remain on the path of

export-fuelled economic growth. A good indicator,

also, the Cambodian garments products export

began recently to stabilize (Cambodian Top Ten

Products). With garments and textiles being one

of the most prominent exports of Cambodia, swim

wear can take advantage of the opportunity to use

Cambodia as a potential supplier.

Comparable to garment also the footwear

industry had been founded mostly through foreign

investors (mainly from Taiwan) who built in the

mid-1990s factories in order to profit from favorable

market access offered by key overseas markets

to Cambodia. In 2008, the main regional market

of Cambodian footwear was the European Union

where tariff-free market access is granted because

of Cambodia’s standing as a Least Developed

Country (LDC). Germany and the UK make up about

44% of Cambodian footwear exports. Japan is the

largest individual country market, with 33% where

Cambodia relishes in a very moderate tariff of

2.7%. Initially, Japan had a much higher share in

Cambodia’s footwear exports but lost its position

due to the rise of Cambodian exports to the EU

market (Cambodian Top Ten Products).

Cambodia has a long history of rubber

79

farming that began in French colonial era.

With growing international market orientation rubber is once again a vital crop in Cambodia. It can

be plainly specified that rubber is a predominantly dynamic sector in Cambodia that draws an increasing

number of domestic farmers as well as foreign investors who use land-concession to form large-scale rubber

plantations. Yet, due to informal trade the real number is considerably higher and growing as many farmers

change from their former crops to rubber due to a favorable rubber price development in recent years

(Cambodian Top Ten Products).

APPENDIX

80


APPENDIXIMPORTING/EXPORTING DOCUMENTS

Bill of Lading The Bill of Lading (BOL) is a required document to move a freight shipment. The BOL functions as a

receipt of freight services, a contract between a freight carrier and shipper and a document of title. The bill of

lading is a legally binding document supplying the driver and the carrier all the details needed to process the

freight shipment and invoice it accurately (FreightQuote).

This document includes shipper’s and receiver’s/consignee’s names and complete addresses. It also

includes a Purchas Order or special account numbers used between businesses for order tracking. The BOL

has special instructions for the carrier to ensure prompt delivery, date of shipment, and number of shipping

units. It also includes the type of packaging, including cartons, pallets, skids and drums; a note if commodity

is a Department of Transportation hazardous material. Special rules and requirements apply when you

are shipping hazardous materials. In addition, it also has a description of items being shipped, include the

material of manufacture and common name, the NMFC freight classification for the items being shipped,

and the exact weight of the shipment. If multiple commodities are being shipped, then the weight of each

commodity is listed separately. And finally, the last inclusion for the BOL is the declared value of the goods

being shipped (FreightQuote).

81

APPENDIX

82


Cargo Release Order “Cargo release processing is available only to users operational on entry summary in the specified

port of release. When the entry summary, CBP Form (CBPF) 7501, data is not available, or if use of summary

data is not desired, entry (CBPF-3461) data may be used for cargo release processing. Data submitted for the

first time must be provided on an add transaction. Data may later be replaced or deleted. For air shipments,

cargo release selectivity processing is initiated on or after arrival depending on when the cargo release data

is added to the file and is certified. On vessel shipment, cargo release selectivity processing is initiated on the

cargo release data no sooner than five days prior to the arrival of the vessel, or on or after arrival, depending

on when the cargo release data is added to the file and is certified. Cargo release data may be submitted

for release processing with the estimated date of arrival up to 90 days in the past and 60 days in the future”

(International Logistics Management).

“Cargo release processing is available only to users who are operational on entry summary. The entry

data or entry summary data to be certified must process error free and be in the Automated Commercial

System (ACS) entry file. Cargo release

processing results are provided shortly after

cargo release processing occurs. Output

consists of the provisional release status for

all entries and entry summaries provided

through ACS, which were certified for cargo

release processing” (International Logistics

Management).

