Garment Sector in Danger: Manufacturers [... Why worry when Comrade Keat Chhon claimed that Cambodia's economy will increase by 7%?]

By Kong Sothanarith, VOA Khmer
Original repoort from Phnom Penh
12 June 2009

At least 100,000 factory workers have felt the pinch of the global economic crisis, with 60,000 losing their jobs, the Garment Manufacturers Association said Friday.

Orders are down, and Cambodia lacks competitiveness with its neighbors Bangladesh, China, Indonesia and Vietnam, Van Sou Ieng, head of the association, told reporters.

Manufacturers are facing pressure from unions to increase wages, as the crisis has cut the overtime hours many workers have come to rely on.

The garment sector is one of the chief engines of the Cambodian economy, but its main target is the US and European markets, which have been hard hit by the economic downturn.

ASEAN leaders take actions to tackle financial crisis [... but Strongman Hun Sen said there is no financial crisis in Cambodia, was he lying?]

March 01, 2009

HUA HIN (Xinhua) - ASEAN leaders stressed in a statement today the necessity of proactive and decisive actions to restore market confidence and ensure continued financial stability to promote sustainable regional economic growth as the global economic downturn was deepening.

The leaders, who gathered in Thailand's central seaside resorts of Cha-am/Hua Hin for the 14th summit of the Association of Southeast Asian Nations (ASEAN), agreed to stand firm against protectionism and to refrain from introducing and raising new barriers.

Facing the sweeping financial crsis and a slowed world economy, the leaders reaffirmed their determination to ensure the free flow of goods, services, investment and capital, and facilitate movement of business persons, professionals, talents and labor.

Meanwhile, the leaders from the 10 ASEAN member states appealed for more coordinated action by both developed and developing countries in a bid to restore financial stability and ensure the continued functioning of financial markets, which will provide support for growth.

The leaders also called for a bold and urgent reform of the international financial system to achieve a more comprehensive, equitable and inclusive system that takes into consideration the interests and voices of the emerging and developing economies.

The leaders looked forward to working with other partners to convey the abovementioned messages at the forthcoming London Summit scheduled in April.

Thai Prime Minister Abhisit Vejjajiva told a press conference, after the leaders signed a series of documents, that in efforts to cope with the current crisis, ASEAN would pursue the path of the Chiang Mai Initiative Multilateralization (CMIM), a regional foreign reserve pool in case of currency flow shortage.

Abhisit, whose country currently holds ASEAN's rotating chair, said Saturday that ASEAN welcomed the progress achieved at an ASEAN+3 finance ministers' meeting on Feb. 22.

At that meeting, finance ministers from ASEAN as well as China, Japan and South Korea agreed to speed up the process of operationalising the CMIM. Under the agreement, 120 billion U.S. dollars, instead of 80 billion as initially proposed, would be injected into the reserve pool.

The 14th ASEAN Summit is scheduled to conclude here Sunday afternoon. ASEAN consists of Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

Help Promote Growth, Keat Chhon Urges Banks

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
24 February 2009

Finance Minister Keat Chhon on Thursday urged commercial banks to expand their loans as a counter to the global economic slowdown, which has already lowered projected growth for the country.

“Banks have to play a role in helping the economy,” Keat Chhon told VOA Khmer. “Now the government has arranged for them to take a role by lowering the reserve requirements.”

In September 2008, the National Bank increased reserve requirements for commercial banks, from 8 percent to 16 percent, to help secure deposits. But Keat Chhon said that requirement will now be lowered to 12 percent.

Adjustments to the banking sector come amid a credit crisis in America that has led to a recession and global financial uncertainty.

In Cambodia, the crisis has hurt garment manufacturing, construction and tourism—three pillars of the economy—and the World Bank recently lowered its growth forecast for the country, to 4.9 percent, compared to a rate of 7 percent in 2008.

In Siphan, head of the credit division for Acleda Bank, said the decrease of reserve requirements will allow his bank to have more cash ready for credit and loans, from about $470 million in 2008 to $700 million in 2009.

“We have enough cash to lend,” he said. “We can provide any kind of credit, because we will increase our loans about $300 million.”

Other major banks like ANZ Royal, Cambodian Public and Japan Maruhan are committed to expanding their loans as well.

However, In Siphan said even with banks expanding their loans, only a limited number of investors is currently looking for credit.

Som Ganty, a financial expert at the Royal University of Law and Economics, said loan expansion by commercial banks would provide more cash flow for investors, which could help Cambodia escape the most serious impact of the financial crisis.

He suggests lowering the reserve rate even more, though, as local banks are not able to find capital from foreign banks.

“The reserve requirement should be as low as 8 percent, so the banks will be able to increase money lending,” he said.

