Experts Play Down Impact of Labor Strikes

Economists and analysts on Thursday shrugged off the opposition CNRP’s threat to stage nationwide labor strikes, arguing that while such a move could lower profits for companies in the short term, it would not significantly deter foreign investors.

Mr. Rainsy, who mentioned the possibility of strikes during a speech on Wednesday, said Thursday that he intended the strikes to disrupt the country’s economy if necessary and force the ruling CPP to make political reforms and properly investigate election irregularities.

But observers of Cambodia’s economy say potential foreign investors are already well aware of political instability in the re­gion and would not be de­terred from bringing their business to Cambodia.

“The threat of a general strike, or even if it is carried out, is unlikely to have a discernible impact on FDI [foreign direct investment] flows to Cambodia,” said Jayant Menon, lead economist at the Asian Development Bank’s Office of Regional Economic Integration, in an email.

“Although a general strike could send a negative signal to the investing community, many countries have strikes, and they do not generally affect the investment climate in any significant way,” Mr. Menon added.

John Brinsden, vice president of Acleda Bank, said that while the threat of strikes could cause potential investors to “sit up,” the benefits of doing business in Cambodia far outweigh the effect strikes might have on political stability and profitability for companies.

While the possibility of strikes “might make people begin to sit up and take notice, and it possibly would have a dampening effect on people’s perception of the country…it wont make them go somewhere else,” Mr. Brins­den said.

He added that Cambodia still compares favorably to countries like Burma and Laos in terms of its wages, workforce and infrastructure. “All of those countries have their own particular problems,” he said.

Bretton Sciaroni, chairman of the American Cambodian Business Council and an adviser to the government, said that while strikes might negatively influence Cambodia’s reputation for stability, they will be taken with a grain of salt by savvy investors.

“Investors like political stability, period,” he said. “That has been a selling point for Cambodia.”

And, while general elections in 1998, 2003 and 2008 have all brought temporary unrest, “the economy still managed to move on,” he said.

Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, said it is too soon to predict the consequences of nationwide strikes on the garment industry—a sector well-acquainted with labor strife.

“It’s about when and, more importantly, how long,” Mr. Loo said.

“Strikes affect individual enterprise, that’s normal for any industry in any country…. General strikes reflect on the overall atmosphere, so investors might be more concerned,” he said.

Mr. Rainsy said that while the length of his proposed strikes—likely to occur sometime next month—will “depend on the reaction of the government,” a longer labor demonstration may be necessary to force the ruling CPP to make certain “easy” political re­forms the CNRP is demanding.

Such reforms include a moratorium on the granting of economic land concessions and a stop to deforestation.

“Probably we [will] start with a one-day strike,” Mr. Rainsy said.

“The first thing we want to do is send them the warning that the country will not accept this constitutional coup…and if the government ignores this warning, then we will go further, and the strike could be prolonged,” he added.

Asked whether he was concerned that drawn-out strikes might impact Cambodia’s economy as a whole, Mr. Rainsy replied: “It is like taking medicine. Suppose that Cambodia is like a child suffering stunted growth…so suppose that we put him under treatment, maybe he will not feel well for a while…but after that, he will recover and grow very strong.”

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