EU crisis to hit tourism again

Western tourists visit the Royal Palace in Phnom Penh. Cambodia could see a decrease in European travellers due to volatility in global markets. Photograph: Nina Loacker/Phnom Penh Post

Wednesday, 13 June 2012
Don Weinland
The Phnom Penh Post

The World Bank yesterday said developing countries should brace for a long period of volatility in global markets, which could impact tourism-reliant nations such as Cambodia.

A “serious deterioration of conditions” remained a possibility in Europe, according to the bank's Global Economic Prospects, although slow improvement was a likely outcome for the bloc.

The turmoil, which has been magnified recently by a Spanish bank bailout and the possibility of Greece's withdrawal from the eurozone, could further tighten the purse strings of European travelers.

Gauging Cambodia's market for European travelers has been difficult since numbers declined significantly during the onset of the global crisis in 2009, said Pierre Jungo, managing director of Diethelm Travel, a regional travel agency that caters largely to Europe.

Greek Crisis Holds Lessons for Cambodia

Ros Sothea, VOA Khmer
Phnom Penh Tuesday, 25 May 2010

“When debt repayment time comes, Cambodia will need to borrow more money and it could face recession, like Greece.”

While Cambodia may never experience an economic crisis like the one in Greece that rattled world markets, economists here say the experience holds valuable lessons in the importance of increased annual revenue and reduced debts and deficits.

Before a $146 billion monetary package from neighboring European countries and the International Monetary Fund last week, Greece was facing a particularly high budget deficit of 12.7 percent, in part because its national tax collection is weak and corruption there is rooted.

Greece borrowed from other countries to cover its annual government expenditures—something that almost all countries do. But by 2010, Greece’s debt had reached $400 billion, and its weak tax collection was exacerbated by the global economic crisis.

That put the country at risk of a default, worrying markets because the European Union has a number of weaker economies, especially Italy, Portugal and Spain. The stabilization package was meant to help Greece over the next three years, and in return, Greeks will face austerity measures to reduce government spending and increase revenue.

Cambodia has similar problems of debt, tax collection and corruption.

But Sam Genthy, a financial analyst who is on Cambodia’s Securities Commission, said Cambodia has been able to avoid harsh effects of the economic crisis because it does not rely on international debt for general spending. What debts it does have are long term and low interest.

“Greece uses the euro, which will be watched closely on their budget deficit,” he said. “Cambodia is not at that stage yet, despite the country’s use of the dollar.”

Still, Cambodia needs to increase revenues from taxes in order to reduce its budget deficit and debt, he said.

Cambodia’s budget deficit in 2009 stood at 6 percent, double the year before. It spent more than $600 million over its annual revenue, which depends also on international aid and loans, which in 2009 nearly reached $1 billion.

Meanwhile, Cambodia owes an estimated $4 billion to foreign countries, about 40 percent of its annual GDP. That debt has nearly doubled since 2004.

Some economists worry that debt will continue to increase if donor countries cut aid—thereby prompting a Greece-like crisis.

“Our economy depends on only four sectors, which are very fragile,” economist Chheng Kimlong said.

Garments, tourism and housing were all buffeted by the global economic crisis, he said. “And only agriculture is pretty strong.”

If that is hurt, government revenue will decline.

“When debt repayment time comes, Cambodia will need to borrow more money and it could face recession, like Greece,” he said.

And without a stable economy, investors can withdraw from a country, he said.

Din Virak, a member of the Cambodian Economic Association, said a huge reduction in donor support could indeed trigger a crisis, but the government would potentially use oil and gas revenue to fill the gap.

Cambodia could also see an upswing in tax revenues with increased economic growth, which would help it reduce debt, said Douglas Broderick, the UN’s resident coordinator for Cambodia.

And so while a debt crisis for Cambodia is not just around the corner, it is something that has to be watched.

“It’s one of the items on the watch list and we have to be careful,” said Amy Wong, an economist for the United Nations Economic and Social Commission for Asia and the Pacific. “To maintain the micro-economic stability is important, including low government deficit, so that the debt situation can reduce gradually. And to close the social gap, as well, because we should not [only] focus on economic growth, but to help the poor [and] address environmental issues.”

