PHNOM PENH: While online scams have been reported to generate between US$12.5 billion and US$19 billion annually in the Kingdom, the language used has caused confusion. While the figure quoted is equivalent to as much as 40–60% of the Kingdom’s total GDP of US$51 billion, some have claimed that the figure is literally part of the Kingdom’s GDP.
One example, the US-published “Transnational Crime in Southeast Asia” report, produced in May last year, stated that the scam industry in Cambodia made $12.5 billion, which is “equivalent” to approximately 40% of Cambodia’s total GDP.
While “equivalent” is a term used to compare value to the GDP — with no part of scam income included in the GDP — some people have interpreted it as being a part of the GDP, causing confusion.
A high-profile example of this misunderstanding was former Fox News host Jeanine Pirro, now US attorney for the District of Columbia.
“Cambodia remains a source of focus, and public reporting suggests that 40 to 60% of Cambodia’s GDP is derived from scam revenue. While the Cambodian government recently appears to be taking more action against compounds, we are waiting to see whether that will actually change the prevalence of scams in Cambodia,” she said, responding to a question from The Post during an April 24 virtual press conference.
Economists explained that Pirro’s remark reflected a flawed understanding of economics. For obvious reasons, scam earnings are not found in official statistics.
“By definition, GDP is the market value of all final goods and services produced within a country’s borders during a specific period. As in other countries around the world, GDP only includes legal economic activities. It is not accurate to include illegal activities in the GDP because, by nature, they are difficult to verify, exist outside formal reporting systems, and are not reliable sources of information,” noted economist Duch Darin.
“Formally, Cambodia’s GDP growth is derived from manufacturing, agriculture, tourism, construction, logistics and digital services, based on accepted international standards,” he added.
Hong Vannak, an economist at the Royal Academy of Cambodia, echoed Darin’s sentiments, stating there is no room for illegal money in a country’s GDP. The figures can only be compared, not included. He noted that while there may be a gray area where a small part of scam revenue may end up circulating inside the legal economy, no economist can make an exact separation.
“Scammers’ activities are hidden with no clear location, time or targets. Of course, they need to eat, travel and find accommodation, and they sometimes transfer some of their money to family. So, through food, travel and accommodation, this portion falls into daily expenses within a country. We can only say that this kind of money becomes a part of the GDP in that sense.
“What has been reported is a comparison of scammers’ earnings to the total GDP. It is not that Cambodia’s GDP has a 40% share of scamming profits. Scamming doesn’t come from Cambodia only, but from many countries, such as Myanmar, Thailand and even some developed nations. Scamming takes place everywhere when states are loose in their control,” Vannak said.
Cambodian economist Lor Vichet said that there is no clear study to indicate that a particular percentage of Cambodia’s GDP comes from scamming. Therefore, it remains a gray area. Only specific studies by expert institutions like the World Bank, IMF, ADB or the Ministry of Economy and Finance can make it clear, he suggested.
In March, Prime Minister Hun Manet clarified that scams, which he labeled the “black economy,” have no place in Cambodia’s “white economy”. Those who benefit indirectly, such as drivers or landlords, were likened to a “gray economy”.
The prime minister stressed that Cambodia’s general economy, such as tourism, is unrelated to scams, and rejected the accusation that 60 per cent of Cambodia’s total economy is from scams, calling such claims untrue.
“Income from the black economy does not enter Cambodia’s official economy. It might go into house rentals, land purchases or some drivers’ salaries, but it does not contribute as a share of GDP — I want to be clear on that,” he said. - The Phnom Penh Post/ANN
