Business experts and social commentators made differing predictions Monday about how seriously Cambodia’s economy will be affected by the National Assembly’s vote to strip the parliamentary immunity of three opposition lawmakers and the subsequent arrest of parliamentarian Cheam Channy.
Central to the most of the predictions was the reaction of the US. The US could cut off loans to the government and encourage international agencies to do the same, said Chea Vannath, president of the Center for Social Development.
“I don’t know how much patience the US has with this matter,” she said, adding that the US could use its influence to urge donor groups to stop loans and grants.
The US could also make it more difficult for Cambodian garment factories to export to the US, Chea Vannath said. In 2003, 70 percent of the garment sector’s exports were to the US, worth $1.12 billion.
Last month, the Garment Manufacturers Association of Cambodia’s President Van Sou Ieng said that GMAC is lobbying for duty-free access to the US. US Senator Gordon Smith has introduced legislation that would grant it.
Given this, “the timing was just horrible,” for the Assembly vote, a foreign business expert said on condition of anonymity. “It’ll be hard for the [US] State Department to go forward with these proposals right now.”
The US Embassy declined immediate comment.
Say Sokhna, an adviser to Deputy Prime Minister Sok An, said it was too early to comment on the impact on the economy. But, he said: “It is a normal situation in Cambodia.”
Ok Serei Sopheak, an independent consultant for international NGOs and donors said “if the government won’t try to resolve the matter, it will have an affect, because the international community is keeping an eye [on the situation], especially US Congress.”
But the foreign business expert said the events cannot be compared to the 2003 anti-Thai riots in terms of negative impact on the business environment. Regional investors are unlikely to be deterred, he said.
However, he added: “The image is of a guy fleeing the country with an associate being put in jail. The image is the hard part.”
Sam Rainsy has limited credibility in the business community because he is perceived as offering few alternatives to the status quo, said Tim Smyth, managing director of Indochina Research.
“There’s stability in the government, and that’s what businesses care about,” he said. “I’m sure [outside Cambodia] it seems worse than it actually is.”