Hang Chuon Narun, director general of the Ministry of Economy and Finance, said the government has been careful to balance spending and revenue, which he said will ensure Cambodia doesn’t face a crisis like Greece.

Asia exits crisis but risk of unrest lingers

Mon, Jan 04, 2010
Reuters

Asia is leading the world out of global recession, but the financial crisis may yet have a dangerous sting in the tail -- the risk of social unrest as unemployment and inequality rise even as economies recover.

Fears of widespread unrest last year failed to materialise, and most Asian economies are now posting impressive growth. But unemployment is a lagging indicator, and many political risk consultancies are warning that 2010 may hold nasty surprises.

"Although we maintain that the crisis has already inflicted its deepest wounds, its impact will continue to be felt throughout 2010," the Economist Intelligence Unit said in a report.

The main downside risks to economic stability this year include asset price bubbles, deflationary pressures, and the danger of "an increase in the frequency and intensity of social and political unrest, given increased unemployment, weak growth and impending fiscal austerity measures in many countries," the EIU said.

Much of the risk is concentrated in Asia.

The EIU rates China in the "high risk" category for social unrest in 2010, upgraded from "moderate" risk in 2009. Also in the high risk category are Thailand, Indonesia, the Philippines, Sri Lanka, Cambodia, Bangladesh and North Korea.

But unrest does not necessarily lead to market meltdown. The key question is whether violence is widespread enough to threaten major political upheaval or to significantly disrupt economic activity. Viewed in these terms, China is less of a risk, but Thailand and the Korean peninsula could be flashpoints for 2010.

China: Unrest without upheaval

The single most worrying political risk for investors in Asia is that an eruption of unrest in China destabilises the country and undermines its crucial role as an engine of global economic growth. This would not only cause a major sell-off of Chinese assets, it would undermine markets worldwide.

But most analysts rate this risk as extremely low in the coming year.

The Chinese Academy of Social Sciences last month said China had seen unprecedented levels of social conflict in 2009.

But crucially, unrest has almost always been fueled by local grievances and directed at local officials, rather than challenging the legitimacy of the central government. And ethnic unrest in Xinjiang and Tibet never reached a level where it was a major threat to national cohesiveness and a worry for investors.

There is little doubt that 2010 will see multiple outbreaks of mass unrest in China. Tens of thousands of "mass incidents" are reported annually and the trend was moving sharply upwards even before the economic slowdown.

Unemployment in China, though officially at 4.3 percent for urban jobless, is estimated by analysts to be much higher given the tens of millions of migrant workers.

Income inequality is also growing -- the Chinese Academy of Social Sciences expects the income of urban residents to grow 10 percent in 2010 versus just 6 percent for the rural poor.

The government is clearly worried about the dangers of a mass movement emerging -- last month it jailed its most prominent dissident, Liu Xiaobo, to 11 years in jail for campaigning for political freedoms. But so far there is no evidence of widespread popular anger towards the government.

While protests remain localised, investors need not worry unduly about China unrest.

Focus on Thailand, Korea, India

Elsewhere in Asia, unrest is a greater concern for markets.

Thailand is a particular worry. It was mired in an intractable political conflict, broadly between urban elites and the impoverished rural poor, even before the global financial crisis battered the country's economy.

"Thailand is least comfortable politically," Standard Chartered strategists wrote in their 2010 outlook for Asia.

"The combination of a weak, effectively unelected government facing sometimes violent street protests and a troublesome former premier hovering nearby is a recipe for major uncertainty.

"Should the health of the revered king worsen again, the situation could become even more tense and threaten the sovereign rating. Confidence would suffer, foreign direct investment inflows could be deterred, and existing high levels of excess capacity would increase, dragging growth lower."

North Korea is a wild card. Kim Jong-il's regime has for years been defying analysts' predictions of its imminent demise.

Information is scarce but the North's economy is widely believed to be going from bad to worse. Although Pyongyang's announcement it will return to nuclear disarmament talks should get more aid flowing, there are increasing signs of strain.

