GSP Status Attracts Chinese

KHMER TIMES
SUM MANET

Travel goods exports, like backpacks, from Cambodia enter the US with zero duties. Reuters

Around 16 Chinese companies are researching the market for travel goods – such as luggage, backpacks, handbags and wallets – with the intention of setting up factories in the Kingdom to export these items to the US, using Cambodia’s duty-free quota under the US Generalized System of Preferences (GSP).

Kaing Monika, deputy secretary-general of the Garment Manufacturers Association in Cambodia (GMAC), told Khmer Times that the Chinese delegation, comprising 16 companies, were in the country last month.

“They [Chinese investors] are very keen. They are in the final stages of their research and we are optimistic that they will set up their factories here to manufacture travel goods,” said Mr. Monika.

“They are already looking at factory sites and want to piggy-back on Cambodia’s GSP status for duty-free export to the US,” added Mr. Monika.

On July 1 Cambodia was granted duty-free benefits for exports of travel goods like luggage, backpacks, handbags and wallets to the US under the GSP.

US Ambassador to Cambodia William Heidt said that this was the largest expansion for Cambodian products into the US market in 20 years since both countries started trading in 1995.

In mid-September a two-day roadshow to Hong Kong was organized jointly by the Ministry of Commerce, GMAC, the Council of the Development of Cambodia, and the US embassy in Phnom Penh to attract investors to set up travel goods factories in Cambodia.

Mr. Heidt told reporters at a press briefing, after returning from Hong Kong, that travel goods manufacturers on the island were lured by Cambodia’s duty-free GSP status and interested to move to Cambodia due to rising labor costs in mainland China.

“Many companies in China that manufacture backpacks and suitcases are looking for opportunities to move out of the mainland. It is getting more expensive to manufacture [travel goods] in China, and coupled with that rents are also higher on the mainland,” said Mr. Heidt.

According to Mr. Monika, there are 15 GMAC members currently producing travel goods for export.

Kong Sang, GMAC’s first deputy chairman, said the duty-free status for travel goods would create more jobs for Cambodians.

“I hope more factories manufacturing travel goods will be set up in Cambodia,” said Mr. Sang.

In September, Commerce Minister Pan Sorasak called on Malaysian businesses to also invest in Cambodia’s travel goods sector.

“We would like to invite Malaysian business people to invest in our travel goods manufacturing sector. We no longer have to pay duties for our exports to the US and this is a huge incentive to investors,” said Mr. Sorasak when he addressed the Cambodia-Malaysia Business Opportunities seminar.

Last year, total export of travel products was valued at about $48 million.