Cambodia’s Garment Sector Sees 12% Export Growth Amid New Green Supply Chain Mandates

Total export valuations for the sector reached $3.4 billion over the three-month period ending September 30, up from $3.03 billion reported during the same timeframe last year. The robust figures reflect steady orders from major retail buyers in the United States and the European Union, which together account for more than 65% of Cambodia's total apparel shipments.

Despite the positive trade momentum, sector leaders and international trade analysts warn that emerging environmental standards in key import markets could test the industry's competitiveness in the coming years.

"The recovery in foreign purchasing orders has provided welcome relief to factories and workers following post-pandemic supply chain disruptions," said Ken Loo, secretary-general of the Textile, Apparel, Footwear and Travel Goods Association in Cambodia (TAFTAC). "However, our long-term trajectory depends on how quickly local producers can adapt to strict international decarbonization mandates."

The European Union's upcoming Corporate Sustainability Due Diligence Directive (CSDDD) will require global brand supply chains to enforce stricter environmental and labor oversight starting next year. To maintain access to EU markets, Cambodian apparel manufacturers are being urged to transition toward renewable energy sources and reduce overall factory emissions.

Industrial experts point out that structural energy costs remain a key hurdles for local factory owners seeking to install green technology.

"Cambodian manufacturers are caught between rising global compliance demands and high domestic operational costs," said Sok Sina, a senior supply chain analyst based in Phnom Penh. "Factory owners need accessible financing and clearer regulatory frameworks to adopt rooftop solar and energy-efficient machinery without eroding operating margins."
Government officials acknowledged the challenges facing the nation's key manufacturing pillar and pledged continued policy support to facilitate the sector's green transition.
Speaking at a trade briefing in Phnom Penh on Wednesday, Ministry of Commerce spokesperson Penn Sovicheat highlighted ongoing initiatives aimed at modernizing industrial infrastructure and streamlining customs clearance.

"Cambodia remains committed to protecting its position as a reliable, high-quality sourcing destination for global apparel brands," Sovicheat said. "The government is working closely with private sector stakeholders and international trade partners to support sustainable production practices and expand market access through regional free trade agreements."
Economic advocacy groups also emphasize that maintaining robust social compliance standards will be equally vital for the industry's outlook. Human rights and labor organization representatives note that ensuring fair wages, safe working conditions, and transparent auditing processes will help Cambodian exporters maintain a competitive edge against regional competitors such as Vietnam and Bangladesh.

With garment manufacturing contributing over 10% to Cambodia's gross domestic product and employing approximately 800,000 workers—primarily women from rural provinces—the sector remains central to the nation's economic stability. Industry leaders expect export growth to remain positive through the fourth quarter, provided global retail demand remains steady and factory modernizations proceed as planned.