A sudden currency redenomination late last year added to the hardship of many North Koreans, and there were reports of rare public protests following the move. With Kim's health also in doubt, the risk of sudden major upheaval cannot be discounted.

An implosion of the regime is a key political risk for the region -- not just because it would increase the danger that an unstable North Korea could launch an attack on its neighbours, but also because political collapse could lead to the sudden reunification of the peninsula, with heavy economic costs.

Analysts say that North Korea political risk is so difficult to quantify that it is unlikely to be properly priced in, meaning South Korean markets could dive if the Pyongyang regime wobbles.

A final unrest risk is India. As with China, outbreaks of violence are common in Asia's other emerging superpower, and generally are not of major concern to investors.

But Indian asset prices rallied sharply in 2009 on hopes that the surprisingly strong mandate won by the Congress party in last year's election would allow it to power ahead with economic reforms. Progress has been considerably slower than many investors had expected, and their optimistic forecasts may have to be revised.

In November, tens of thousands of farmers protesting about low state sugarcane prices blockaded India's parliament and forced the postponement of the winter legislative session.

And in December, moves to split a large southern state caused an uproar and revived calls to split other states as well.

While major upheaval is not expected in India in 2010, social pressures may well be a drag on reform, and on its markets.

Asia needs low interest rates amid recovery, ADB says

Thursday, December 17, 2009
Bloomberg

Asia should keep interest rates low even as China, South Korea and other emerging economies in the region may grow at the fastest pace in three years in 2010, the Asian Development Bank said.

“Inflation is still low,” Jong-Wha Lee, the Asian Development Bank’s chief economist, told reporters in Manila Tuesday. “We haven’t seen a very strong recovery in the region. You need low interest rates to make recovery prompt.”

China, South Korea, Taiwan, Hong Kong and 10 Southeast Asia economies may expand 6.8 percent in 2010 from 4.2 percent this year as the global recovery spurs demand for the region’s goods, according to a report released Tuesday by the ADB’s Office for Regional Economic Integration in Manila.

Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Growth could falter as the effect of stimulus measures fade and governments exit expansionary policies, the ADB division said.

“With the global recovery tentative, monetary policy should remain accommodative where feasible, with a watchful eye on inflation and asset prices,” the division said. “The recovery could falter if policy makers tighten too early, but tightening too late may lead to higher inflation and unsustainable fiscal deficits in the coming years.”

Confidence dips

Confidence in the world economy dipped last month as central banks’ actions to withdraw some emergency measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed.

Some policy makers in Asia have started raising borrowing costs to contain accelerating inflation. The Reserve Bank of Australia increased borrowing costs a total of 75 basis points at its last three meetings and Vietnam raised its benchmark rate by one percentage point to 8 percent in November.

“Inflationary pressures appear to be well under control for the moment,” the ADB’s regional integration office said. “While recently showing slight increases, inflation is still expected to remain subdued as economies operate with excess capacity.”

Recovery in East Asia also hinges on the revival of growth in Europe and in the US, as this will affect the region’s export-dependent economies, the office said.

Weaker demand

“The deleveraging cycle is still in its early years, and if households in developed countries, particularly the US, save more than expected to repair their balance sheets, then weaker consumer demand will delay recovery in these economies,” the ADB division said.

Emerging East Asia groups China, the Southeast Asian nations of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam, and the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan.

Developing Asia, which includes economies such as India and Pakistan and excludes Japan, will probably expand 6.6 percent next year after growing 4.5 percent in 2009, the ADB said in a separate note Wednesday.

Thaksin gives lecture for his role as adviser of Cambodia

PHNOM PENH, Nov. 12 (Xinhua) -- Ousted former Thai Prime Minister Thaksin Shinawatra on Thursday took his role for the first time as adviser of Cambodian Prime Minister Hun Sen and the Royal Government of Cambodia to give a lecture to more than 300 Cambodian economic experts at the Ministry of Economy and Finance.

Thaksin's first lecture focused on "Strategy to Fight Financial and Economic Crisis."

Keat Chhon, deputy prime minister and minister of economy and finance, said in his welcome speech that "He (Thaksin) initiated many eye-catching policies ... They affected the economy, public health, education, energy, social order, drug suppression and international relations."

