PR83300

PHNOM PENH, Cambodia, March 20, 2020 /PRNewswire=KYODO JBN/ --

The economy of Cambodia is to suffer the effects of two hard blows in the

coming months and years. The first is the European Commission's announced

intention to scale back its "Everything But Arms" (EBA) preferential trade

arrangement with Cambodia and the second is the novel Coronavirus (COVID-19)

pandemic.

These events are laying bare the structural weaknesses of Cambodia's economy,

which is over-reliant on the European Union for market access and on China for

production capacity, investment and tourist inflow. Cambodia's most vulnerable

citizens, particularly women who work in the garment industry, low-skilled

workers and those who have just been lifted from poverty, will feel the brunt

of the fallout.

The Asian Development Bank and the World Bank have each warned policymakers of

the precarious state of the "near poor" in Cambodia. According to official

estimates, the current poverty rate is below 10 percent (compared to 47.8

percent in 2007). Although the nation has achieved great success in its fight

against extreme poverty, more than 70% of Cambodians still live on less than

US$3.20 a day.

The Royal Government introduced short-term measures in late February of 2020 to

help employers sustain their operations, to help workers who have lost their

jobs or whose work has been suspended and to support small and medium

enterprises which are the backbone of the economy. The Royal Government is to

be commended for this. The protection of livelihoods is tantamount to the

protection of human rights.

The measures include tax holidays, direct support, training programs, customs

facilitation and the reduction of government expenditures. For example, owners

of factories that suspend production due to a shortage of raw materials will be

expected to pay 40% of wages while the government will pay an additional 20%.

An enhanced set of reforms and mid to long term measures are to be announced by

the government at the 19th Government-Private Sector Forum on April the 1st,

2020. In the interim, The Asian Vision Institute (AVI) wishes to appeal to the

government to take the following points into consideration.

Measures to support the diversification of markets, of sources of foreign

direct investment, of industrial bases and of domestic start-ups and SMEs

should be made more visible. To that end, a clear set of key performance

indicators (KPI) should be formulated to evaluate and to enhance the

performance of line ministries and agencies.

Secondly, more robust internal government reforms are needed to address

fundamental challenges that existed well before the arrival of the pandemic and

the EBA adjustments. These reforms should focus on areas of weakness as

outlined by the World Bank's "Ease of Doing Business" score assessment for

Cambodia: starting a business, dealing with construction permits, connecting to

the power grid, registering property, obtaining credit, paying taxes, trading

across borders, enforcing contracts, resolving insolvency and others. More

consideration should be given to Cambodia's scoring in the World Economic

Forum's "Global Competitiveness Report".

Thirdly, additional incentive schemes that target specific industrial sectors

should be formulated to support diversification.

Finally, regular progress reviews must be conducted to ensure the effective

implementation of measures and reforms. Each ministry and line agency should

favour a bottom-up approach and take ownership of their technical reforms and

measures to enhance and support the economic resilience and competitiveness of

Cambodia.

Cambodia has enjoyed a period of peace which is unprecedented in her modern

history. To make the most of the dividends at hand, it is imperative that

measures and reforms be bold, be decisive and be undertaken swiftly, for the

good of all.

The Asian Vision Institute (AVI)

https://c212.net/c/link/?t=0&l=en&o=2752293-1&h=2557919455&u=https%3A%2F%2Fwww.asianvision.org%2F&a=https%3A%2F%2Fwww.asianvision.org%2F

is an independent think tank based in Cambodia.

For further information: Dr Chheng Kimlong, Phone: +855-6121-1800, Email:

admin@asianvision.org

SOURCE: Asian Vision Institute