Cambodia's garment exports grow at slower pace in first half

PHNOM PENH, Aug 7 (Reuters) - Cambodia's garment exports grew at a slower pace in the first half of the year, possibly due to stronger competition from Vietnam and Myanmar for U.S. sales, the central bank said.

Garment exports grew just 4 percent in the first six months of the year, less than half of the 9 percent pace seen in the same period in 2016, National Bank of Cambodia (NBC) said in its semi annual report.

Cambodia's textile and footwear industry generates $6 billion annually for the economy. It has created 600,000 jobs that sustain many rural families, helping to sharply reduce the country's poverty rate.

"The garment sector, which is the strongest force in expanding the economy, maintains fair growth even though it is at a little slow pace if compared with the same period last year," National Bank of Cambodia (NBC) said in its semi annual report.

The slowdown may be due to a 2.3 percent drop in exports to the United States amid stronger competition from Vietnam and Myanmar, the report said.

Increases in Cambodia's minimum wage were also a factor, leading to higher production costs, the report said.

Cambodia's new minimum wage is $153, more than double the $64 minimum wage for garment workers in Bangladesh, the world's second-biggest exporter of garments after China.

The country's exporters may face more challenges ahead.

With the World Bank's upgrade of the economy last year to lower-middle income country status, Cambodia will no longer receive preferential trade access in the European Union (EU) over the next three years, the report noted.

Foreign direct investment in the garment sector dropped by about 30 percent in the first quarter of 2017, compared to a 5 percent drop in the same period last year, the report said.

(Reporting by Prak Chan Thul; Editing by Kim Coghill)