"I think that there are a lot of things we can learn from Thaksin's very recent and distinctive experiences in order to design our own policies to address the challenges posed by the crisis and bring our economy back to its high growth record.

Relations between the two neighboring countries were further strained recently after Cambodia named ousted former Thai Prime Minister Thaksin Shinawatra its economic adviser. Thailand recalled its ambassador Thursday, and Cambodia followed suit.

Thaksin was ousted in a 2006 military coup for alleged massive corruption and other charges. His supporters say he should be pardoned and returned to power. Since the coup, Thaksin has lived abroad to escape a corruption conviction and two-year prison sentence.

Thaksin arrived here on Tuesday. After his arrival, Thailand government asked Cambodia to "provisional arrest for the purpose of extradition of former Prime Minister Thaksin Shinawatra, but was turned down by Cambodian government saying it "considers the prosecution and legal process against Thaksin Shinawatra as a politically motivated proceeding."

On Wednesday, Prime Minister Hun Sen held talks with Thaksin for nearly two hours at his Takhmau surburb residence. Hun Sen also said that he has no plan to discuss Thaksin's visit in Cambodia during Saturday's meeting between ASEAN leaders and U.S. President Barack Obama in Singapore on the sideline of APEC meeting.

Asian summit to tackle economic crisis

Thursday, October 22, 2009
By Martin Abbugao
AFP

HUA HIN, Thailand — Asian leaders meet here this weekend to discuss ways to deepen economic ties further in order to sustain the region's rebound from the recent global downturn, diplomats and analysts said.

With parts of the region still reeling from natural disasters, the leaders are also expected to grapple with ways to improve rescue capabilities and facilitate the delivery of humanitarian aid, they said.

The annual Association of Southeast Asian Nations (ASEAN) summit and related meetings with key regional partners will kick off Friday at this elite beach resort in Thailand amid tight security.

The ASEAN summit involving Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam will be followed by talks with Australia, China, India, Japan, New Zealand and South Korea.

Asia's quick rebound from the global recession compared with the United States and other Western economies is expected to set the mood for talks on further freeing up the flow of trade, investment and people across the region.

"Asia is poised to take on a bigger role on the global stage after the dust from the economic crisis has settled," a senior Southeast Asian trade official told AFP.

"Integration is the key to unlocking Asia's full potential. Furthermore, the recovery needs to be sustained for the long term, so the right policies must be put in place early."

Bridget Welsh, a Southeast Asia expert at the Singapore Management University, said ASEAN's newly ratified charter "provides more accountability on progress for economic integration."

Integration "is one means of buffering the vulnerability of ASEAN toward economic changes globally," Welsh said, adding however that achieving it will be an "uphill battle."

Central to the integration efforts is ASEAN's goal to establish a single market and manufacturing base by 2015, and expanding trade and economic links to include its major regional trading partners such as China and India.

"ASEAN is well on its way to integrate into one regional community by 2015 in line with its charter," the grouping's Secretary-General Surin Pitsuwan told reporters in Bangkok on Wednesday.

He said that within the past decade, the bloc's combined export value jumped three-fold to 1.7 trillion dollars from 576 billion dollars. Trade within the region of nearly 600 million people also increased four-fold, he said.

In the same period, ASEAN's trade with Japan and the European Union also increased three-fold, with China and Australia it had multiplied 10-fold, and with India it had jumped six-fold, Pitsuwan added.

Singapore Foreign Minister George Yeo said in remarks published Wednesday that one key issue will be how to increase Southeast Asia's links by air, land, water and information technology with emerging Asian powers China and India.

"If we ASEAN, in our own integration, make sure that our links connect to theirs, not only will ASEAN be linked to China and India -- we'll also link China and India together," Yeo said in an interview with Singapore's Straits Times.

He said the ASEAN leaders will task a group to study the details of expanding the links.

The environment will also be a major topic, with ASEAN leaders expected to issue a statement in support of global talks in Copenhagen in December for a new climate change treaty, other diplomats said.

ASEAN and its partner nations are also expected to issue statements on food security cooperation and disaster management.

