Showing posts with label Economic impact on Cambodia. Show all posts
Showing posts with label Economic impact on Cambodia. Show all posts

Thursday, September 08, 2011

Cambodia economy: Exposure to US economy is a concern

September 6th 2011
FROM THE ECONOMIST INTELLIGENCE UNIT

As economic data coming out of the US continue to get worse, Cambodia's heavy exposure to the US economy represents a major risk to growth prospects. The US is Cambodia's most important export market by far—representing almost half of all receipts—and a US slowdown or descent into recession could substantially reduce Cambodian export revenue, with implications for the broader economy.

It is a cliché that when America sneezes the rest of the world catches cold, but in Cambodia's case the statement is apt. The US imports more Cambodian goods than any other country, making sales of key products such as garments vulnerable to fluctuations in American demand. In 2010 Cambodia's merchandise exports to the US amounted to US$2.2bn, equivalent to 47.1% of its total export earnings, according to IMF figures. Exports to the EU's 27 member states stood at US$1bn. Together these two markets accounted for 69.6% of Cambodia's exports in 2010. Although Cambodia's exports to mainland China rose by nearly 430% last year, they still stood at only US$86.1m, equivalent to 1.9% of total exports.

Cambodia is therefore substantially exposed, via the US and the EU, to the global economic cycle. It is little surprise that the 2008-09 global crisis took a heavy toll on Cambodia, which suggests that economic prospects could darken again if the US and/or the world head towards recession. The Cambodian government has tried to downplay the extent to which Cambodia was affected by the 2008-09 crisis—the Ministry of Economy and Finance maintains that the country escaped recession in 2009, stating that real GDP expanded by 0.1% in that year—but all other observers estimate that the economy contracted for the first time since records began in the early 1990s.

Thursday, July 22, 2010

Cambodia Delays Stock Exchange Yet Again

JULY 21, 2010
Associated Press

PHNOM PENH, Cambodia—Cambodia has delayed the opening of its proposed stock market for a second time, pushing the date back to July 2011.

In a statement Wednesday, the Finance Ministry said the delay was due to technical issues and the global economic crisis.

``The postponement of the stock market is to adapt to the evolving situation of the global economic and financial situation, which shows some positive signs of recovery but is still fragile,'' the statement said.

Last December, officials said Cambodia's stock market would open by the end of this year after initially targeting it to begin operating in 2009. After receiving the approval from Prime Minister Hun Sen, the Cambodia stock exchange is expected to kick off in July 2011, the statement said.

The Cambodian economy is small and reliant on textiles, which account for nearly 80% of exports, and hundreds of millions of dollars in international aid. Foreign investment has been deterred by the country's reputation for endemic corruption.

Neighboring Vietnam started its stock market in July 2000. Nearby Laos also is planning a stock exchange.

Hong Sok Hour, director general of the Cambodia Securities Exchange, said the delay was necessary because Cambodia needs everything to be in place before the opening.

``We want our bourse to be a good one when we open. That is why we need the infrastructure and human resources to be ready at the same time,'' he said.

In December, Cambodia awarded a contract to a South Korean firm, World City Co. Ltd., to build the $6 million, four-story, 71,900-square foot stock market building in Phnom Penh's planned financial district on the outskirts of the capital.

The finance minister announced plans in 2007 to launch a stock market, saying Cambodia needs to find new ways to attract international capital beyond international aid and bank loans. Soon after, lawmakers approved a securities law on issuance and trading of nongovernment securities to pave the way for the market.

Wednesday, July 21, 2010

Cambodian Indirect Sex Worker Study Report

Publication date: 15 Jul 2010

Abstract: The report presents the findings of a small complementary study examining the plight of a group of much talked-about but little understood workers: those who have left the factories during the crisis and started work as indirect sex workers in the entertainment sector. The specific focus of enquiry in the study concerns the vulnerabilities these workers face to HIV/AIDS -one of the most critical workplace issues in Cambodia today.

The narratives obtained in this study lend a much-needed human face to a group of workers who are too often the subject of negative stereotyping. Such stereotyping not only demonises and degrades these workers as humans, but it also undermines their ability to claim fundamental human rights and entitlements and pushes them into further marginalised positions away from vital health and educational services. The end goal of the study is thus to better understand the situation of these workers so that we can then offer practical assistance to reduce their HIV related vulnerabilities.

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Thursday, July 08, 2010

Banking System Shows Signs of Recovery

Ros Sothea, VOA Khmer
Phnom Penh Wednesday, 07 July 2010

“2009 was a very hard time for us, where we had large deposits but little lending.”
The total amount of deposits in Cambodia’s 28 banking institutions recorded a jump in the first part of the year, a positive sign of recovery following the 2008 economic crisis, an industry leader said Monday.

Banks posted $3.6 billion in deposits in the first five months of the year, a 13 percent increase from the same period in 2009. Loan disbursements increase 8 percent, to $2.7 billion, for the same period.

That’s a signal of healthier banks, In Channy, CEO of Acleda Bank, a leading lender in Cambodia, told “Hello VOA” Monday.

“2009 was a very hard time for us, where we had large deposits but little lending,” he said. “But this is a good sign this year, when our economy is going better and the demand for loans is growing.”

Agriculture, garments and tourism were all driving growth in the economy, he said.

One concern, however, is that the banking sector has not grown at pace with the country’s total GDP.

“The banking sector would be considered to be growing rapidly only when the amount of deposits is at least equal to the total GDP of $10.3 billion,” he said. “But up to 2009, our deposits were only 30 percent of GDP.”

Still, the number of people banking is growing, up to 1.1 million in 2009, a 38 percent increase from the year before.

“What we should do next is train and educate our people to understand more about the banking system,” he said.

Wednesday, June 30, 2010

Analysts Look for Lessons in 2008 Crisis

Ros Sothea, VOA Khmer
Phnom Penh Tuesday, 29 June 2010

“And the other area is to manage natural resources more transparently, which not only provides additional sources of growth, but also additional revenue for the budget.”
Economists say the lessons of the recent economic crisis should encourage policymakers to revise some of their macroeconomic principles and make immediate improvements in fiscal management, infrastructure and other areas to make the country more competitive in the global recovery.

National and international experts met last week for a high-level workshop to find ways Cambodia might maintain economic growth in the face of the new economic realities brought about by the financial crisis.

The crisis should signal a time for improvements in fiscal policy, economic diversification, investment climate and social protection, among others, experts said.

Better fiscal management can increase revenue, while improved infrastructure, including in rural areas, can bring more investment, said Qimao Fan, the World Bank’s Cambodia country manager.

“And the other area is to manage natural resources more transparently, which not only provides additional sources of growth, but also additional revenue for the budget,” he said.

A low-income country like Cambodia depends much on external markets for growth, which also makes it vulnerable to external shocks like the 2008 crisis. The crisis caused garment orders to plummet, hitting the garment industry hard, for example.

Do Hong Hanh, Vietnam’s country representative for the Asia Competitive Institution, said Vietnam limits exports to 20 percent to any one nation to limit risk. By contrast, Cambodia depends on the US market for 40 percent of all its total exports.

