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Candid Conversation: Cambodia’s Ken Loo
Mayu Saini
9 min read
Despite a series of setbacks over the past years, the Cambodian apparel exports have finally made some progress in the first five months of 2024, with exports up by more than 22 percent over the previous year.
The garments, footwear and travel goods sector (GFT) earned more than $5 billion in this time, accounting for almost half of the country’s total export revenue. While apparel showed the biggest increase, travel goods exports were up 18.8 percent and footwear by 10 percent for the same time-period according to data from the Customs and Excise department.
Ken Loo, secretary general, Cambodia’s Textile, Apparel, Footwear and Travel Goods sector (TAFTAC), who has been at the helm of the association since 2001 told Sourcing Journal that the sector has been able to weather a critical time that included the withdrawal of the European Union’s Everything but Arms (EBA) scheme, the pandemic and the subsequent the global slowdown. He also addressed issues about freedom of association that have been a major source of global concern.
TAFTAC was earlier known as GMAC (Garment Manufacturers Association of Cambodia).
Sourcing Journal:There appear to be a lot of changes in the apparel industry in Cambodia, with many factories closing down last year, and many more opening this year. What’s the actual outlook in terms of numbers?
Ken Loo: Cambodia’s economy has been predicted to grow by 5.8 percent in 2024 according to The World Bank with the apparel, footwear and travel goods exports being the major drivers. TAFTAC now has 743 members—last year 110 companies joined as new members. If you are an apparel exporter you have to be our member. The organization started in 1996, due to the increasing need for the garment industry to stand together with a unified voice and is one of the most active and prominent trade associations in the country.
SJ: How many are apparel factories out of the total? A lot of factories closed down in 2023 as well didn’t they, more than in any other year?
KL: There are 550 garment factories, 102 bag factories, 12 shoe factories and the remainder are associates.
Last year 60 factories left the association. Every year some close and others open. Is 60 closing down more than before? Probably yes—but 110 factories opening is more than ever before.
SJ:Why the name change from GMAC to TAFTAC in 2022?
KL: GMAC became TAFTAC because the makeup of our members changed. While it was mostly garments earlier, shoes, and bags stepped up. The GMAC brand is still strong—many people still call us GMAC, but slowly people are getting used to saying TAFTAC.
SJ:Has TAFTAC been able to get more leverage with the manufacturers themselves as well as with global brands and retailers?
KL: We have been banding together in an attempt to try to effect change. But we have no leverage—or I should say it is very, very low. The leverage certainly increases by banding together—but we don’t control what our members do and cannot force them to do anything that they don’t want to. We can suggest better business decisions, and go to our members and say, “You know we want to promote these terms in our contract to protect your interests” and similar things. But any individual factory can go change that and do what they want.
We have no leverage with our customers either. Buyers are where they are because it suits their purpose— let’s be very clear about it.
They’re never in any country to help that country or to help the supplier. They are there because it suits their purpose, that’s it.
It’s always a question of price, and that’s the global situation right now. You can’t negotiate that. It’s a buyer’s market and that leaves little room for negotiation.
SJ: Is TAFTAC doing much to engage better with the global buyers?
KL: We are trying to engage the buyers, we are trying more communication, more interaction. We have been working on sustainability issues and we are fortunate we have Better Factories Cambodia (BFC) and have more interaction with the buyers through that platform as well.
SJ: Some analysts feel that Cambodian manufacturers are finding the sustainability norms from the West too heavy and prefer manufacturing for China and don’t want to bother about the West. Are you seeing that shift?
KL: How can we not bother about the West? Our number one export market is still the U.S., accounting for 40 percent of our exports in this sector. The EU accounts for 23 percent, UK is 7 percent, and Canada around 5 percent. That’s an approximate 75 percent.
How can we not bother about the West? The break-up of the exports to these markets has not really changed.
Certainly, exports to China are growing, but that does not mean we are doing Chinese brands. We are contract manufacturers—and manufacture for the brand. It’s not for us to say we want to export to one country or another. We send the goods to where our customers want them and sometimes these can be contracted by the same brands through China.
I also think it’s a totally wrong concept to say that Chinese brands or Chinese customers are less concerned about sustainability or environmental issues; I think they are more concerned about these issues.