As in previous ASEAN summits, military-ruled Myanmar's continued detention of democracy icon Aung San Suu Kyi is likely to come under the spotlight.

A campaign to have her and other political prisoners freed will take on special significance as it coincides with ASEAN's launch during the meeting of a body aimed at promoting human rights in the region, analysts said.

It also comes at a time of a major policy shift by the United States to re-engage the junta despite opposing some of its policies and maintaining sanctions.

East Asian Summit Kicks Off In Pattaya

By D. Arul Rajoo

PATTAYA, April 9 (Bernama) -- Amid worsening global economy crisis and massive anti-government rally in Bangkok, the 14th Asean Summit and its related summits kick off Thursday as 16 leaders of one of the most important economy blocks meets to strengthen regional cooperation to cope with the global crisis.

While waiting for their leaders to set foot on the popular resort city, about two hour drives from Bangkok, senior economy officials begun the task of setting the agenda for three-day summit.

Despite the delay in the East Asian Summit, which was initially slotted together with 14th Asean Summit in Hua Hin at the end of February, the 10-member Asean can look forward for a fruitful outcome as the world's engine of growth China will sign a free trade agreement (FTA) with them.

Chinese Premier Wen Jiabao will ink the agreement with Asean Leaders, including new Malaysian Prime Minister Datuk Seri Najib Tun Razak who will be making his debut in the summit after taking over the helm a week ago.

With a huge population of 1.9 billion and combined with Asean's 560 million, the FTA which would come into effect in 2010 is expected to further strengthen trade between them, which stood at US$230 billion in 2008, a 14 percent growth from the previous year.

Asean also received a shot in the arm with announcement by Japanese Ambassador to Thailand Kyoji Komachi that the country would unveil a series of packages aimed at regional countries to cope with the economies crisis, including a US$20 billion in official development aid for developing countries.

During the summit, Asean, China, South Korea and Japan will also endorse the recommendation made by their Finance Ministers during a special meeting in Phuket in February where they agreed to raise to US$120 billion multilateralisation reserve pool under the Chiang Mai Initiative, from the initial US$80 billion.

Under the fund, which is aimed at assisting members to cope with the crisis, Asean countries will contribute US$24 billion or 20 percent of the total amount, while China, Japan and South Korea will share the remaining.

Malaysia, Indonesia, Singapore, the Philippines and Thailand have agreed to contribute US$3.4 billion each towards the fund while the remaining five other Asean members comprising Brunei, Cambodia, Laos, Myanmar and Vietnam will contribute five percent of their reserves to the initiative.

While such goodies are in store, host Thailand is struggling to assure its foreign guests, which includes prime ministers of China, South Korea, Japan, Australia and New Zealand, that it's safe to come despite over 100,000 anti-government protestors in Bangkok giving an ultimatum to Prime Minister Abhisit Vejjajiva to resign.

India will be represented Kamal Nath, its Commerce and Industry Minister.

The 44-year-old Abhisit, who took over on December after allies of ousted Prime Minister Thaksin Shinawatra was removed by court, told the Channel 9 station in a morning talk show that he has no plan to bow to their demand.

The red army of Thaksin had laid siege to Abhisit's office since March 26, and paralysed a major section of the capital since Wednesday in a showdown with the government. The protestors in Pattaya attacked Abhisit’s motorcade two days.

Vitavas Srivihok, director-general of the Thai Foreign Ministry's Department of Asean Affairs, said besides the economy crisis, leaders would also discuss food and bio-energy security, disaster management and mutual recognition arrangement on good manufacturing practice of medicinal products.

On Sunday, UN Secretary-General Ban Ki-Moon will attend the Third Asean-United Nations Summit in Bangkok.

Crisis, North Korea to top ASEAN talks

April 9, 2009
Adam Gartrell
AAP

The global financial crisis and North Korea's recent rocket launch will dominate Prime Minister Kevin Rudd's talks with Asian leaders in Thailand at the weekend.

But Rudd is also likely to use the East Asia Summit as another opportunity to talk up his ambitious plan to create an EU-style Asia Pacific Community (APC).

