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Fewer Bidders Offer Less At Garment Quota Auction

By David Kihara

The Cambodia Daily

          Cambodia’s second garment quota auction this year raised \\$440,000 for the government, substantially less than the \\$4 million earned in a February auction, Minister of Commerce Cham Prasidh said Thursday. 

Only 29 bidders showed up for the auction, held by the ministry on Wednesday, compared to 65 for the February auction, he said. 

Under an agreement with the US, Cambodia is allowed to allocate a percentage of the US garment market to manufacturers here. The ministry of Commerce does so by  auction to generate revenue for the government. 

The lack of bidders and the relatively low amount of money earned from the quotas was due to the season and a slowdown in the US economy, resulting in fewer purchase orders from US buyers, Cham Prasidh said. 

“Last year was better because the US economy was performing well,” he said. 

Garment factories have until the end of the year to fill their quotas, at which time the US will re-issue a bonus, a figure tied directly to working conditions and adherence to labor laws here. 

Bids for most types of garments stayed low, Cham Prasidh said. Only 13 successful buyers paid just more than the opening bids for all types of garments except for women’s jackets, he said. Bids for those went for more than 600 percent of the %5 per dozen starting bid. 

“Even if you make the price very low, there are no buyers,” Cham Prasidh said. 

The lackluster turnout is a bad omen for the country, one industrial leader said. “People are not so interested to place orders in Cambodia,” said Van Sou Ieng, chairman of the Garment Manufacturers Association. The lack of bidders reflects the realities of a market in which the cost of ordering in Cambodia is high compared to other countries. Madagascar and some Caribbean countries enjoy import tax exemptions from the US, while imported goods from Cambodia receive a 17 percent tariff, he said.

Cambodia’s second garment quota auction this year raised \\$440,000 for the government, substantially less than the \\$4 million earned in a February auction, Minister of Commerce Cham Prasidh said Thursday. 

Only 29 bidders showed up for the auction, held by the ministry on Wednesday, compared to 65 for the February auction, he said. 

Under an agreement with the US, Cambodia is allowed to allocate a percentage of the US garment market to manufacturers here. The ministry of Commerce does so by  auction to generate revenue for the government. 

The lack of bidders and the relatively low amount of money earned from the quotas was due to the season and a slowdown in the US economy, resulting in fewer purchase orders from US buyers, Cham Prasidh said. 

“Last year was better because the US economy was performing well,” he said. 

Garment factories have until the end of the year to fill their quotas, at which time the US will re-issue a bonus, a figure tied directly to working conditions and adherence to labor laws here. 

Bids for most types of garments stayed low, Cham Prasidh said. Only 13 successful buyers paid just more than the opening bids for all types of garments except for women’s jackets, he said. Bids for those went for more than 600 percent of the %5 per dozen starting bid. 

“Even if you make the price very low, there are no buyers,” Cham Prasidh said. 

The lackluster turnout is a bad omen for the country, one industrial leader said. “People are not so interested to place orders in Cambodia,” said Van Sou Ieng, chairman of the Garment Manufacturers Association. The lack of bidders reflects the realities of a market in which the cost of ordering in Cambodia is high compared to other countries. Madagascar and some Caribbean countries enjoy import tax exemptions from the US, while imported goods from Cambodia receive a 17 percent tariff, he said.