Tal Nay Im, director of the National Bank, said the central bank has no plan to lower reserve requirements further. Commercial banks will have to find resources through foreign lenders to continue their operations, she said.

Vietnam tourism slumps amid global downturn

HANOI, VIETNAM Dec 18 2008
AFP

Vietnam is set to miss its target of attracting five million international tourists this year as arrivals have dropped off sharply amid the global economic downturn, industry officials say.

Hotels and tour operators are struggling and dropping their rates amid the steepest fall in arrivals since the 2003 Severe Acute Respiratory Syndrome crisis and then bird flu outbreaks scared tourists away from Vietnam and other Asian destinations.

Next year the tourism sector -- which employs more than 10% of Vietnam's workforce -- faces zero growth or worse, the Culture, Sports and Tourism Minister Hoang Tuan Anh warned at a recent Hanoi conference.

The Vietnam National Administration of Tourism (VNAT) has asked the communist government to spend $20-million to $30-million on a global marketing campaign to draw back visitors next year and after.

VNAT said such a campaign -- which would follow on from a smaller advertising campaign on CNN and the Discovery Channel -- could be financed from a newly announced $1-billion economic stimulus package.

"The number of international arrivals has been down for months, but the situation has seriously worsened since October," said Vu The Binh, a senior official at VNAT.

That month, fewer than 300 000 international visitors arrived in Vietnam, a drop of almost 12% on October last year, according to VNAT figures.

By November, arrivals were down 22% year-on-year, although part of this was due to the shutdown of Thailand's airports by protesters.

Despite strong growth rates early in 2008, only 3,87 million tourists had come to Vietnam in the year to November, with arrivals from the United States, Japan, South Korea and Taiwan all down, the tourism ministry said.

"We forecast arrivals in 2009 will fall 20% to 30% from 2008 because of the global economic crisis," said Binh.

"So we need to invest more in tourism products to make them return to Vietnam in late 2009 and 2010."

Tourism operators have echoed the complaints.

"Our clients from the United States and Europe -- especially France, Britain and Germany -- have been down since mid-year," said Nguyen Hang Quy of Huong Giang travel agency in the former royal capital of Hue.

"It's because of the international downturn," he said.

"And 2009 will be more difficult. We are now trying to seek out new markets in Asia."

Tourism accounts for 4,5% of Vietnam's emerging economy and had been forecast to generate $3,7-billion this year. The sector makes up 10,8% of the workforce in the country of 86 million people.

At the Hanoi conference it was reported that Vietnam could boost tourism revenues by at least 10% if it eased up visa regulations and expedited the process through online applications and visas on arrival.

The cumbersome visa application process was the "largest obstacle to establishing Vietnam as a global destination", said a Tourism Working Group paper presented by Baron Ah Moo, the CEO of Indochina Hotels and Resorts.

"Due to the processing time ... last-minute travel to Vietnam is not an option and has been replaced by weekend trips to Phuket, Bali, Macao and Singapore," he said.

Wasn't it a Hanoi PhD who said that the global economic downturn wouldn't have a significant impact on Cambodia?

Economic Downturn Felt in Cambodian Stores

By Taing Sarada, VOA Khmer
Original report from Washington
17 December 2008

As the global economy continues to worsen, vendors in Cambodia say their daily business has begun to suffer.

At the Red Moon restaurant, behind the Hotel Inter-Continental on Mao Tse Toung Boulevard, owner Nhem Sothear lamented the fall in his guest numbers.

“I’ve seen a 20 percent to 30 percent reduction from the rate before,” he said recently. “Before, they used to spend $100; now they spend only $80 to $70, or $50. It’s not so negative, it’s still positive, but it’s only at a small level. We used to make a good income, but now it is not so much.”

Sot Visal, general manager for the Phnom Khmer restaurant, near Silep market, said the economic downturn was costing him 30 percent to 40 percent of his customers, while some restaurants have closed altogether or are reducing staff.

“When the world has a bad economic crisis like that, we lose a lot of our clients,” he said.

A woman named Angeli, at a clothing store called “I Love You,” said customers had started asking for cheap clothes, rather than worrying about high quality.

“Most of my clients are very reluctant with the price,” she said, noting that her store had just opened. “They want cheap clothes but of poor quality.”

The worsening consumer climate in Cambodia is echoing that in other countries, especially America, following the collapse of the housing and subprime lending markets.

Economist Sok Sina said the downturn was hurting Cambodia’s economic growth rate, dropping it from a high of 13 percent in 2006 to between a projected 4 percent and 6 percent in 2009.

“Cambodia’s economy mainly depends on industry, agriculture and service,” he said. “If the countries in the West, Europe and Asia meet an economic crisis, they will reduce their spending on food, clothes and tourism. These factors can hurt Cambodia’s economy.”