Recalling the business boom that followed the UN-sponsored elections in 1993, Tha, a rice vendor at Phsar Thmei, hoped that sluggish sales would quickly pick up following the July 26 polls.
So far, though, as Tha and other vendors are discovering, not only have sales failed to recover to their pre-July 1997 highs, they are just as bad—and in some cases worse—than before the election.
“I don’t remember business ever being this slow,” the 27-year-old vendor said Thursday. “Even before the election it wasn’t this bad.”
For the city’s market vendors, as well as many industries in Cambodia suffering from the current economic downturn, there have been few signs that immediate relief is in sight, according to a report released Wednesday by the Cambodia Development Resource Institute. The economy, it stated, is in a “generally miserable state,” with consumer spending down, prices of basic goods surging, and everyone from market vendors to garbage scavengers struggling to make ends meet.
More than a year has passed since the country’s once thriving economy began to grind to a snail’s pace. Most of the donors, investors and tourists who were either frightened away by the July 1997 factional fighting or hit hard by the regional economic crisis have failed to return. The ongoing political uncertainties following the elections have done little to give a boost to the economy.
And the lack of confidence is reflected by many of the country’s consumers, who are resolutely hanging on to whatever money they have.
Average sales at Phnom Penh markets in August were down 48 percent compared to June 1997, according to the CDRI’s report, the Cambodia Development Review. The figures were also only marginally better than those in May, when the CDRI conducted its previous survey (52 percent).
Food sales were down more than 41 percent, the report said, but sellers of household and luxury items are faring even worse.
Kim Mom, a fish seller at Phsar Thmei, said Thursday she has seen her income slashed by two-thirds to about 10,000 riel a day ($2.60) since the 1997 factional fighting. While business was slow earlier this year, she said, it has worsened since the election.
“We used to have one or two days a week with no customers but that was not too bad because the other five days people came to buy,” said Kim Mom. “Now sometimes the whole week goes without customers.”
Inside the Phsar Thmei market, in the electronics section, 50-year-old Leakhana says people come near his stall only to watch free television. “Business has gotten slower and slower,” he said. If he is lucky, he earns $5 a day. But on many days he makes nothing.
And while business has plummeted, inflation has soared. Since May, the price of a kilogram of mud fish has risen from 5,214 riel ($1.30) to 7,857 ($2), the CDRI report found. Pork has jumped from 7,430 riel ($1.90) per kilogram to 8,395 riel ($2.20).
What the report called “particularly worrying” is the continuing rise in price of rice, which in
August was 27 percent higher than August 1997.
The report found that the incomes of cyclo drivers, porters and scavengers have also continued to decline. The number of drivers has risen dramatically, mainly because the drought has deepened rural poverty and forced residents to the city for work.
Daily earnings in August dropped 12 percent from May, to about 6,100 riel ($1.60), according to the report. In July 1997, cyclo drivers reported daily earnings of more than 12,000 riel ($3).
Drivers said many cannot pay the daily 1,500 riel rent for cyclos and are abandoning them at the side of the road.
The report paints a bleak picture of other economic sectors. Hotel occupancy rates in August in Phnom Penh and Siem Reap hovered at between 10 percent and 20 percent, with both staff and salaries being cut.
Wood-processing factories, the report found, are operating at a fraction of their capacity, cutting wages, and reducing employees. Wood related exports are down and prices have been slashed by half compared with early 1997, mainly because the regional economic crisis has slashed demand.
One industry that has kept growing is garment manufacturing. According to the report, garment exports in the first half of 1998 totaled $140.5 million, 63 percent more than the same time in 1997. Several factories have increased sales, the report said, and one has taken on extra workers.
The reason behind the industry’s continued strength, said CDRI economist Toshiyasu Kato, is its export markets. Most export their wares to the EU and US, which have not been seriously affected by Asia’s crisis, he said. Exporters can also take advantage of the low tariffs provided by the EU’s Generalized System of Preferences trade status.
The report also said the cement industry is experiencing a boom that began in 1998’s first quarter. But Alex Traun of Naga Cement said that while demand remained steady in the first quarter, there was no sign of growth.
Analysts said significant economic improvement might not take place until the end of 1999. “I think the new government is the key,” Kato said. “Then foreign donors [must return], then foreign investment will follow that.”
But Craig Martin, executive director of the International Management & Investment Consultants Ltd, believes investors are more concerned about who gets which posts in the next government and their attitudes on foreign investment.
At Phsar Thmei, vendors said they harbor little hope of a quick recovery. Instead, they said, they are economizing.
Fish seller Kim Mom’s family cuts back on things that are now luxuries, such as watching television, to save on electricity bills. Television vendor Leakhana said he no longer takes his children out on pleasure trips.
When asked how far off they believed a recovery might be, vendors answered with a nervous giggle. Or silence.
