Forum Presents Dueling Outlooks on Economy

The global economic crisis is driving the country’s poor into deeper poverty, and there is no sign of an immediate recovery, workers and NGO officials said at a forum in Phnom Penh Tuesday, calling for the government to em­ploy a better response to the fin­an­cial situation.

But while representatives of and experts on the Cambodian labor market drew up a seemingly bleak picture of the country’s economic situation, government officials offered a set of more measured, positive conclusions.

“Effects of the economic downturn on Cambodia are much less than in Singapore, Thailand and Malaysia,” said Hang Chuon Na­ron, secretary-general of the Min­istry of Economy and Fin­ance, while speaking at Tuesday’s forum on the impact of the economic global downturn. “The Cambodian economy is a small and open economy. The downturn only affects a few sectors.”

Moving swiftly from the banking sector to agriculture and on to tour­ism, Mr Chuon Naron did not ad­dress the plight of those dealing with hardships stemming from the economic crisis, but rather spoke of the possibility of an economic growth rate of 2.1 percent in 2009 (the World Bank predicts a contraction of 1 percent).

Mr Chuon Naron listed a number of positives from within Cambodia’s economy, underlining the fact that the banking sector is rapidly growing in size, the tourism industry is only narrowly hit as regional visitors rise in number and the agricultural labor force is in a position to benefit from an influx of laid-off workers making their way back to the countryside. He also said that garment exports for 2009 would decline by just 5 percent compared to 2008.

But according to Larry Strange, executive director of the Cambodia Development Research Institute, garment exports fell by 27 percent in the first four months of this year and approximately 60 percent of agricultural workers were found to have taken a loan from either their family or a bank in 2008 to help finance basic overheads.

Mr Strange told the forum that it was now imperative “to develop understanding of the economic downturn” and “work together [with the government] to ensure effective policy responses.”

Saing Chan Hang, a researcher at the CDRI, echoed these opinions, explaining that garment exports to the US – which represent 70 percent of the Cambodia’s export market for garments – have been “deeply affected” from the steep recession that the US is currently experiencing.

“Some people are facing a lot of problems in getting loans from banks, especially in agriculture, where the price of agricultural products are going down,” said Chan Sophal, president of the Cambodian Economic Association.

And to make matters more strenuous, both labor costs and production costs are increasing, possibly offsetting any progress made by increased productivity, he said.

“Land distribution is another problem,” he said, adding that land policy should be more “pro-poor” and is currently stacked in favor of large companies.

Mr Sophal said that despite the views from government officials that the banking sector is blossoming, 32 percent of households nationwide are confronted with challenges in repaying their loans, meaning micro-financing agencies are “facing difficulties in collecting their income.”

Countering Mr Chuon Naron’s claims about laid-off workers boosting agricultural production by returning home to farm, Chhoun Monthol, president of the Cambodian Union Federation, said by telephone Tuesday that data due to be released by his trade union next week shows that only 50 percent of laid-off garment workers have actually gone back to their rural home villages.

“Those who do [go back] tend to be waiting for an opportunity to come back and find work in the city,” he said, adding that Mr Chuon Naron’s prediction of a 5 percent decline in garment exports for 2009 was “unreasonable.”

“I am not a politician. I say what I see,” he said.

And Cheam Chansophorn, director of the Battambang provincial agricultural department, said by telephone that any improvements being made to the agricultural sector were not due to a replenished labor force filled with fresh unemployed workers, but rather technological improvements in seeds and fertilizers.

Regardless, Srun Sokhom, deputy general director of the general directorate of agriculture at the Ministry of Agriculture, told the forum that “agriculture is not affected by the crisis, but it is increasing its productivity.”

He said that crop output is due to increase by 52 percent and the fish catch by 25 percent in 2009.

To help bolster the livelihoods of those hit by the crisis, he explained, the Ministry of Labor has been implementing short-term vocational training schemes of between 1 and 4 months.

Mr Chuon Naron said that about 30,000 unemployed workers have received agricultural training, whereas nearly 10,000 have been trained in mechanics. He added that the state has set aside a further $1 million in micro-credit services for those who have already been trained.

But the outlook coming from government officials didn’t appear to meet the perception of the economic situation held by workers attending the public forum.

“When the factories close down, they don’t consider any financial support for their workers. They run away from their responsibilities,” said one garment worker addressing the crowd on Tuesday. “Many of my friends have had to find work in the sex industry as a result of the financial crisis.”



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