SJ: Having lost 20 percent of the European Union’s Everything But Arms (EBA) scheme in 2018 and the Genarlized System of Preferences (GSP) from the U.S. in 2020, are manufacturers in Cambodia demoralized?
KL: No, it’s not that much different. The items that they removed under the EBA were the men’s items— so instead, we produce ladies items. What’s the difference? Instead of XXL for men, we do XL for ladies.
The 20 percent withdrawal by EBA did nothing more than that. There’s literally no impact.
As for the GSP, apparel and footwear was never part of the GSP, so what’s the big deal? We always paid duty. It was the same thing for Bangladesh, even though they lost the GSP, it didn’t matter.
But fortunately, it’s a level playing field. It’s not like we lost it and other people continued to enjoy it. The whole world has no GSP.
The only thing that affected Cambodia was for bags. We lost some orders, some moved back to China.
SJ: H&M has been withdrawing from Cambodia, too, over the past few years. How has that affected the industry?
KL: It has affected their suppliers. Some have shut down, some have switched.
SJ: The wage review is in progress, and everyone is watching closely and saying that every year there’s been a $2 increase.
KL: That’s not fair at all. We have raised the minimum wage annually since 2013. No other country has done this. We raised it even during the pandemic—in 2021 and $2 in 2022. Yes, that is low, but which other country increased their minimum wage?
In 2023, our exports dropped 18 percent across the board. If someone came and said “It was only $2″— please note that no one else did it. We have an annual review and it goes up every year and it is not just an annual review, it’s an annual increase. You have to see things in context.
SJ: In the last two months, there has been global concern that the NGO CENTRAL is being targeted for their research on inequalities for workers. What has been the TAFTAC reaction?
KL: We feel that the so-called report—it’s not “research”—was biased.
If you interview 10 people it is not a good sample size. Also, it was not random sampling—it was purposeful sampling.
I can always produce 10 people who say otherwise for that small sample. Even the two unions who participated in the report issued a statement immediately after the public release of the report to say that they didn’t fully support what the report said.
The ministry of interior has requested for CENTRAL to submit a financial report which is required under the law. It’s not a reaction to the report, but rather to complaints made by other stakeholders who reacted to the report. The law does prescribe that you need to keep financial reports and the ministry of interior has the right to call upon them if they are complaints, and in this case there are.
SJ: So who gets affected the most in this case? The labor? Or Better Factories Cambodia?
K.L: Neither. CENTRAL gets affected.
CENTRAL is a trade union disguised as an NGO. I’ve said this publicly and our position is clear—you want to be a trade union, be a trade union. We have no problems with that. There are 6,000 trade unions registered in Cambodia. Don’t register as an NGO and do trade union work—that’s not right. If you’re not subject to the same rules and regulations that other trade unions are subject to then you shouldn’t be doing the work of a trade union.
SJ: Cambodia is known to have many trade unions in each factory, and yet there are a lot of questions about not enough freedom of association…
KL: I have no idea why we are being put under the microscope by global NGOs on issues of trade unions. It appears it is mostly because Cambodia is more open. Imagine if they did this in Bangladesh—it’s not going to fly. In Vietnam—its not going to fly.
It is tolerated here. And because we are open-minded they double down on us. It’s so ridiculous to single us out on this issue.
Singapore has one trade union—it is a different case because they unratified the convention of freedom of association.
Vietnam has one trade union, and they have ratified the convention of freedom of association. It is also part of their commitment for the European Union-Vietnam Foreign Trade Agreement (FTA)—they have one trade union. Do they get called out call for lack of freedom of association?
Thailand had a coup for six years, any sanctions? To Vietnam? Myanmar had a coup, have they received any sanctions?
Cambodia was sanctioned by the EU, and they removed 20 percent of the EBA because of a lack of political space.
We had elections and they said “‘no political space.” Twenty percent of our EBA privileges were removed. Not that it affected us much, but that’s what the EU did.
So, you tell me there are no double standards—they are all around—extreme double standards
SJ: Yet you work tirelessly for the industry. Do you run out of hope? Or energy?
KL: We run out of energy sometimes. But we always have to live in hope. It’s my job to keep trying. I get paid to keep trying. I was here in 2001. I left for a year in 2008, rejoined in 2009 and I believe that it is essential for us to work together to help the industry.