The prime minister will travel to the Thai resort town of Pattaya on Saturday, ahead of Sunday's summit, a meeting of leaders from the 10 ASEAN nations, plus Australia, New Zealand, Japan, China, South Korea and India.

The leaders will issue a joint statement on the region's response to the financial crisis and will receive briefings from the heads of the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank.

The leaders will also discuss the regional security threat posed by North Korea's provocative long-range rocket launch, trade, food and energy security, and disaster relief cooperation.

Australian National University ASEAN expert Professor Hal Hill says Mr Rudd will use any bilateral meetings with leaders to push his "bold" APC plan.

"I think it's still at the stage where people are being sounded out - are they interested or not?" Hill said.

"It's very early days, but my understanding is that most of the countries that have been consulted are at least listening, and they're interested."

But Rudd should avoid being too pushy because Australia was still the "new kid on the block" in regional talks, Hill said.

"Australia's got to play its hand fairly carefully and not be seen to be as a new member trying to throw its weight around," he said.

The summit is expected to go ahead, though it's likely to be targeted by protesters who want to force Thai Prime Minister Abhisit Vejjajiva from power.

The meeting was originally scheduled to take place late last year, but was postponed after political unrest in the Thai capital Bangkok.

The 10 members of ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, the Philippines, Singapore, Thailand and Vietnam.

Farmers Troubled by Global Turmoil

By Sok Khemara, VOA Khmer
Original report from Phnom Penh
06 April 2009

The prices for Cambodian agricultural products have declined in parallel with the global economic crisis, with farmers along the borders of Thailand and Vietnam reporting more and more difficulties in their daily lives.

Under lower prices, farmers are struggling to pay interest on their debts, and they are watching the prices for their cassava, corn and rice plummet.

Cassava’s market value has halved in the past year, down to 300 riel, or $0.70, per kilogram. Corn’s value has done about the same.

Living with 10 children in a village in the former Khmer Rouge area of Samlot, in Battambang province, 45-year-old Soth Taharch said seed prices were high but final sale prices weren’t.

“I will keep planting, even if the product is cheap, as we do not have any other business,” she said. “I will shave my head [in gratitude] if I can find money to pay the debt.”

Morng Phat, a nearby farmer, said the money he earned this year was barely enough to pay for fertilizer, pesticide, labor and other expenses.

“The problem is that farm products are not balanced with goods on the market,” he said. “It would be helpful if a real local company would help buy and stock our products, avoiding middleman pressure for their prices.”

The falling prices were hurting others who had taken out loans and expected to pay them back.

“In this area, there are a lot of people who have run away from their homes and sold their land away,” said Khoy Soeun, in Sampov Loun district, Battambang. “The prices are cheap, and the people have lost much.”

“One day there will be confiscation of property,” said neighbor Seng Chea, as he repaired a tractor.

Tep Kunnal, governor of nearby Malay district, said farmers had to “join hands” to get over the hurdles.

Along the eastern border, farmers reported the same woes—with worries mounting.

Chhuon Keng, a farmer along the border, said he was struggling to pay medical debt after his three children came down with dengue fever.

Another villager, So Wat, on the border in Kampong Cham province, said the low prices were keeping him from paying the cost of surgery for his wife.

Even the middlemen, or brokers, are suffering this year.

“Making profits from the business is hard now,” said Kim Sothary, female trader. “This year I’m more tired, and there’s more work but less profit.”

She bought cassava at 330 riel per kilogram and sold it for 395 riel in Vietnam, she said.

Kang Chandararoth, an economist, predicted the low prices would only last as long as the global economic woes.

And banking officials said they did not anticipate problems from defaulted loans.

“In the period of the economic crisis, agriculture is the field that we think has the most potential,” said In Siphan, chief of Acleda Bank’s credit division.

Even with low prices, cassava, corn and rubber would continue to grow, he said, gradually bring an income, however small.

Cambodia: Foreign aid continues during economic crisis

Tuesday, March 10th, 2009
By Chhunny Chhean
Global Voices Online

Reports of foreign aid to Cambodia continue despite the global economic crisis. CAAI News Media shares news that the United States will give Cambodia $21 million USD over four years in a program to alleviate poverty in rural parts of the country.

