Phnom Pehn, March 12:

Asia’s most vulnerable garment sectors have survived — even flourished — and proved the nay-sayers wrong during the fir-st year without the protection of the quota system. But industry officials say they have only done so with the help of additional safeguards imposed by the US and EU against China.

The end in December 2004 of the decades-old international quota system known as the Multi-Fibre Arrangement (MFA), which gave developing countries guaranteed access to developed countries’ markets, was expected to doom the garment sector in countries like Cambodia, Bangladesh and Vietnam. But all three recorded post-MFA export gains of between nine and 11 per cent during 2005, keeping hundreds of thousands in work in an industry that is a key economic driver.

“We’ve proved all the doomsayers wrong,” said Fazlul Haq, president of the Bangladesh Knitwear Manufacturers and Exporters Association. In it’s first post-MFA foray, Bang-ladesh, one of the region’s poorest countries, posted 11 per cent export growth led by knitwear.

Bangladesh — where over 4,000 garments factories account for three-quarters of export earnings and some two million jobs — was singled out for its poor infrastructure, unstable political situation and lack of integration in the textile industry. But the latest figures have dispelled the dire predictions. “Last year, we easily beat our main competitor China in these segments. In addition, many of our big factories are so swamped with export orders some had to refuse orders because of supply side constraints,” said Haq. The association’s figures showed that more than 150 new knitwear garment factories began production last year while a large number of existing companies ramped up their production capacities. But Haq acknowledged the country struggled at first against China’s massive assault on the sector, only continuing its surge after the US and EU imposed more quotas on the east Asian giant.

In May 2005, the US invoked safeguards contained in China’s WTO accession pact, which allowed it to impose quotas on seven types of textiles from China. The EU took similar action in June following a sharp spiral immediately following the end of the MFA — sector employme-nt plunged about 10 per cent to less than 250,000 in Cambodia which also saw a boom following the additional safeguards.

The $1.9 billion sector provides the kingdom with more than 80 per cent of its export earnings and employed 279,000 workers in 236 factories as of November 2005. Exports rose by nine per cent last year, according to Van Sou Ieng, chairman of Cambodia’s Garment Manufacturers’ Association, but he warned that the expiration of the new safeguards at the end of 2007 will force a sector re-think.

Industry expert also said the smaller countries have to become more creative as market demands for cheaper products gives China an edge. The sectors “still have a chance because China is interested with mass producing. China is not interested in smaller quantities that are more difficult to produce.”