Meanwhile, Vasana Mututnanont, executive director of international affairs division of Thailand’s board of investment, said a crisis was actually a good time to attract investors.

“When Thailand was hit by the financial crisis, we had to create a new incentive in order to make it more attractive,” she said. “We had to maintain and make a good connection with companies that were already in Thailand because they can be good speakers for the country, if they are happy.”

“For newcomers, when you know who to attract, you have to make appointments with them instead of waiting for them to come,” she added. “So for Cambodia, it will be better if you will do the same things.”

Improved tax collection was at the top of the agenda. Cambodia’s total tax revenue for 2009 was $1 billion, a low figure compared to other countries. As a result, Cambodia needs an additional $1 billion in assistance from international donors.

Vann Puthipol, director of department of large taxpayers at the general department of taxation for Cambodia’s Ministry of Finance, said he is working on improving collection.

“First, we have to educate taxpayers,” he said. “Second, we strengthen the tax payment service. Third, we strengthen the auditing system to find out who is avoiding paying tax, and we will punish them.”

Cambodia will also benefit from the implementation of property and petroleum taxes, he said.

An increase in the tax rate could also help, said Pisit Puapan, director of economic analysis for Thailand’s Ministry of Finance.

Still more improvement can come by diversifying the agricultural products sold by Cambodia, said Nagesh Kumar, director of macroeconomic policy at the UN Economic and Social Commission for Asia and the Pacific.

But in order to do that, Cambodia must attract more investment, increase its productivity and extend its export market.

Experts also urged Cambodia to increase economic stability by improving the banking system and taking measures to de-dollarize.

A draft of the strategies is expected this week through UNESCAP, with a more detailed report to be released later this year.

Friday, June 04, 2010

Central Bank Moves To Stabilize Faltering Riel


Ros Sothea, VOA Khmer
Phnom Penh Thursday, 03 June 2010

“The riel depreciation was caused by a slowdown in our economy. The flow of dollars derives from exports, tourism and foreign investment, which has not been as much as before.”
The National Bank continues to buy up riel with dollar reserves in an effort to increase the value of the national currency, which has fallen more than 1 percent since April 20, its lowest level in three years.

By May 28, the US dollar was equal to 4,219 riel, an increase from 4,186 riel over two months, according to the National Bank. To increase the value of the riel, the bank used $4 million to buy riel out of circulation through a bidding process last week. And on Monday, the National Bank announced it would use $3 million more.

Tal Nay Im, secretary-general of the National Bank, said the first round of bidding would not raise the value of the riel, but would instead stabilize it. The bank intends to sell more dollars in an effort to get more riel out of circulation, thereby raising its value. Financial analysts say it will take around $10 million to increase the value of the riel by 1 percent.

The dollar has been used in Cambodia since Untac’s peacekeeping mission in the 1990s, working side by side with a riel that was demolished along with the banking system under the Khmer Rouge. Decades of civil strife and several currency changes have weakened people’s faith in the riel, and that is likely to continue so long as the riel’s value continues to depreciate, financial analysts say.

Economists say the depreciation is not a great concern, though it can bring an increase in price for exported products. On the other hand, a riel whose value has appreciated too much can also hurt the export market. The National Bank has tried to keep the riel’s value between 3,900 and 4,100 per dollar.

The Economist Intelligence Unit estimated in April the riel would depreciate an average 1.3 percent in 2010 and 2011.

“The riel depreciation was caused by a slowdown in our economy,” Chan Sophal, president of the Cambodian Economic Association, told VOA Khmer. “The flow of dollars derives from exports, tourism and foreign investment, which has not been as much as before.”

Another cause was the fear of a financial crisis in Europe, which recently had to take severe measures to bail out the economy of Greece, a member of the European Union that came close to defaulting on its loans.

“If there is an economic crisis, like the fear of the Greece crisis and the financial system in euro zone, those holding the euro will sell their currency and buy dollars,” said Sam Genthy, a financial expert at the Securities and Exchange Commission of Cambodia. “That trend makes a higher dollar value. So if the dollar goes down a bit, the riel will go back to a normal balance.”

The riel is also undergoing seasonal depreciation.

Cheam Tieng, deputy executive director of treasury and internal affairs at Acleda Bank, said the riel faces depreciation pressure every May, but it’s value will rise again when more dollars flow in the tourism sector and when the harvest arrives.

Post-Crisis Construction Recovery Lagging

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 03 June 2010

“We are watching the situation very closely, and we have seen that the construction sector is still in a downturn. There is still a reduction in local and foreign investment.”
Two years after the onset of the global economic crisis, Cambodia’s construction sector has struggled to recover, despite promising indicators in the country’s other economic earners.

Both garments and tourism have recovered some since the downturn, but officials say a lack of confidence from both local and foreign investors has stymied construction recovery.

“We are watching the situation very closely, and we have seen that the construction sector is still in a downturn,” Im Chamrong, directory general of the Ministry of Land Management’s construction department, told VOA Khmer. “There is still a reduction in local and foreign investment.”

The country’s real estate and construction sectors were booming through 2007 and into 2008, bolstered mainly by investment from South Korea, China and small investors. The rise of the real estate market made construction one of the economic pillars of the country, which, along with garments and tourism, helped make up a third of the country’s GDP.

Two years after the crisis, garment exports reached $603 million in the first quarter of the year, up from $562 million during the same period last year. The number of tourists has increased 10 percent for the same period, to more than 884,000. But in the real estate market, there is still a 50 percent or 60 percent decrease.

“Land and housing prices can’t be increased in 2010,” said Sung Bunna, president of the Real Estate Valuers Association. “Wait until 2011, and don’t hope that it will increase to the same rate as 2007 and 2008. It will increase very slowly until our economy looks stronger.”

Companies and Markets, a global research group based in London, expects a contraction of Cambodia’s construction sector this year. Recovery may have to wait until 2011, with a slow increase of 6 percent through 2014. That’s down from a growth rate of 19 percent before the downturn, according to the group.

Meanwhile, construction investment projects have also declined, though some, like Camko, Grand Phnom Penh, Posco and the Diamond Center, all in Phnom Penh, have continued.

The Ministry of Land Management reported a decline of 82 percent in construction project approvals, or just $159 million, in the first quarter of the year.

Seng Sopheal, a real estate appraiser for Cambodia Properties, Ltd., said the decrease came from a shortage of foreign capital.

A restriction in bank lending has also slowed the sector. Since early 2009, major commercial banks halted large loans, especially for real estate development. Those restrictions remain in place, as banks have sought to avoid risks.

“We don’t seek to provide loans for real estate development,” Stephen Higgins, CEO for ANZ Royal Bank, told VOA Khmer. “We may only do it in some special cases, but we don’t do it in general because generally a real estate loan is more risky than normal lending.”

Tuesday, May 18, 2010

Riel value slumps to new low

Tuesday, 18 May 2010
Nguon Sovan
The Phnom Penh Post


Exchange rate falls to 4,235 riels per dollar amid gradual depreciation in 2010

THE value of the riel reached a year low on Monday potentially pushing up inflation and affecting Cambodians’ purchasing power, commentators said.

The riel currency has lost 1.07 percent of its value against the US dollar within the past month, according to rates recorded by Ly Hour Exchange.

