LANG SON, Vietnam – Cambodia’s multibillion-dollar garment industry is at risk of chain disruption from the deadly coronavirus, its strongman premier said Monday, March 2, as the outbreak cripples Southeast Asia’s key industries, bringing border trade to a trickle.
Beijing issued unprecedented lockdowns for cities and provinces most affected, bringing to a shuddering halt the so-called “Factory of the World” – key to a global supply chain.
The coronavirus has “shaken the global economy,” said Cambodia’s strongman premier Hun Sen on Monday. (READ: OECD warns of severe economic hit from virus outbreak)
Cambodia is already feeling the sting with its $7-billion-dollar garment sector reliant on China for 60% of its raw materials.
Last week, the labor ministry announced 10 factories had downsized their production lines, leaving 3,000 workers out of work.
But the full impact of the coronavirus is expected to hit in March, when nearly 200 factories are expected to run out of their reserve inventory of materials.
This could spell doom for 160,000 workers and employees – more than 20% of the sector’s 700,000-strong workforce.
Hun Sen said he had asked China to send materials urgently in order to avoid suspending workers.
A labor ministry official told Agence France-Presse (AFP) on Monday the country is expected to receive “some” by the end of March, though it would not meet its full demand.
Garment worker Pann Sokchea, who toils in Phnom Penh’s manufacturing district, fears cuts to her crucial overtime pay.
“Factories no longer have cloth coming in, so workers are concerned about their jobs,” she told AFP.
Neighboring Vietnam also stands to lose as much as $2 billion dollars if China-sourced materials are delayed for another fortnight, Le Tien Truong, director general of garment corporation Vinatex, told state-run media.
Like Cambodia, the country’s industry is reliant on China for 60% of fabrics to fuel its clothing production lines according to the Vietnam Textile and Apparel Association (VITAS).
So far, its garment exports dropped 1.7% to $4.5 billion dollars in the first two months of this year.
But exporters of finished products to China are also feeling the heat as container trucks slow to a crawl at the border.
In northern Lang Son, rows of trucks wait hours – or even days – to bring their goods through the main international crossing.
A shortage of Chinese labor means unloading operations, previously completed in just over an hour, can now take an entire day.
Meanwhile, fruits and vegetables languish in overheated trucks as drivers dressed in protective suits periodically check their freshness.
“I’ve been here for 4 days,” driver Le Thanh Duy, who was transporting dragonfruit, told AFP.
“We can do nothing but wait.” – Rappler.com