ASEAN: Regional Trends in Economic Integration, Export ... - USITC

Indonesia has limited potential as a global competitor in garment production. 47 In spite of
these challenges, however, some U.S. apparel buyers consider Indonesia a competitive
producer and an attractive sourcing alternative to China. 48
Cambodia, Thailand, and the Philippines are the next-largest exporters of cotton woven
apparel in ASEAN. Cambodia’s exports of these goods remained relatively flat at about
$0.8 billion during 2004–08, while those from Thailand and the Philippines declined
during the same period. Of these three countries, Cambodia has the lowest labor costs and
is the most competitive producer of cotton woven apparel in terms of opportunities for
growth and integrated ASEAN production. Cambodia’s labor costs for the apparel
industry, at approximately $80 to $100 per month, 49 are among the lowest of the ASEAN
producers.
Thailand has a fully integrated textile industry, including yarn spinning, fabric weaving,
and printing, dyeing, and finishing facilities. 50 Approximately 60 percent of Thailand’s
fabric production is consumed domestically, and the remaining 40 percent is exported. 51
Thailand’s fabric producers ship their cotton woven fabrics to other ASEAN countries,
primarily Burma, Cambodia, Laos, and Vietnam, for apparel production, to benefit from
those countries’ low labor costs. 52 Thailand’s woven fabric industry is known for its highquality
cotton woven fabrics sold at relatively high prices. 53 The industry now faces
increased manufacturing costs, in part due to the use of outdated machinery, rising labor
costs, and relatively low capacity utilization rates (approximately 75 percent). 54
The cotton woven apparel industry in the Philippines contracted during the 2004–08
period. 55 Exports of cotton woven apparel from the Philippines declined annually, falling
by approximately 40 percent during 2004–08 (table 4.7). Facing intense competition from
such lower cost producers as Bangladesh, Vietnam, Cambodia, China, and Indonesia, the
Philippines lost market share in the United States, its largest cotton woven apparel
market. 56 The Government of the Philippines attempted to assist the industry by
developing incentives to attract FDI. A special zone was set up in a former U.S. military
base. All textile machinery imported into this special zone is duty-free. 57 In addition,
because the United States is the Philippines’ largest apparel export market, the
Government of the Philippines is seeking preferential duty-free treatment in the United
States for its apparel exports that are made with U.S. fabric. 58
47 Ibid.
48 Joe Ayling, “Analysis: Emerging Exporters Eye China Market Share,” April 16, 2010; Joe Ayling,
“Speaking with Style: Janet Fox, JC Penney,” April 27, 2010.
49 Industry representative, interview by Commission staff, Kuala Lumpur, Malaysia, March 10, 2010.
50 BDLINK Cambodia and ACE Project Team, “Diagnostics Report, Textile and Apparel Supply Chain
Corridors,” July 2009, 25–26.
51 BDLINK Cambodia and ACE Project Team, “Diagnostics Report, Textile and Apparel Supply Chain
Corridors,” July 2009, 15–16.
52 Industry representative, interview by Commission staff, Bangkok, Thailand, March 17, 2009.
53 BDLINK Cambodia and ACE Project Team, “Diagnostics Report, Textile and Apparel Supply Chain
Corridors,” July 2009, 15–16.
54 ACE Project Team, “Textile and Apparel Supply Chain Corridor Diagnostics, SWOT Analysis,”
May 2009, 23–24.
55 Textile Outlook International, “World Textile and Apparel Trade and Production Trends,” September–
October 2008, 26.
56 Ibid., 27.
57 Ibid., 29.
58 Galvez, “RP Eyes Duty-Free Deal with US to Boost Textile Industry,” April 20, 2010. The “Save Our
Industries Act” (Senate Bill 3170, 111th Congress) would provide duty preferences for U.S. imports of
certain apparel manufacturing in the Philippines using U.S. yarns and fabrics.
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