CAMBODIA has taken a heavy hit from the economic crisis caused by the Covid-19 pandemic. Firms are staring at cancelled orders, causing job losses.
Cambodians are said to hold the world’s highest average amount of microfinance institution loans, totalling US$3,804 per capita.
While the nation’s economy grew by 7% in 2019, it is projected to shrink by as much as 5.5% this year.
According to the Asian Development Bank, the current crisis could push an additional 1.3 million Cambodians into poverty.
That’s about 8% of the population.
Despite reporting fewer coronavirus cases than most of its neighbours, the kingdom could be among the region’s biggest Covid-19 losers due to economic and financial contagion effects.
The country is well known for its tourism and garment manufacturing sectors.
Cambodia’s Ambassador to Malaysia, Cheuy Vichet speaks to StarBiz about the efforts made by his government to cushion the devastating impact of the pandemic and the fight against poverty.
Q: While much richer Asean countries have been battling Covid-19, Cambodia has done fairly well on that front. How did you manage to do it?
A: In Asean, only Cambodia and Laos have until now reported zero deaths from Covid-19.
As of Aug 28, Cambodia has identified a total of 273 cases, almost all of them imported. Of these, 265 have recovered with eight under treatment.
There are several factors that helped us.
Cambodia acted quickly. As soon as our health officials were advised of growing cases abroad, thermal scanners were installed at all airports and land border crossings. Extensive contact tracing was implemented and travellers from highly infected regions were barred from entering the country.
Schools, universities and entertainment venues were closed. Domestic travel was banned for a time and the Khmer New Year celebrations were cancelled. Thousands of factory workers were quarantined. I am proud to say that my countrymen, younger Cambodians especially, played an important role in assisting the authorities by educating friends and neighbours, and distributing masks and sanitisers.
Due to the hot weather, Cambodian people normally wear face masks or kromar – traditional scarf to protect them from the heat when going out, before Covid-19. And “respectful social distancing” is part of our culture. While westerners shake hands, in Cambodia you are greeted with “Sampeah” - palms joined and with a slight bow.
I extend a heartfelt Sampeah to the World Health Organisation and to nations that have provided assistance to Cambodia. China, Japan and Vietnam donated medical equipment and supplies. The European Union, Australia, France, Germany and the United States committed millions in funds and Russia extended a hand as well. At home, I am most gratified to see that government officials, armed forces and business elites among those contributing some US$23mil to support the National Committee for Combating Covid-19.
Q: There are critics who say that some countries in the region lack the capacity to detect the virus, are under reporting cases, hiding reported cases or discouraging people from reporting them with legal threats. How do you respond to this?
A: Our small nation hosts hundreds of NGOs and other foreign representatives, whom, along with media outlets, politicians and citizens at large, are well grounded and well connected in this digital age. How could people keep silent if they got infected or died of Covid-19? Our success lies in transparency and in the innate capacity that Cambodians have of acting selflessly in times of crisis. Our health system may not be as good as others in the region but the numbers speak of itself.
For example, when Thailand locked down in March, thousands of Cambodian migrant workers rushed to get home. Testing was impractical if not impossible at that time. Families and neighbours were quite concerned, but they cooperated with the authorities immediately and the situation was kept under control.
Q: Can you tell us more about your Covid-19 strategy and what worked most effectively?A: The Cambodian government established the National Committee for Combating Covid-19.
It is the central command that leads, launches and promotes anti-virus measures including education, testing, contact tracking and border entry controls. With the purpose to stem the spread of Covid-19, Cambodia put in place stringent measures.
We suspended tourist visas, imposed temporary ban on travellers from some red zone countries, suspended flights from some countries, and undertook extensive screening and tests at border entry points.
We prevented community transmission by monitoring the 14 day-quarantine and home isolation, testing and conducting aggressive contact tracing, and imposing a week travel ban inside the country. The Health Ministry has been working closely with the WHO representative and Pasteur Institute by providing clear and accurate information about Covid-19 every week and providing the public with advice and prevention measures through the media. Things have gone very well at home and foreign nationals are still thanking us for our help in the early days of the pandemic. As you may recall, in the spirit of humanitarianism and international solidarity, Cambodia welcomed, tested and treated the passengers of the cruise ship Westerdam in February.
Q: You temporarily shut down borders to foreigners, especially those from the West, closed schools, universities and entertainment venues across the country. These must have proved effective as well?
A: Diplomats, members of international organisations, business people, employers, experts and their families can travel to Cambodia, but they must adhere to mitigation measures as prescribed by our health authorities. These measures and travel restrictions are subject to change at any time. To-date, flights from Malaysia, Indonesia and the Philippines are suspended due to increased holiday travel since mid-August through mid-September which requires extra measures to be taken to prevent potential virus transmissions. These measures cause of great inconvenience, but we are acting to ensure the safety of all.