On Monday, one US dollar was worth 4,235 riels, up from 4,190 riels per dollar at this time last month.

“We have seen that the riel has gradually depreciated in value against US dollar during the last month,” said Sieng Lim, the owner of Cambodia’s Ly Hour Exchange, on Monday.

“Normally, when riel notes are abundant on the markets, its value is depreciated,” she added.

The rate, estimates for which can vary among agencies, has sparked concern among some members of the Kingdom’s business community.

Chan Sophal, president of Cambodia Economic Association, said that, theoretically, the riel depreciation could be due to a decline in the inflow of US dollars to Cambodia. He could not comment further on why the riel has lost value.

The depreciation, he said, would affect purchasing power and pushes up inflation as the price of goods increases.

“People with wages in riel currency would suffer the most from the depreciation,” he said.

He pointed out that the garment industry, which carries out transactions in US dollars, would not suffer and added that as the circulation of riel in Cambodia is relatively small, it would be easy for the government to raise its value.

“It’s not difficult to stabilise the riel because it constitutes 10 percent of total money supply,” he said.

Generally, the National Bank of Cambodia (NBC) intervenes when the riel depreciates, by selling US dollars to buy riels when the exchange rate reaches 4,200.

In August last year, it announced it would dip into its foreign reserves to buy $6 million worth of Cambodian riels to hold up the value of the local currency, which had reached 4,191 against the greenback.

But since the start of this year, Cambodia has not seen any NBC intervention against depreciation.

Tal Nay Im, NBC’s director general, did not pick up the phone after repeated calls on Monday.

Some analysts believe the depreciation may be a blip. Cheam Teang, Executive Vice President Chief of Treasury and International Cooperation Officer at ACLEDA Bank, said Monday that it is seasonal trend. He said he believes that, as the depreciation is small, it will not have much of an impact on the economy.

“In my own observations, at this time of the year riel currency is always depreciated, and it would recover the value in the last quarter of the year.

The depreciation is just around 1 percent – it’s normal, and it’s no surprise” he said.

“But it fuels some rise in inflation too,” he warned.

The Kingdom’s consumer price index, recorded by the National Institute of Statistics, saw inflation rise to 7 percent in March.

Tuesday, April 20, 2010

ADB forecasts economic rebound for Cambodia

Tue, 20 Apr 2010
DPA

Phnom Penh - The Asian Development Bank on Tuesday predicted Cambodia's economy would return to growth this year, following an estimated 2-per-cent contraction in 2009 due to the global economic crisis.

The ADB forecast economic growth of 4.5 per cent this year and 6 per cent in 2011. The economy grew by an annual average of 9.1 per cent from 1998 to 2008.

ADB country economist Eric Sidgwick noted signs of recovery in the first quarter of 2010, with indications of growth returning to the three key economic pillars that were hit: garment manufacturing, construction and tourism.

But he said Cambodia must broaden its economic base and add value in all four key sectors including agriculture, which alone accounts for about one-third of gross domestic product.

He said tourism provided an example of a key industry needing to diversify.

"If you look at the rates of growth of tourist arrivals over the last several years, that rate of growth has been gradually declining - growth is still positive, but [the rate of growth] is declining," Sidgwick said.

"That is an indication that the tourism industry is maturing, in a sense."

To boost that growth rate would require a new wave of investments, to diversify away from its focus on the temples of Angkor Wat and to encourage visitors to stay longer.

"And I think there are good prospects for developing the tourist industry further in Cambodia, but it needs more than just Angkor Wat," he said.

Sidgwick said recovery in the key garment export markets of the United States and the European Union would dictate the extent of local recovery in the sector.

But he said to improve Cambodia's overall economic prospects, the government must ensure that reforms that have been on the table for years are now implemented. Integrating its economy into the region, where strong growth is expected, is also vital.

Sidgwick said the government's doubling of the budget deficit from 3 per cent in 2008 to 5.9 per cent last year was the right response as a short-term measure to the global economic crisis and "probably manageable," but warned it had not all been well-targeted.

"The fiscal stimulus impact of those measures could probably have been greater had the expenditures been targeted more to more productive investments and less on consumption," he said.

The ADB report said Cambodia's poverty rate, measured at 30.1 per cent in 2007, had likely risen due to the global economic crisis, although a lack of coordinated data meant that precise figures were not available.

Monday, April 12, 2010

Office rental rates plummet by one third

12/04/2010
Soeun Say
Bangkok Post


PHNOM PENH : Office rental prices in Cambodia's capital continue to tumble, dropping by as much as one-third in the first quarter of the year, according to the National Valuers Association.

"Prices have continued to fall because the supply of office space for rent is much higher than the demand," said Keuk Narin, general manger of the Bonna Realty Group and secretary of the National Valuers Association.

The prices are likely to continue to fall throughout the rest of the year, he said.

The NVA estimates that the best Grade A office space now rents for US$20 to $25 (650-800 baht) per square metre per month, down $10 from the final quarter of last year. Grade B rentals now go for $7 to $11 (230-350 baht) per sq m a month, a drop of about $3. Figures for Grade C offices are hard to compile as most of the properties are independently owned and operated.

Khoun Davy, finance manager for the Delano Business Centre, said it was charging $15 per sq m a month, but that the centre was considering lowering the price due to a lack of interest.

"It's so quiet," he said. "It's hard to attract clients to rent our space. We've had 70% of our renters from early 2009 until now. We've still got 30% [empty].

"We're preparing next month to decrease the price from $15 to $8 per square metre per month," he said. "The location is good. It's probably the best location in Phnom Penh."

Office space at many new developments remained empty in the first quarter of the year.

According to NVA figures, the Icon Professional Centre on Norodom Boulevard had rented only 26% of its space. The Delano Business Centre, on streets 134 and 169, filled 70% at $15 per sq m a month. And the Attwood Business centre, near Phnom Penh airport, was reporting 61% occupancy.

Other companies reporting occupancy to NVA included: Canadia Tower at 28%; Bo Retra, 78%; Paragon Office Building, 25%; and Premier Office Centre, 68%.

However, more established properties reported higher occupancies, such as the Intelligence Office Centre, which is 89% full, Hong Kong Centre at 91%, the Phnom Penh Centre with 96% and B-Ray Tower, which was also nearly fully occupied.

Despite the falling prices, Daniel Parkes, country manager for CB Richard Ellis (CBRE), on Tuesday said the company was optimistic demand would grow in the longer term.

"Demand will continue to grow in coming years from existing occupiers within the Phnom Penh market looking to upgrade their premises and business image, and also from new entrants from abroad," he said.

Grade A office space is likely to continue to decline, Mr Parkes added, as demand over the next five years increases.

CBRE previously estimated office-space demand would nearly double to 18,580 sq m by 2013, as businesses look to upgrade their offices and new firms open.

Friday, March 26, 2010

Cambodian garment workers facing uphill battle in global downturn – UN

Garment workers going home on motorcycles in Cambodia [File Photo]

Source: UN News Centre

25 March 2010 – Even those Cambodian garment workers who were able to hold on to their jobs in the face of global economic challenges have not escaped the current downturn unscathed, a new survey led by the United Nations International Labour Organization (ILO) has found.
Factory closures or cutbacks due to reduced orders forced many garment workers in the South-East Asian nation out of a job. One in 10 unemployed workers lost their positions two or more times last year, with most still looking for work.

