PHNOM PENH, Jan 18 (Reuters) - Business owners in Cambodia urged lawmakers to introduce stricter measures to a controversial draft trade union law on Monday to stabilise a vital manufacturing sector plagued by unrest, warning the current bill was too lenient towards unions.

The Cambodian Federation of Employers and Business Associations (CAMFEBA) submitted seven recommendations that included empowering the government to suspend registration of unions, instead of only a court, and for a union to have membership of at least one fifth of factory workers.

Strikes by assertive and politicized unions, mostly over pay, have left the government with the task of satisfying workers’ demands and keeping Cambodia’s $5 billion textiles and footwear sector attractive amid rising competition.

Rival Vietnam is seeing record foreign investments into its far larger garments and shoes industry, helped by tariff perks from multilateral trade deals and cheaper wages than China.

Myanmar is courting factory investment with its low wages and tax breaks and has recently been receiving orders for brands like Gap and H&M on garments of similar quality to those made in Cambodia.

Van Sou Ieng, president of the CAMFEBA, said strikes were being masterminded by “misbehaving” union leaders, who were a small minority damaging Cambodia’s reputation and threatening the jobs of 700,000 garment workers.

“The illegal strikes have to stop,” he told reporters

“No job, no survival, so protect the jobs first,” he said, adding that union leaders were organising strikes without consent of members.

Strikes have often been accompanied by violence as police try to disperse crowds, creating reputation risks for brands that outsource to Cambodian factories, which include Adidas , Marks and Spencer, Walmart, Next and Inditex’s Zara.

The draft law, originally requested by business owners in 2007 to curb strikes, would set rules on how unions are formed, operated and dissolved.

Labour unions and rights groups have complained that the legislation would be too restrictive and used to trample on workers’ rights.

Pav Sina, president of the Collective Union Movement of Workers, said parliament should adopt legislation that benefits all, not just business owners.

“There are many obstacles for unions to operate in this draft law,” Pav Sina told Reuters.

“We call for the removals of articles suspending unions and requiring unions to prepare financial reports.” (Reporting by Prak Chan Thul; Editing by Martin Petty)