IFC aids Cambodian garment-textile firms save $30m using resource efficiency measures

Despite pandemic-related challenges, ten Cambodian garment and textile firms with cut-and-sew and garment-washing operations participated in the International Finance Corporation‘s (IFC) Cambodia Improvement Programme in 2019 and 2020, reducing energy and water consumption by 18% and 29%, respectively.

The program’s goal is to improve resource efficiency while lowering operating expenses, and promoting sustainable private sector growth, thereby boosting the country’s economy.

According to an IFC press release, the participating producers implemented a mix of low-cost and more complicated resource efficiency initiatives over a 22-month period, such as preventive measures to reduce steam loss or the use of highly efficient washing systems.

Approximately 60% of the recommendations have been implemented so far. According to the release, if completely implemented, the measures could lower annual energy usage by 29%, water consumption by 44%, and greenhouse gas (GHG) emissions by 25% when compared to 2018.

Cambodia’s garment industry employs about 750,000 people, most of whom are women, and accounts for more than a third of the country’s GDP. The garment industry remains the country’s largest exporter, with $11.3 billion in exports in 2021. Cambodia’s competitiveness in the region, however, is hampered by high energy costs and low productivity.

Rana Karadsheh-Haddad, IFC Asia Pacific regional director for manufacturing, agribusiness and services, said that the competitiveness of Cambodia’s garment sector has been harmed by high energy prices and low productivity. That is why, to promote sustainable private sector growth and improve the competitiveness of local producers, IFC has been supporting the greening of global textile value chains at the local level. IFC will utilise its collaborations with top global brands to drive sustainability in Cambodia’s textile sector, improve recovery, and create resilience, based on these excellent results.

IFC’s Global Trade Supplier Finance (GTSF) initiative, which provides short-term financing to suppliers exporting to foreign clients by discounting invoices once they are accepted by the buyer, will provide pricing incentives to local suppliers with higher sustainability performance. GTSF will offer $276 million to Cambodian suppliers in 2021.

With financing from Korea’s Ministry of Economic and Finance, the IFC’s Cambodia Improvement Program (CIP) has been in place since 2019. The goal is to boost the garment industry’s competitiveness, productivity, and long-term growth.