A study assessing 1,200 employed and 800 unemployed workers in the capital, Phnom Penh, finds that many with work have had their salaries slashed and now feel as though they do not have enough money to cover remittances and basic needs such as food, health care and transport.

Many of those who lost their jobs but managed to find new ones are working under less favourable conditions, seeking assistance from trade unions for assistance on challenges such as asking for leave and late wage payments.

Even though laid-off workers have looked for jobs in other garment factories, only one third of them succeed in finding work.

Those looking outside the garment industry typically try to find jobs in the service sector to work as salespeople, tailors or food vendors.

Even though many would like to enroll in training programmes, the cannot, and the families of some workers, both employed and unemployed, have sent additional family members – mostly women – to find work to deal with the loss in income.

“The information we are gathering though the survey has been helpful in identifying action that can be taken by a range of stakeholders to help struggling workers, strengthen the garment sector, and better prepare the country to deal with future economic setbacks,” said Tuomo Poutiainen, chief technical adviser at ILO’s Better Factories Cambodia initiative.

Based on the survey results, ILO is calling for employment policies promoting productive employment, enhancing social protection and working with employers to be compliant with labour laws.

The study was commissioned by the ILO with the support of the UN Development Programme (UNDP), and was carried out by the Cambodia Institute of Development Study (CIDS).

Monday, March 15, 2010

Asia's Tourists Hit the Beaches, Warming Region's Economy

MARCH 15, 2010
By ALEX FRANGOS
The Wall Street Journal


SIEM REAP, Cambodia—Resurgent tourism within Asia is helping to drive economic recoveries, and demonstrating the growing power of regional consumers.

Just ask Kwong Meng Geip, a purveyor of a medicinal mushroom spirit a few miles from the ancient temples of Angkor Wat. South Koreans who arrive on tour buses are the biggest buyers of the unique brew he makes in clay barrels. And the Koreans are flowing back after a slow 2009.

"My business is better than before," says Mr. Kwong, as he presides over displays of the yellow-tinged liquor at the Angkor Rice Wine Workshop, a distillery and souvenir shop he owns. "It releases the hurt," he says of the liquor.

Mr. Kwong attributes the medicinal benefits to the special 150 pound soo krom mushrooms used to make the mild-tasting liquor, which sells for $25 a bottle.

.What's happening at Mr. Kwong's shop is playing out across the region. Unlike the U.S. and Europe, where unemployment remains high and consumers are cautious, Asia's unemployment rates are falling. That has given Asians the confidence to travel, some for the first time.

Tourism generally accounts for a relatively small share of economic output. But it signals an important willingness among consumers to spend.

Consumption spending more broadly has been driving growth across Asia. Government stimulus spending and subsidies for consumers to buy big-ticket items such as cars and appliances have helped economies expand at healthy rates. Chinese consumers bought more cars than Americans last year, for instance.

But the shift into travel spending, seen as a big-ticket discretionary item, is a sign perhaps of the next stage of the recovery.

Unlike government-encouraged car purchases, "personal travel is a real indicator of consumer spending, in the sense that there are no subsidies involved," says Yuwa Hedrick-Wong, chief economist for MasterCard Worldwide, based in Singapore.

He says Asian consumers, not burdened by debt as were many in the West, socked away money during the downturn and are now spending some of those savings on travel.

Like auto purchases, tourism is a spending multiplier that puts money in the hands of a diverse set of actors in the economy, from airline pilots to taxi drivers and chambermaids. "It's a very good industry as a growth stimulus for the destination countries," says Mr. Hedrick-Wong.

The rise in intra-Asia tourism may help achieve a long-term goal sought by many policy makers around the world: a rebalancing of the global economy in which consumer spending becomes a bigger driver of Asia's growth.

To be sure, Asia's export-dependent economies still need American and European demand for their goods. And that goes for tourism. High-spending Americans and Germans are a critical source of demand in places such as Thailand and Indonesia. But more intra-Asian travel helps to ameliorate the sluggish travel recovery among Western consumers as they pay off home loans and credit-card bills.

An important source of tourism revenue for the rest of the region is China. During the Lunar New Year holiday in February, a popular time for travel in the Chinese world, the number of mainland Chinese who went abroad increased nearly 21% from the year before to 2.4 million, according to government statistics.

Zu Hui, 28 years old, a worker at an oil-trading company in Beijing, recently took her honeymoon trip to the beach island of Phuket, Thailand. It was her first exploration outside China, and she called it "a great trip" filled with romance and water sports.

She says going abroad can be cheaper than traveling within China, and it allows her to avoid the crowds in China during peak holiday periods. She's now planning a trip to Dubai.

In Malaysia, tourist arrivals have "not been disrupted because most of them come from Asia and the Middle East and from the emerging world," says central bank governor Zeti Akhtar Aziz.

Malaysia bucked the global downtrend in travel and managed to attract 22 million tourists in 2009, a 7% increase from the year before. Tourism spending helped boost fourth-quarter growth to 4.5%. More than a million tourists came from China for the first time. India sent nearly 590,000 tourists to Malaysia.

Overall, Southeast Asia saw a 2% increase in international visitors in 2009, according to the Pacific Asia Travel Association. Global international travel fell 4%, says the World Travel Organization, led by Europe and North America, both down 6%.

The return of tourism activity is especially important to parts of Asia where the leisure travel industry is a key component of growth.

Tourism expenditures made up 13.6% of GDP in Cambodia in 2008, 9.5% in Malaysia, and 8.4% in Thailand, according to the United Nations World Travel Organization. Taiwan credited its stronger-than-expected growth to a surge in tourism after rules were relaxed on visitors from mainland China.

In the dusty colonial town of Siem Reap, visitors from South Korea, China and Taiwan have begun to stream in again after a sharp downturn in 2009. The number of Korean tourists venturing to Cambodia dropped 26% in 2009, as Korea's currency lost almost a third of its value during the financial crisis.

By December, however, Korean arrivals to Cambodia bounced back 21% compared to 2008 lows. Visitors from China and Taiwan also rebounded sharply in December, up 14% and 34% respectively, according to Cambodia's Ministry of Tourism. Tour guides, motor-taxi drivers and folks like Mr. Kwong, the winemaker, are starting to get busy again.

"More and more people are coming," says Lee KyungMi, owner of Damnak Spa, a small hotel and spa in Siem Reap that caters to Korean visitors. The native of Seoul cautions business is still not where it was two years ago, when a quarter-million Koreans visited Cambodia, many to see the Buddhist temples around Angkor Wat.

The main drag in Siem Reap is lined with Korean-owned hotels and Korean barbecue restaurants. And three new golf courses are also a magnet.

"Korean golfers are our major market," says Adam Robertson, manager of the Angkor Golf resort. They make up 70% of his customers. "When the Korean won devalued, that was hard to take." January and the first half of February was "very good."

High-end hotel operators in the area say they have seen a pickup in travelers from the U.S. and Europe, but they are aiming their biggest growth at Asian travelers.

