A maverick Dutch owner of a factory in Cambodia is trying to demonstrate that socially responsible entrepreneurial enterprises, not reliance on non-governmental organizations, is the Southeast Asian nation’s best path out of poverty.
“This is the only solution to help this country, not the NGOs” which to some degree create employment by setting up workshops to make trinkets for tourists, said Piet Holten, president of Pactics.
“The NGOs are trying hard to do good. They have a good heart, but in the end the effect is minimal,” Holten asserted.
Cambodia is believed to have the second highest number of NGOs per capita in the world, behind Rwanda. It is estimated between one-fifth and one-third of the country’s people directly benefit from assistance of the foreign aid groups which inject one billion dollars annually into the economy.
Holten is no armchair economist. His environmentally friendly factory on the outskirts of Siem Reap employs 350 people, mainly young women, churning out 50 million products annually, mostly microfiber cloths and pouches for designer brand sunglasses.
The facility does not resemble the typical ramshackle Cambodian garment factory – an industry infamous for exploiting its impoverished workers.
Solar panels provide 40 percent of the site’s electricity. A backup generator is powered by biofuels. In the well-ventilated wheelchair-accessible work areas all lighting is natural. There is an on-site water purification plant. Rainwater is collected to flush the toilets.
On site daycare includes roo ms for breastfeeding mothers (who get four months of paid maternity leave).
The company subsidizes a nutritious daily lunch and pays health and accident insurance – a rarity in the sector.
“We want them to stay and not get sick,” Holten explained to VOA during a factory tour. “Happy people make good products.”
Pactics, which was established with one factory 12 years ago in China, is believed to be one of only two workplaces in Cambodia with SA8000 certification (modeled on ISO standards) for socially acceptable practices.
Profits are still the bottom line, however.
“We are not a social enterprise. We are here to make money,” said Holten who acknowledged that the corporate attention paid to employees’ welfare means “I sleep a lot better.”
A productivity based piece-rate system is intended to encourage workers to earn above the minimum guaranteed wage (currently $135 per month).
That means supervisors do not have to police the factory floor as employees feel a collective sense of responsibility, Holten said.
New employees go through a five-day training program run by an Italian NGO. But the instruction is not about how to do their jobs on the factory floor. Rather they are schooled on the importance of showing up on time and how to behave in the workplace – such as waiting in line to get lunch and hygienic use of toilets. They are also educated about workers’ rights and given job safety information.
The concept of sexual harassment is explained and the importance of not tolerating it in the workplace.
These fundamentals are necessary for novice workers as “nobody had ever seen a factory” in Siem Reap province, one of Cambodia’s poorest, when the factory began operations.
“When you train them you want to keep them because training is expensive,” explained Holten, now starting his third factory (the first one is in Shanghai).
The new Raytecs division factory in Phnom Penh will make customized sportswear.
Holten does not want to stop there.
“I’d like to help more companies in Cambodia. We have the recipe,” he asserts. “There can be more companies doing this.”
Smaller companies in Cambodia do not have access to resources to increase scale or to move beyond products in the garment sector.
Pactics, whose primary client is Italy’s Luxottica Group, the world’s largest eyewear company, was able to build its Siem Reap facility with a Dutch government private sector investment grant of 700,000 euros in 2012.
Pactics desires to demonstrate socially responsible factories in Cambodia can be profitable and globally competitive.
“These girls are competing on the world market,” said Holten, who previously worked in several countries as a manufacturing consultant in the software industry.
To work at Pactics applicants must be 18 years of age, although Cambodia’s minimum employment age is 15.
It seems obvious the boss has a soft spot for his workers. Much of the labor intensive process could be automated. Holten admits packaging, for example, could be done by machines that would give a payback in a decade “but it would not be nice for these people. They won’t have a job.”
Holten stops briefly on the factory floor to chat with Chuon Pour whom he recruited and put through a polytechnic university where administrators resisted having a woman study mechanical engineering because “girls should not get their hands dirty,” as Holten recalled.
The grateful 22-year-old explained that now she “wants to share my knowledge with other employees.”
The enterprise has not been without frustrations for Holten in a country with a government notorious for inefficiency and corruption, but as Holten points out “there is no low-wage country where you do not have risks.”
Recruiting qualified local factory managers has proven nearly impossible to supervise the output of up to 18,000 pouches and 30,000 cleaning cloths per day for famous brand sunglasses and snow goggles, such as Oakley and Ray-Ban.
“We try to internally promote,” according to Holten, but until there are enough locals to be bosses some of those jobs are being filled by Europeans.
For the hundreds of Cambodian workers on the factory floor there is already evidence of upward mobility.
The majority of the bicycles in the employees’ parking lot have been replaced with motor scooters. Pactics makes sure every worker who buys a motorized two-wheeler can also afford a crash helmet 50 percent subsidized by the company.
The biggest safety risk for employees, Holten discovered, is not on the shop floor but commuting on Cambodia’s notoriously hazardous roads.