The footwear sectors share in Cambodia has grown by 4.4 percentage points

The footwear sector's share in Cambodia has grown by 4.4 percentage points

Cambodia's footwear sector has the potential to offer more investment and production opportunities than the garment sector, according to a new report from the International Labour Organization (ILO).

In its ninth Cambodia Garment and Footwear Sector Bulletin, the ILO said that between 2013 and 2018 the footwear sector's share of Cambodia's total garment, textile and footwear export value grew by 4.4 percentage points, while the garment sector's share decreased by almost 10 percentage points. 

"This development raises the question whether the footwear sector offers new opportunities for investment and production in Cambodia and invites further research," reads the report.

Cambodia also was among the top ten footwear producers, exporting footwear at a value of US$1.04bn in 2018 (+19%). Cambodia's most important export markets for shoes are the EU (46%), the US (17%) and Japan (12%).

Exports to the European Union (EU) are under threat, however, following the launch of a process earlier this year to withdraw Cambodia's duty-free and quota-free market access under the Everything But Arms (EBA) scheme. The 18-month process officially started in February 2019.

Foreign apparel and footwear receipts account for nearly 80% of Cambodia's total exports, with the country exporting US$8.5bn worth of garment and footwear exports to Europe and the US last year, according to data from the National Union Alliance Chamber of Cambodia.

At the end of last month the Garment Manufacturers Association in Cambodia (GMAC) warned manufacturers a recent increase in "illegal" strikes is hurting the sector and could lead to a loss of confidence from buyers at a time when EU trade benefits hang in the balance.

However, Cambodia is currently the fourth-largest supplier of footwear into the US, and the comments about the sector's growth come as US sourcing executives are trying to respond to the threat of higher China tariffs by moving sourcing orders to alternative countries.