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Measures in Garment
Sector
Cambodia has achieved political stability
during the last decade, which was a key-factor to enable a favorable
environment for business and investments. The economic growth was mainly
sustained by garments exports, agriculture, tourism and the construction
sector. The percentage of people living under the national poverty line
fell gradually from 45% to 35% by 2004 and further declined to 30% in
2007, proving that Cambodia will be on the right track to meet her poverty
alleviation-related Millennium Development Goals of year 2015.
In the course of world economic crisis, the
Cambodian garment sector continues to play a major role in our exports to
the world, with 70% going to the US market. However, the order for the
first quarter of 2009 declined compares with the same period of 2008
resulting in the drop in the production capacity to 70% among the 300
factories. Currently, the major buyer has been facing the credit crisis
and setting new conditions for Cambodian garment. The new terms include
the reduction of order lead time from 3 months to 40 days and a payment
credit term of 60 days. In order to address the above challenges and help
retaining the existing and attract more investment in garment sectors, the
Royal Government of Cambodia met with the Garment Association of Cambodia,
other relevant stakeholders and government agencies and agreed on the
followings:
Fiscal Measures to assist garment sectors
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Royal Government will
extend the exemption of 1% profit tax for additional two years
(2010-2011)
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Royal Government will pay
0.3% on behalf the garment factory's owner for two years (2009-2010) for
the required contribution by employers to the Social Security Plan. This
will allow the employers to pay only 0.5% of the employees' salary
instead of 0.8%
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Ministry of Economy and
Finance in cooperation with the Ministry of Labor and Vocational
Training will establish a Social Safety Support Fund (SSSF) to provide
the short training program to youth and layoff workers. This SSSF is not
only helping address the social issues but also will help to increase
the productivities of the labor for garment sector and all labor force.
At the same time, this training program, for medium term, will be
transformed as permanent measures to provide vocational skill training,
including the advanced management skill, for workers who are working at
the factories. Factory's owner may contribute in appropriate amount of
sale proportion or by volunteer. The contribution into this SSSF is tax
deductible.
Measures to improve Trade Facilitation to
facilitate import – export
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Royal Government will
implement the formality for import and export by using online
application in the framework of ASYCUDA by expediting the installation
of the software and equipment required to allow the importer and
exporter to be able to use this system.
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For the remaining measures
related to trade facilitation, Steering Committee on Private Sector
Development and its three Sub-Steering Committees, in particular the
eight Sectoral Working Group Mechanism of the Government – Private
Sector Forum shall continue to actively and effectively discuss in order
to find the potential obstacles in the import – export procedures and
raise the measures to reduce procedures and unnecessary cost, both
official and unofficial.
Measures to receive the Credit and Export
Guarantee
Measures to improve the Industrial
Relations
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Royal Government will work
closely with employers and workers to ensure that labor law and strike
procedures are fully complied.
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Ministry of Labor and
Vocational Training shall expedite the draft of the Law on Union.
Other Measures
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Competent and Local
authorities shall cooperate to prevent the activities of stealing
clothes from the factories to sale in local market.
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Garment Factory's owner
shall improve their management and strengthening the internal governance
in their factories.
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