"The last two months a lot more Koreans are coming," says Emmett McHenry, general manager at the Sokha Angkor Resort in Siem Reap. He has offered special deals to Chinese and Korean travel agencies and figures one-quarter of his visitors are from the two countries.

The rebound in travel spending points to a possible sweet spot in Asian growth. A modest demand recovery in the U.S. and Europe, combined with a confident Asian consumer, could be enough to keep Asia's economies humming for awhile.

—Juliet Ye contributed to this article.

Tuesday, March 09, 2010

Report From Cambodia's Garment Factories

Garment workers returning after a lunch break. (Photo: Anne Elizabeth Moore / t r u t h o u t)

Monday 08 March 2010
By Anne Elizabeth Moore
t r u t h o u t | Report


Meet the international working class - the faceless laborers that likely had a hand in stitching together your mid-range jeans, your jaunty parka or your favorite silky smooth T-shirt: They are super giggly and sharing snacks in the back of a converted military pickup truck over their lunch break.

In fact, they're downright cute as buttons, and make about that, too. Cambodia offers a national monthly minimum wage for garment workers of $50. This is still higher than in some countries, but Cambodia's economic boom means that prices and wages in almost all other sectors have risen rapidly in recent years. In 2009, the Cambodian Labour Union Federation and the National Institute of Statistics determined that the minimum wage to support the conditions factory workers lived under was $93 per month. Yet, recent talks to grant laborers a living wage stalled immediately.

"It is too much money to consider when the economic crisis has affected the sector," the president of the Free Trade Union of Workers Chea Mony admitted to the press mast month. Ninety-three garment factories closed and 60 suspended work in 2009, leaving 68,190 workers - close to 20 percent of the force at last tally - out of jobs, according to official Ministry of Labour records. Many women, with few other opportunities in the developing nation, took jobs as sex workers. The so-called entertainment industry grew rapidly, and some fear HIV transmission rates are on the rise too.

In the truck, though, no one's concerned. Six of them, matching kerchiefs tied over their brows, nestle together in the back, three in the front, all in respite from the heat of the torrential noonday Cambodian sun, not eating very much because they can't afford to. They each have smooth, light brown skin; bright, charming eyes; and luscious, dark hair. They could be models or - given some time and the funds to study - accountants, scientists or lawyers. Instead, they are garment workers, but I've come to find out if they have a contingency plan.

"Are you worried that your factory will close down?" I ask the group, and they laugh.

"Not worried," my translator explains. "They would be happy."

Concerned there may be a language problem, I ask again, more shrill: "What will you do if the factory closes down?"

I'm not sure what I'm expecting - panic, acknowledgment or a fully worked-out five-point plan - but more laughter is not it.

"Forever," the translator explains over their guffaws, meaning that the factory will never close, and they will continue working there until they cannot work anymore. "Not stop," he clarifies. They're still giggling, but it's no longer funny.

I do know this: I did not expect the choice among a return to poverty, a life in the entertainment industry and garment work - the occupation of around 300,000 women in Cambodia, and the nation's third-biggest money maker - to be so bleak. So bleak it's funny.

The tittering pack of five girls and solitary boy in the back of the military vehicle - to represent the gender ratio in the Cambodian textile industry we would need five more girls, but there isn't room in the truck - touch each others' arms affectionately and tell animated stories. They wear matching kerchiefs to tie back their hair. It's a factory requirement that creates a monotone visual on the floor, and allows bosses to identify workers easily. Plus, it gives them another reason to fire infringers.

I am traveling with my partner, an academic who writes about jeans. When we approach, the group quiets, but only for a moment.

Later, we find out that our translator and friend Mr. Lee told them we were not reporters, so they would talk to us. He explained that we are just tourists who like factories. Still, they fear being fired without the meager stipend a factory closure would bring, so they do not give their names. To further protect them, I will not name their place of employment, either.

This particular group sews and packs jeans for sale in Mexico, Panama, China, Canada and the US. Such information wouldn't usually be available to workers in individual factories, but this group, at the end stages of production, gets to read the boxes. (Many garments, jeans in particular, go through several different international ports before they are completed. This leaves most workers completely in the dark about where their handiwork is retailed - and sometimes, what the final product looks like.)

Most of the clothes produced in Cambodia - 70 percent - are intended for US export. This means that if these same workers were doing these same jobs under US standards - that is, if things switched up a bit and either the pay scale was exported or the entire labor force was imported - they would be earning about 30 times what they do now.

Each member of this group makes $55 per month base pay. The slight increase over the minimum gives them bragging rights, and may quell some protests, but to get enough to send $50 or $60 back home to the provinces, this group works seven days per week, which can bring in as much as $100. (Around 20 percent of the country's 14 million people are estimated to rely on the pay of a garment worker.)

Women who've left the factories say that forced overtime is common, but the workers in the truck do not complain, as jobs cuts and layoffs are often threatened in retaliation. Many work through illness, fearing the loss of wages or of their job. (In-factory health clinics are sometimes available, but lines are often too long and the care too insubstantial to make the wait worthwhile.) One woman tells me of a regular occurrence on the factory floor: that a worker will faint in the stifling heat. This is a fireable offense in the garment industry.

This group doesn't know how much the jeans they make sell for, which is probably good. A reporter friend told me once about a plane that crashed into the ocean near Kep. Packed and priced T-shirts and jeans washed ashore, and the locals who found them couldn't believe their eyes. They asked her, "This is how much people pay?" One was laughing so hard, my reporter friend was concerned he would asphyxiate.

None of the women in this group yet has children, and each lives with up to four other girls in a small concrete room. Advancement is unlikely, and the garment factory workers realize it. "Do any of you want to be managers?" we ask, and Mr. Lee translates their raucous response: "Oh, they would like."

Female managers at the factories are rare - by some estimates only 6 percent of the managers in the country are women, most are rumored to be related to owners. When asked what it would take to advance through the hierarchy, the girls basically agree: Time. Time to study accounting, earn a high school diploma, attend university. Plus, they add sadly, "the owners only recruit high quality."

Some factory workers supplement incomes with piecework, and a very few work already in the entertainment sector. The most popular of the part-time job, though, according to the Women's Agenda for Change, is money lending: loaning other factory workers a few bucks under high interest rates.

These workers, though, are just too tired. When we ask, "what do you do after work?" they look at us askance.

"They sleep," Mr. Lee says.

Undaunted, we try again: "Have you visited the city center?" It is 20 minutes away, a trip that might cost 12 and a half cents on the moto of a friendly driver." Two years ago," one says. The others are silent.

"A few months ago, these were all empty," our translator and guide Mr. Lee explains as he leads us through the dank, but lively concrete caverns that house the garment factory employees who reside and work along the southernmost edge of Phnom Penh, Cambodia.

"Now," he says, "they fill."

Mr. Lee has brought us home to meet his wife, who just quit the factories. The walkway is jam-packed with motorcycles, toys, drying clothes. The walls are crumbling. The only security system is the massive padlocks on each door. He opens the door to one of the flats and, in Khmenglish - a mix of Cambodian and English that adds gratuitous S's and sees no need for verb tenses - asks us to step into his home.