According to a story posted by Cambodian News, the U.S. provided a total of $5.6 million USD in aid in 2008.

On the issue of foreign aid, Socheata Vong posts an interview from the Phnom Penh Post with political commentator Lao Mong Hay where he says,

“…[F]oreign aid basically serves foreign policy. Look at the American government. So long as recipient countries pursue policies in conformity with American foreign policy, they will give aid.

Mr. Semoun and Hort Sroeu post about South Korean investment into Cambodia. Sroeu's blog states:

In 2007, Cambodia became the 6th biggest host of South Korean investment after China, the U.S., China’s Hong Kong region, Vietnam and Malaysia, [South Korean ambassador to Cambodia Shin Hyun-suk] said…Initially, South Korean investment was concentrated on the garment manufacturing sector, he said, adding that banking, agro-industry, manufacturing, real estate development and IT sectors are the dominating fields of South Korean investment in Cambodia now.

However, the country must deal with projected decreases in garment exports and tourism. As Khmer Young reports,

Cambodia's economy [is predicted] to shrink 0.5 percent this year, the International Monetary Fund said on Friday. That is a big turnaround from the 4.8 percent growth the IMF had forecast in November.

The International Monetary Fund statement is available here.

Cambodian casinos out of luck as revenues take a hit

A casino building at the Poipet border crossing. Gambling is down at both the Vietnamese and Thai border casinos. (Photo by: Tracey Shelton)

Tuesday, 20 January 2009
Written by Kay Kimsong
The Phnom Penh Post

Local casino operators report fewer gamblers on both the Thai and Vietnamese borders, with across-the-board cost cuts planned for this year.

THE global economic crisis has hit Cambodia's gaming industry, with casinos on the Vietnamese and Thai borders announcing hefty cost cuts.

The local downturn comes amidst a global gambling slowdown affecting casinos worldwide - Macau's gaming industry posted a US$300 million drop in revenues in the last three months of 2008, while US gambling hotspot Nevada reported a 65 percent plunge in takings last year.

Cambodia is particularly susceptible: With about 30 casinos, it has more gambling venues than any country in Southeast Asia. Traffic at the Thai border is down sharply with casinos taking a triple hit from the global economic crisis, recent border tensions and a falling Thai baht.

At the Kings Crown Casino and Hotel - with locations in Cambodia on both the Thai and Vietnamese borders - the number of visitors has dropped sharply, leading to losses of $620,000 in the last quarter of 2008, the company said.

The company says it is cutting the work week for its more than 2,000 employees, a move designed to trim costs, said Cambodian Peoples' Party Senator and casino owner Phu Kok An.

He told the Post that his company was negotiating with employees to reduce their working month from 30 to 15 days.

"We are not laying off workers but they will get 15 days' salary. If your salary is $200 per month, you will get $100."

The company currently spends $300,000 a month on salaries, he added.

The casino has outlets in Poipet on the Thai border and Chrey Thom district, Kandal province, close to Vietnam.

"We are not earning enough income to spend on staffing, water and electricity. When people earn less money, they gamble less," Phu Kok An said.

He said that the number of gamblers fell sharply but that the business would remain open.

"we are not earning enough income to spend on staffing, water and electricity. "

"We earned some profit in early 2008 but made losses over three months [in September, November and December 2008], we employ a lot of workers - we are overstaffed - and we're overspending," he said. But Vann Sitha, vice president of New World Casino-Hotel in Bavet on the Vietnam border, said his company does not plan to lay off any of its 700 employees or reduce working hours. Although some staff had resigned, it would continue to recruit, he added.

"Our casino management has never laid off staff, but some like to move from job to job seeking a better salary offer," he said, adding his business had been less affected by recent events given its location on the Vietnamese border as opposed to the troubled Thai side.

Phat Bun Hour, assistant to Koh Kong Casino owner Ly Yong Phat, also a CPP Senator, declined to comment.

Chea Peng Chheang, secretary of state at the Ministry of Finance, is calculating the casino industry's total revenue for 2008, which he said will be completed this week. Revenues are expected to be lower than the $10 million generated in 2007.