Commercial Invoice “A commercial invoice form is

used for all shipments containing non-

documents. The commercial invoice is the

primary document used for importation

control, valuation, and duty determination.

This document identifies the products being

shipped” (UPS).See commercial invoice on

page 83.

Cargo Release Order Sample

83

Customs Import Declaration “When you import goods from a third country, you

have to declare the presentation of the goods – that is, their

physical arrival – to the customs authorities. After a defined

period, you have to place the goods in a customs procedure

such as free circulation or a customs procedure with economic

impact. You have to report data on customs control and for

determining the customs duties to the customs authorities in

the corresponding customs import declaration. You can simulate

calculation of the customs duties in Customs Management in the

Global Trade Services (GTS) system. You can run the simulation

for either a specific customs declaration or for individual customs

tariff numbers” (SAP).

“The types of customs declaration can differ by

country. For example, you can submit single customs declarations

for each goods receipt or use simplified customs declarations to

speed up your import processes. If you use simplified customs declarations, you have to submit separate

supplementary customs declarations to declare missing data for individual transactions or use a collective

declaration for all the transactions in a period” (SAP).

Commercial Invoice

Customs Import Declaration

Import Permit

“An import permit is a document

issued by a national government

authorizing the importation of certain

goods into its territory. Each import

license specifies the volume of imports

allowed, and the total volume allowed

should not exceed the quota. In many

countries, the importer must obtain a

specific import license for each import

shipment, but a shipment valued

below a minimum requirement does

APPENDIX

84


not require a permit. The purpose of import license

is include- to control kind and quantity of import

product, to control the import origin of the product,

and stop illegal importers” (Cambodia Export

Import).

“An experienced importer knows that it is

necessary to possess a valid license for importing

goods to do this business legitimately in most

countries. An import license is very essential

for businesses engaged in the import of goods”

(Cambodia Export Import).

“Sometimes, the imports of many goods

are under government control of respective

countries. Goods such as military or paramilitary

goods, technology, artworks, plants and animals,

medicines and chemicals when imported require

a valid license for import and many times even for

export. Importers should be aware that importing

certain goods such as weapons or other sanction

goods to countries without proper license is unlawful and if they do so they will charge as stringent criminal

action” (Cambodia Export Import)

Import Permit

Insurance Certificate “A document issued by an insurance company/broker that is used to verify the existence of insurance

coverage under specific conditions granted to listed individuals. More specifically, the document lists the

effective date of the policy, the type of insurance coverage purchased, and the types and dollar amount of

applicable liability” (Investopedia).

“A certificate of insurance is often demanded in situations where liability and large losses are a concern.

For example, a company wishes to hire a driver from a temp agency. The company will most likely ask the

agency to show them a certificate of insurance that proves that certain liabilities will be covered by insurance

in the event the driver causes problems, such as incurring damages from driving the company’s vehicles”

(Investopedia).

85

APPENDIX

Packing List “Packing List (also known as a bill of parcel, unpacking note,

packaging slip, (delivery) docket, delivery list, manifest or customer

receipt, shipping list) is a document which details the contents, and

often dimensions and weight, of each package or container. It serves to

inform all parties involved with shipping, including transport agencies,

government authorities, and customers, about the contents of the

package. It helps them deal with the package accordingly” (KK Freight).

Packing List

Tax Certificate “The certificate issued to the purchaser of land at a tax sale

certifying to the sale and the payment of the consideration thereof,

and entitling the purchaser upon certain conditions and

at a certain time thereafter to a deed or instrument of

conveyance (called a tax deed) of the land, to be executed

by the proper officer” (The Free Dictionary).

“Patent tax is an annual business registration tax

which all enterprises carrying on business activities in

Cambodia are required to pay by 31 March. A “patent tax

certificate” will be issued by the Tax Office upon registration.

If an enterprise carries out different types of businesses, a

separate patent tax certificate is required for each distinct

business activity. Likewise, if a taxpayer carries out business

in different cities or provinces, a separate patent tax

certificate is required for each location. The standard patent

tax payment is KHR1,140,000 (roughly USD$285)” (KPMG).