It is small. The tile floors are utilitarian enough, but the walls crumble and mold with years of abuse. Most walls do not see as much human contact as these: but when three people sleep, cook, eat, read, wash and dry laundry, relax, bathe, play - and, if the inhabitants are lucky, store their motorcycle - in a space approximately eight feet by ten feet, the walls are going to show wear.

The tiny abode is occupied by Mr. and Mrs. Lee and their three-year-old son. They pay $25 per month. Utilities aren't included, and add another $5 to $10 every month. Water for cooking and drinking must be purchased separately. (Rents vary, depending on the size of the room and the number of people sharing it, but it's hard to find a place to sleep near the factories for less than $15 per month, before utilities.)

With overtime, a worker can bring in as much as $85 to $120, but a 2009 Cambodian Institute of Development Study found that workers earn an average of $79 per month. After rent and utilities, and the $50 most send back to the provinces every month, garment workers are left with between $4 and $9 per month for food, in a city where it's hard to eat on less than $1.25 per day. It's a particularly tight fit for families with kids to feed.

A few months ago, despite losing his own job with an NGO, Mr. Lee asked his wife to leave the garment factory job because, although they needed the money, they missed their son. There is no childcare available to workers and young Lee Hira was living in the provinces with grandma so they could both work. Visits were rare.

Now Hira is home - such as it is - and the family's together. When the boy is old enough for school, Mrs. Lee will look for more work in the factory. She was worried a few months ago, when there were so many open rental units in their building.

But now, she thinks, things are looking up.

"Can we go inside the factory?" I ask Mr. Lee after we've left his home. We're out on the street in front of another factory hoping, like wallflowers at a high-school dance, that someone approaches us.

Cambodia got into the garment sector in the mid-1990s to take advantage of the Multi-Fibre Agreement, a quota system that offered developing nations a fair shot at exporting apparel to the lucrative US market. At the time, inspections and unions and oversight of factories all flourished. This allowed Cambodia to proclaim itself "sweatshop-free," even as details of conditions in some factories painted a less-than-rosy picture.

At the end of 2004, however, the Multi-Fibre Agreement ended, and the textile industry in Cambodia panicked. Some closed up shop immediately, some simply laid off workers. Many that stayed open doubled workload but not pay, changed contracts to make it easier to fire employees or simply stopped meeting workers' demands for rights.

The good thing about the "sweatshop-free" aura that still clings to the garment industry is that factories are supposed to allow outside monitors to come through for inspections. In practice, however, only 300 factories are registered with the International Labor Organization's Better Factories Cambodia program, which sends only 12 inspectors out, in pairs and with advance appointments, to monitor compliance.

Mr. Lee denies my request without saying no. "They scared you want to take a photo," he says. "The owner of the garment factory - sometimes they scared, some foreigner want to know if they are breaking regulations."

They should be. During the 2008 inspections, the most recent year for which reports are available, Better Factories Cambodia found only 97 percent compliance with the minimum wage pay standards for regular workers, and 70 percent compliance for casual workers. Legal requirements regulating payment for maternity leave were only adhered to 74 percent of the time, sick leave paid out 66 percent of the time and a lowly 8 percent of the companies inspected adhered to laws limiting compulsory overtime. Half the companies failed to meet basic health and safety requirements.

But while Mr. Lee and my traveling companion are otherwise engaged, I meander closer to the factory door. A friendly guard waves me in. "Hi!" she says enthusiastically, but this turns out to be the only English she knows.

A not-so-friendly guard, standing with four uniformed pals, grips his rifle in greeting. I gesture toward the two picnic tables full of eating women and turn on the charm. "I'm starving, what kind of food do you serve here?" I ask him.

He laughs and pokes his chin toward the door. "We don't make anything here," he says. "You must leave."

A whole family on a motorbike stops when we wave. A four-year old girl stands on the seat in front of her mother and behind her father, who steers. None wear helmets. The first law requiring them was passed recently, but only about half the riders on the street wear them still. They are from Kandal province. On their motorcycle, a trip home takes about two hours.

They tell us they pay $25 per month rent, utilities included - which means their room must be impressively tiny. They send as much money home as possible and, during the rainy season, return home to work the rice fields.

Agriculture barely beats out the garment industry in national income, but working in the country's two grossest-earning sectors doesn't seem to be helping the crew from Kandal, whose down time at one job is spent at the other.

"What is better," we ask, "to work at the farm or to work in the factory?"

In the factories, Mr. Lee explains, "Every month they get the monthly pay. But the farmers? Not every month. For a few months, four months," he says, they make enough to survive. But after that? "Finish."

The husband is speaking, but the wife looks tired. They need to rush home, cook dinner, get to sleep, wake up, eat a meager breakfast, bring the daughter to their friends and check in for work in the morning. They have a few more months of this before they go back to the farm, but after that they'll return to the factory and pick up where they left off.

If they didn't, you might not have anything to wear.

Wednesday, February 24, 2010

Contention, as Government Touts ’09 Growth [... just like Saddam Hussein used to claim he won 100% of the vote]

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
23 February 2010


Cambodian officials and independent analysts found themselves at odds last week on whether the country’s economy grew or shrank last year.

At an annual meeting of the Cambodian Economic Association on Saturday, Hang Chuon Naron, secretary-general of the Ministry of Finance, announced the economy had maintained a sliver of growth in 2009, about 0.1 percent.

The estimate was preliminary, with results expected in mid 2010, but the agricultural, financial and service sectors had helped create the positive growth, Hang Chuon Naron said.

However, independent economists disagree, citing the negative effects the global downturn has had on Cambodia’s main economic drivers.

“Growth as a whole for last year is going to be negative,” said John Nelmes, resident representative for the International Monetary Fund, in a phone interview. “Our estimation right now remains minus 2.75 percent, because almost all sectors are affected.”

The IMF, Asian Development Bank and World Bank have all projected a shrinking economy for 2009, at 2.75 percent, 1.5 percent and 2.2 percent, respectively. Despite those estimates last year, the government predicted 2 percent growth. (The ADB and World Bank stand by their numbers.)

Cambodia’s chief earners, garment manufacturing and tourism, were both hit by the global economic downturn. And that could hold lessons, Nelmes said.

“It’s important, I think, to have a good understanding of what happened in the economy in 2009, because that would help the government to be able to set its economic instruments in the way that helps the economy to grow again and helps improve livelihoods in Cambodia,” he said.

The IMF marked a slowdown in all sectors, he said. Industry shrunk 9 percent, and service fell 5 percent, while agriculture grew between 3 percent and 5 percent and tourism crept up 1.7 percent. Cambodia had enjoyed economic growth rates as high as 10 percent in the years preceding the global crisis.

The IMF is projecting economic growth in 2010, Nelmes added.

“I think that the World Bank, ADB and IMF estimates are probably neutral, rather than the government estimation,” said Chan Sophal, president of the Cambodian Economic Association. “Based on what happened to our economy, the economic growth of 2009 was not good. It will be negative.”

