Better Factories Cambodia in a State of Change

Better Factories Cambodia in a State of Change

March 10, 2009
By Chea Sophal

Phnom Penh (Cambodia): The International Labour Organization’s run Better Factories Cambodia whose lessons learned created Better Work Programme in Vietnam, and Jordan is in its transitional period to go through changes. The programme will become an independent body at the end of 2010 based on the success and the social dialogues the project made.

The programme which was originally established by the trade agreement between the U.S and Cambodia Government by linking working conditions and trade has made tremendous outcomes in contributing in poverty reduction. The programme does so by monitoring working conditions in the export garment factories, reporting the labor law and international standards compliance of the factories and making social dialogue with the stakeholders such as Government, employers’ association, and trade unions. It produces biannual public synthesis report on the working conditions and situation in the garment industry of Cambodia. Based on its website, a number of brands in the U.S and EU has subscribed to the programme.

International Finance Corporation (IFC) with its Headquarters in Washington D.C joined together with ILO work on the BFC Sustainability Plan which helps BFC to become a self sustainable entity in next two years. The IFC Office in Cambodia has been much involved in promoting private sector development since 1997 in the areas of investments targeting commercially-viable business that serve as models for good corporate governance practices, and providing advisory services (on Business Enabling Environment, Agri-business Supply Chains, Access to Finance (Wing, Credit Bureau, AMK Micro-Finance), Infrastructure, and Environment and Social Sustainability (Tourism, Garment, Agriculture).

BFC is one of the IFC-ILO joint works. With the involvement of IFC, there are a number of Commercializing NGO enterprises namely, from 1999 to 2004, they are:

• ACLEDA Bank,
• Hagar Design,
• Hagar Soya,
• Digital Divide Data (DDD), and
• Grassroots Business Initiative (Graft Network Cambodia)
  

IFC representative told that the contributions of IFC to BFC are on Institutional model and Governance Structure (Better Work Alignment and Local Entity), business Strategy and Financing Plan based on Cost-Recovery, Financial Management System, HR guidelines and Management System/Change Management and Staff Consultation, and Support Transition strategy to Key Stakeholders.

Can BFC be self-sustained by 2010?
The website of BFC revealed core current funding from the World Bank, GMAC, Trade Union, AFD, and International buyers. The goal to stand alone and earn the income through selling reports and advisory services are viable. With the uncertainty of the future industry, BFC is still potential to diversify its services to other areas for examples, Hotels, Restaurants, Shoe factories, and Agriculture plantations.

Change Resistance
BFC will need to properly cope with the change management processes and change resistance. It is inevitable to have such change resistances in any organizational change. BFC has done its part in organizing its Change Management Team, Change Processes, and informed their staff members.

Future Form
The closest predictable and workable for of the future BFC is at the option of Public-Private Partnership (PPP) which is a joint work and guidance by the government and BFC future entity. Current BFC is under the ILO operation and Guidance by the Project Advisory Committee, which is a tripartite body of representatives from Government (MOLVT), Garment Manufacturing Associations in Cambodia (GMAC), and Trade Unions.