Terminal Handling Receipts “Terminal Handling receipts or also referred to as terminal handling charges (THC) is used in

containerized sea freight to describe the charges raised by the Port of Arrival or Discharge to lift the container

onto or off the vessel. The cost normally embraces movement within the harbor to get the container to or

from the ‘stack’. The ‘stack’ is literally the place where the containers are stacked during their period in the

Tax Certificate

86


“An export license grants permission to conduct a certain

type of export transaction. It is issued by the appropriate

licensing agency after a careful review of the facts surrounding

the given export transaction. Most

export transactions do not require

specific approval in the form of

licenses from the U.S. Government. In fact, a relatively small percentage of all

U.S. export transactions require licenses from the U.S. government. It is up to the

exporter to determine whether the product requires a license and to research

the end use of the product, in other words, to perform “due diligence” regarding

the transaction. Exporters should learn which federal department or agency has

jurisdiction over the item they are planning to export in order to find out if a

license is required” (Export.gov).

harbor and it is common for different vessels to involve different stacks. In a group (consolidation) shipment,

cost will also include unloading of the cargo from container and discharging in a warehouse” (Cargomaster).

“It is not common for the THC at origin or destination to be included in the actual ocean freight charges,

although it might be possible to arrange this. The reason for this is that Ocean Freight is generally charged out

in US $ whereas the THC would be cost incurred in a local currency - which may be weaker than the dollar.

To pay the THC as part of the freight could, therefore, actually increase the cost of that event. THC is also

sometimes referred to as FIO: Free In & Free Out. While not the same, FIO refers only to the unloading of the

Customs Export Declaration “If you wish to export products, you must declare the

export to the customs authorities and be able to produce

appropriate customs documents during the transport. For this

purpose, you must create a customs export declaration for

communication with the customs authorities and print export

documents. The system automatically requests an export

confirmation for the customs declaration” (SAP).

Customs Export Declaration

Export Permit

Export Permit

87

Inspection Report “Inspection Reports are required when mandated by the

government of the importing country. Governments assert that

inspections ensure that the price charged by the exporter reflects

the true value of the goods, prevent substandard goods from

entering their country, and mitigate attempts to avoid the payment

of customs duties” (Export.gov).

“If no discrepancies are noted during the inspection, and once

all final documents are received from the importer and exporter,

a “Clean Report of Findings” is issued confirming the shipment’s

value, customs classification, and clearance. The importer uses

the inspection report to get the imported goods released from

customs. If goods reach the border of the importing country without

inspection, they usually have to be re-exported to a nearby country

for inspection prior to re-entry or are subject to heavy penalties” (Export.gov)

Inspection Report

APPENDIX

88


MAPS

Map of United States & Cambodia

89

MAPS

Source: SeaRates

Shipping Route From Cambodia to U.S.

Natural Hazards

DESIGN SHEET

GARMENT INFORMATIONGROUP NAME: One-Piece / Maillot

CLASSIFICATION: Swimwear

SEASON: Spring / Summer 2015

ADDRESS:Santa Cruz, CA 95060

Page #01

PHONE: (314) 341-9003

EMAIL: [email protected]

DESCRIPTION: Panelled one-piece suit with 1/2" thick straps, upside down triangle cut out on back below center chest, Low scoop necklines in both front and back, Modest leg line providing full coverage in front with minimal coverage in back

DATE CREATED: APR 5, 2014 DATE MODIFIED: DATE RELEASED:

Designer's Initials:N.D.

FABRIC:Mesh: 90% Nylon, 10% SpandexNeoprene

COLORWAY: White, Sea-Foam Green, ReefPrint

STYLE NUMBER: #NX418

STYLE NAME: Murex

SKETCH

90


91

TECH PACKS

92


93

TECH PACKS

94


95

TECH PACKS

96


97

TECH PACKS

98


99

TECH PACKS

100


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