CAMBODIA: Increased US Exports Drive Out Taiwanese Firms

With the fivefold increase in the export quota price of garments from Cambodia to the US this year, several Taiwanese textile manufacturers have moved their plants to Latin America, where the quota system is more relaxed, The Taiwan Economic News reported yesterday (Tuesday 15 August). In the past, Cambodia was the favourite overseas production base for Taiwanese textile manufacturers, due to the comparably low garment export quota price to the US. But this situation changed when the US declined to renew its 14 per cent quota ratio to Cambodia recently, industry sources said.The quota price for garment exports from Cambodia to the US increased from US$5 per dozen to US$28 per dozen this year. This recent price is as expensive as that of exports from Taiwan to the US, ranking officials at the Board of Foreign Trade (BOFT) under the Ministry of Foreign Affairs said.Roo Hsing Garment Co will invest in Latin American nations such as Nicaragua and El Salvador, setting up new textile plants within the year, as its pretax profit has declined considerably in its Cambodian plant in the first half, compared with the same period a year ago. The firm expects its new plant in Nicaragua will employ some 6,000 workers. Roo Hsing expects that the proposed two new plants in Nicaragua and El Salvador will begin mass production in September. This will help offset losses in Cambodia. Tainan Spinning Co is reportedly investing NT$100 million to establish a new garment plant in Nicaragua, with output for the US market. The plant will create 5,000 jobs and will also increase exports from US$150m to US$300m per year.With a total of 12 production lines, Tainan Spinning's garment plant in El Salvador began formal production early this year. The firm expects its revenue will total US$5m from this overseas plant in 2000.