Thursday, February 18, 2010

Phnom Penh tax revenue dropped 36 pct in 2009

PHNOM PENH, Feb. 18, 2010 (Xinhua) -- Phnom Penh municipality's tax revenues in 2009 plummeted 36 percent to 37.6 million U.S. dollars, local media reported on Thursday, citing the statistics released by the municipality.

The Cambodia Daily quoted economists as saying the decrease shows the worst effects of the economic recession last year, particularly in the real estate sector where sales were stagnated, and other major sectors such as tourism and garments also played a role in the slump.

Om Chan, director of the municipal tax department, blamed the world economic crisis for reducing taxable revenues in construction and manufacturing, adding "major building construction shut down and did not work," according to a presentation he gave at City Hall on Monday.

Chan Sophal, president of the Cambodian Economic Association, was quoted as saying that revenue loss is not surprising given the bursting of the real estate bubble after years of skyrocketing prices and a high number of sales.

Neou Seiha, a senior researcher for the Economic Institute of Cambodia, said the decline in tax revenue is so much steeper than the GDP decline because sales taxes, profit taxes and other taxes mainly affect the formal sectors of the economy, which were most battered by the crisis.

The main sector in Cambodia's economy to grow last year was agriculture, which was of little help to tax collectors in the country's urban center, he said.

"The tax is very related to the economic activity. They can collect tax from active economic operators if they have economic activity. If they don't have economic activity they can't collect, " he was quoted by the daily.

Wednesday, February 17, 2010

Women left behind amid global crisis

This file photo taken in 2009 shows women working in a Phnom Penh garment factory. The sector was badly hit by the global economic crisis, forcing many women to find employment elsewhere. (Photo by: Tracey Shelton)

Wednesday, 17 February 2010

Sarah Ireland
The Phnom Penh Post

The crisis has given an opportunity to ask this question: Have we wasted the chance of reform? Have we promoted women’s roles in speedy recovery and shaped a sustainable economy enough? If not, it is about time.
YEAR 2010 will be a year of challenges for Cambodia. We all know about the effect of the global economic downturn. In Cambodia, the four main pillars of the economy – garment, construction, tourism and agriculture – have been affected. Businesses cut spending. Jobs were lost.

People migrated to other areas to look for work. And some went back to work in agriculture. Women in export-oriented and service industries are particularly vulnerable after overseas demand plummeted with eroding consumer confidence in American and European markets.

According to the Ministry of Commerce, as many as 63,000 Cambodian garment factory workers, or 18 percent of the total industry workforce, lost their jobs from September 2008 to May 2009. Many of them are women who had to go back to the farm sector only to find that there was nothing much to do at home because there was no rain for their rain-fed agriculture. The annual floods and Typhoon Ketsana that hit parts of the country late last year damaged thousands of hectares of rice crops in the last harvesting season and made their return to the farm sector a nonviable coping mechanism for many women.

Now the world economy is picking up, slowly but steadily. Governments across the world continue rolling out stimulus packages to fight unemployment and boost growth. Investor confidence started growing. There is hope that Cambodia’s economy will follow the same pattern. That is good news.

Here’s the bad news: Very few measures and policies are really designed to help poor people weather the economic storm, especially women who are the most vulnerable and affected by the turmoil and yet instrumental in the recovery.

Oxfam’s research and interviews with women in the region show that despite the positive outlook, the road to recovery is still bumpy, and there’s a long way to go, especially for women working in export-oriented industry in Cambodia, Indonesia, the Philippines, Thailand and Vietnam, whose main incomes rely on overseas demand.

According to the new World Bank report titled Global Economic Prospects 2010, the global recovery is still fragile and the fallout from the crisis will change the landscape for finance and growth over the next 10 years. It has estimated gross world product to grow 2.7 percent this year and 3.2 percent in 2011, a slight increase from 2.2 percent in 2009. In developing countries including China and India with robust recovery, the figure is expected to be around 5.2 percent this year and 5.8 percent next year, and much lower for developed countries.

For Cambodia, this means we cannot expect an overnight recovery, as we depend on demand from developed countries. In 2009 Cambodia suffered from a decreased export of garments, with negative growth in the sector, whereas Bangladesh and Vietnam have been exporting more garments than last year. The country should re-examine its competitiveness in the industry.

Sadly, it is always poor people who are hardest-hit and the last to recover from an economic crunch.

Since women workers generally earn little more than a minimum wage, they are able to save less. And because women are the majority of workers in export-oriented and service industries, they are more vulnerable to job loss and wage cuts than men in times of economic crises.

Some might think a family should not suffer much if a woman loses her job since her spouse earns more money anyway, but the fact that women spend more of their money on children, household goods and daily expenses compared with men means the loss is more serious.

And despite their majority and crucial roles in managing family income and ensuring everyone’s well-being, there were very few loan projects that granted the much-needed money to these women on the ground to rehabilitate their livelihood.

In urban areas of Cambodia, many women have sought new incomes through multiple jobs, some in the informal and entertainment sectors. In many cases, these options were taken after borrowing money. This livelihood disruption occurs across the region. Research and interviews with women workers in Southeast Asia by Oxfam has confirmed this. Complaints such as, “I was able to pay my loan but the interest ruined me”, “I scrimp and save and walk to the market”, “It’s much more difficult to find jobs in the cities, so everyone has to come home even if there’s nothing for us here” or “We have to budget all the time to have enough for even necessities” are all too common when you talk to them.

Questions abound as to why their governments have overlooked them or failed to set up specific programmes or measures that addressed their needs. Most governments in the region have also ignored the gendered impact of the crisis.

It is also worrying that many companies have used the crisis to hasten moves to a more “flexible workforce”, giving them less secure pay and conditions through shorter, temporary contracts. An Oxfam study in 2009 found that a small number of factories in Cambodia closed and reopened suspiciously for tax holiday purposes. Many employees were made to work without social security.

Studies around the world have suggested that active participation of women is necessary to deliver clear, practical and gender-balanced measures. Communities in which women play an active role in decision making and resource management showed a strong resilience against crises. And that should be our goal.

This one isn’t the last crisis. The key lesson from this is that governments must focus on how to create a sustainable economy with social welfare for poor men and women. We must also ask how durable this recovery is and whether it builds resilience or reduces vulnerability to future shocks.

The crisis has given an opportunity to ask this question: Have we wasted the chance of reform? Have we promoted women’s roles in speedy recovery and shaped a sustainable economy enough? If not, it is about time.
----------------
Sarah Ireland is regional director of Oxfam Great Britain. She was country director in South Asia for a few years before moving to Southeast Asia in 2007.

Cambodian garment trade struggles to get over slump

By Prak Chan Thul

PHNOM PENH, Feb 17 (Reuters) - Cambodia's garment industry, its third-biggest currency earner, shed almost 30,000 jobs in 2009 after a drop in sales to the United States and Europe and could struggle this year, a senior official said on Wednesday.

Oum Mean, secretary of state at the Labor Ministry, said 106 factories had closed in 2009, putting 45,500 people out of work.

On top of that, 66 factories suspended operations, leaving another 38,000 on half pay, after a slump in export orders as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis.

However, 48 factories had opened during the year, employing 16,900 people, Oun Mean said. These firms had received permits before the downturn and had taken the risk of continuing with their ventures, banking on an improvement in the world economy.