Q: Can you tell us about the measures taken to protect your vital garment industry and tourism sector?
A: The pandemic has dealt a crushing blow to our economy. As of June, some 256 garment, footwear and travel goods factories in Cambodia had suspended operations. More than 130,000 workers are affected. Some 170 companies in the tourism sector are affected, more than 16,000 are unemployed.
Here too, the royal government acted quickly.
A multi-billion dollar stimulus package is at work. Hospitality workers are receiving 20% of their wages and a government-employer programme is providing relief payments to garment workers. A special fund is to be administered by the Rural and Agricultural Development Bank, the SME Bank of Cambodia is rolling out US$100mil in assistance and the EU has graciously provided a US$66.7mill grant to help in the recovery.
The government also granted the minimum tax exemption to airline companies registered in Cambodia and these companies were also allowed to defer payment of fees for civil aviation for six months. A three-month tax holiday was also granted for hotels, guesthouses, restaurants and tour companies in the capital Phnom Penh and major cities.
Q: Prime Minister Hun Sen and members of his government pledged to donate their monthly salaries to the National Committee for Combating Covid-19. Several members of Cambodia’s business elite also followed suit. This is quite unprecedented in Asean.
A: This is the Cambodian way. In early April, our Prime Minister announced that he would donate his salary for seven months to the National Committee.
He knew his fellow Cambodians would follow suit and more than US$20mil dollars have been raised since. I am most proud of our caring and sharing homeland. Ours is a nation that has faced unspeakable hardship and strife.
Generations of Cambodians have steeled their resolve and focused their energies (to get back on their feet). They have channelled all that is human and loving into a communal sense of belonging and compassion. Our leader need not insist.
Our Prime Minister is a symbol of stability, security and peace who has saved Cambodians from genocide. Under his leadership, Cambodia has become one of the more vibrant economies in world. We have seen an annual growth average of 7% in the last 25 years and we will beat the odds again.
Q: What are the sectors and industries that Cambodia wants to focus on as you battle the pandemic?
A: In July, the government released a US$50mil package to support the aquaculture sector and workers are being encouraged to boost local food production. The Prime Minister has urged those who have returned from working overseas to bring their labour to bear at home. US$50mil in low-interest loan funding has been made available to the agricultural sector.
Foreign tourists have come to a halt, but local sightseers are on the road – especially on weekends. The Royal Government declared a holiday in August to compensate for the cancellation of New Year celebrations in April. It’s estimated that 1.5 million people took advantage of the break to travel.
Q: Onto our bilateral relations. What are your targets for the near future?
A: I am most honoured to have the opportunity to speak on behalf of our Prime Minister and the people of Cambodia, on a most auspicious occasion - the 63rd Anniversary of Malaysia’s Independence Day.
I would like to offer the people of Malaysia my warmest congratulations and best wishes. I am pleased to note, as well, that Malaysia and Cambodia are also celebrating 63 years of fruitful diplomatic and economic relations. Our friendly relationship and bilateral cooperation has grown stronger since Cambodia joined Asean in 1999.
We have cooperated in areas ranging from politics, economics, security and culture at bilateral, regional and international levels. Our bilateral economic relations have a greater potential to grow further. Bilateral trade reached a total of US$697.73mil in 2019 - a significant increase from US$484.42mil in 2018.
Our bilateral trade is relatively low compared to Cambodia’s other trading partners. There is a bit of imbalance. Last year, Malaysia’s export to Cambodia was US$542.44mill compared with Cambodia’s exports to Malaysia at only US$115.28mil. I hope to see more Cambodian products in the Malaysian market in the coming years. I encourage investors to look to Cambodia in the areas of fresh products, halal food processing, manufacturing, and tourism.
A Double Taxation Avoidance Agreement (DTA) and a Malaysia-Cambodia Tourism Cooperation Agreement is in place. Malaysia was one of the first and biggest sources of foreign direct investment in Cambodia in the early 1990s. Today, Malaysia’s investments rank seventh among the top 10 FDI sources in the Kingdom. Soon, Cambodia will sign a bilateral free trade agreement (FTA) with China. Currently, we are negotiating a bilateral FTA with the Republic of Korea. So, in addition to existing regional FTA frameworks and preferential treatments given by main trading partners, I see this trend as a great opportunity and would like to encourage Malaysian investors to expand into Cambodia, particularly in the areas of agriculture, food processing, manufacturing, infrastructure and tourism.
When it comes to labour, there is more to be done. In an effort to prevent the exploitation of workers, our governments have signed two memorandum of understandings (MoUs) on recruitment and employment.
Unfortunately, measures designed to protect workers from unscrupulous employers and agencies have yet to be implemented.
Cambodia looks forward to continued discussions on this matter, in keeping with our most precious and fruitful relationship.