"In 2010, we suspect garment and shoe production will still be affected," Oum Mean said, adding the industry had 468 factories by the end of last year, employing 330,000 people.

"We just feel happy after hearing information that there's been some recovery in those big countries," he said.

According to data from the Garment Manufacturers Association of Cambodia, the country exported garments, textiles and shoes to the value of $2.3 billion last year, down from $2.9 billion in 2008. More than half of its exports go to the United States.

In recent years the sector has been the third-biggest foreign exchange earner after agriculture and tourism in a country ravaged by civil war in the 1970s but which has achieved some stability over the past two decades.

It accounts for about 16 percent of gross domestic product, so the factory closures will hurt, with a ripple effect in the countryside as the money sent home by garment workers dries up.

The International Monetary Fund forecast in December that the economy would shrink 2.7 percent in 2009 before growing 4.3 percent this year.

The government has offered vocational training to the unemployed, but Oum Mean said some female workers had also turned to the "entertainment industry" -- a euphemism for prostitution. "Some think that these jobs are not good for society," he said.
Chea Mony, president of the Free Trade Union, said some workers had sought jobs in neighbouring Thailand, Malaysia and South Korea.

"Some of the women went to work in night clubs and beer gardens," he said. "Unemployment is a heavy burden for Cambodian women."

(Editing by Alan Raybould)

Over 45,000 Garment Jobs Lost in Cambodia Last Year

2010-02-17
Xinhua

At least 106 garment and shoe factories were closed last year, mostly because of a slump in Cambodia's key export industry, forcing more than 45,000 workers out of employment, local media reported on Wednesday, citing figures from the Ministry of Labour.

Oum Mean, secretary of state at the ministry, was quoted by the Phnom Penh Post as saying that 66 additional factories had suspended operations over the same period, temporarily affecting an additional 38,124 workers.

"At the same time, we also saw 48 new established factories that employed 16,886 workers," he said, adding that the government trained 40,000 unemployed garment workers in agriculture up to October.

The Ministry of Labour said that at the end of September last year, 130 garment factories closed or suspended operations in Cambodia in the first three quarters, meaning an additional 42 factories had shut down from October to the end of December.

Just over 30,000 garment workers were made redundant last year up to the end of September. Evidence so far has suggested that openings and closures were about the same, according to Oum Mean.

However, a representative of the Garment Manufacturers Association of Cambodia (GMAC) said that the sector is far from recovery. GMAC Secretary General Ken Loo pointed out that shipments were still down after dismal figures for the last quarter of 2008.

Cambodia's garment sector is regarded as the first largest earning income for the country's revenue.

Thursday, February 04, 2010

Banks Forced to Reduce Interest Rates

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
03 February 2010


A high number of deposits followed by a low number of loans have created a cash flood for banks, forcing them to lower their interest rates.

Since mid-2009, major banks have sought to increase the number of loans they give and decrease the amount of cash deposits they receive, or at least the interest they must pay out.

The increased liquidity produced by high numbers of depositors and low numbers of borrowers means the banks have not been able to earn revenue on loans and face higher risks from increased costs.

Acleda Bank, for example, saw a 40 percent increase in deposits in 2009 compared to the year before, for a total of $688 million. But as of January, the bank has lowered its interest rates on deposits to 5.75 percent, down from 7.5 percent in mid-2009. At the same, the bank has lowered its lending rate for medium-sized loans (between $20,000 and $1.5 million) from 15 percent to somewhere between 10 percent and 13 percent. Rates for small loans dropped from 28 percent to 26 percent.

“If the deposit growth is too fast like this, we have to lower the deposit rate, in order to reduce the amount of deposits,” said In Channy, Acleda’s chief executive officer. “Now we’ve already reduced it to a reasonable rate, and we’ve also reduced our lending rate. This can partly help grow credit.”

In another example, Malaysian-owned Cambodia Public Bank recently reduced its annual deposit interest rates to 4.75 percent and its interest rate on loans to between 11 percent and 12 percent. At one time, the bank charged the highest loan rates, at 15 percent, and offered the highest deposit rates, nearly 8 percent.

“I think the trend is probably still down,” said Phan Ying Tong, country head of Cambodia Public. “We are still looking at it now.”

Cambodian banks began heavily competing with each other in 2008, offering high rates in efforts to bring in customers, prior to the global financial crisis that began in 2008. Even after the crisis, rates continued to rise until they created the current liquidity problem.

The nation’s 33 commercial and specialized banks brought in $3.3 billion in deposits in 2009, an increase of nearly 33 percent from the year before, according to National Bank figures. But they were barely able to increase the amount of money they loaned, dispersing only $2.45 billion in 2009, a 3.2 percent increase from the year before.

The four largest banks—Acleda, Canadia, ANZ Royal and Cambodia Public—account for 70 percent of deposits and loans, and all four are facing high liquidity and slow lending growth, officials said.

ANZ Royal has reduced its annual deposit rates from 7 percent to 3.75 percent and is in the process of reducing its lending rates within the year.

But the bank’s chief executive officer, Stephen Higgins, said the interest rate reduction may not be able to help balance deposits with loans, as deposits remain high and lending remains low.

“All you can do with [the deposits] is give them to the central bank and earn something close to 0 percent on them,” he said. “We probably have over $200 million with the central bank. There is nothing else we can do with it. We can withdraw them back only we’ve got something better to do with it.”

Charles Vann, deputy director general of Canadia Bank, said his bank faces a similar problem, but it hasn’t taken any measures to reduce liquidity.

Tay Nay Im, director general of the National Bank, said the central bank has no measures to help ease liquidity. But she encouraged banks to reduce their interest rates, which could help them have a sustainable growth in the midst of the economic downturn.

Tuesday, January 19, 2010

Cambodia's Total Exports Drop 18 Percent in 2009 [-Hun Xen and Keat Chhon were lying about the economic crisis all along?]

2010-01-18
Xinhua

Cambodia total exports in 2009 declined 18.2 percent compared to a year earlier, a government data showed on Monday.

The exports of Cambodia's products to foreign markets in 2009 were worth 3,619 million U.S. dollars, a decline of 804.7 million U.S. dollars, or 18.2 percent compared to that in 2008, according to the data showed by National Bank of Cambodia.

Garment sector, Cambodia's biggest earner declined 716.2 million U.S. dollars and other products declined 88.4 million U.S. dollars.

While Cambodia's exports were down in 2009 compared to that in 2008, the total imports were also down.

The imports in 2009 were 5,208 million U.S. dollars, a decline of 1,063 million U.S. dollars or 17 percent compared to a year earlier.

Chea Chanto, governor of National Bank of Cambodia said the decline of Cambodia's exports to foreign markets was caused by the global economic crisis.

However, he argued against the predictions made by several international financial institutions about the impacts of the crisis to Cambodia's economy.

He said Cambodia's economic growth was 2.1 percent in 2009, down from 6.7 percent in 2008, and about 3 percent is projected for 2010.

Earlier, International Monetary Fund suggested Cambodia's economic growth was -2.7 percent in 2009, while World Bank suggested -2.5 percent, and Asian Development Bank predicted at -1.5 percent.