Will Hun Sen’s Antagonists Waste a Crisis?

“If Cambodia and other countries in the globe are able to control the outbreak of the Coronavirus by 70 percent at the end of this year, the growth of the tourism sector in Cambodia is expected to recover by around 30 percent in 2021 and 2022… Cambodia will need at least four to five years to see the growth of the tourism sector resuming to normal.”

Pacific Asia Tourism Association Cambodia Chapter (PATACC) chairman Thourn Sinan, 17 June 2020, Khmer Times

“Expect to see more bargain prices in the market towards the end of the year as businesses become desperate for cash-flow and begin selling assets to maintain current operations.”

CBRE Cambodia’s director of property management Dan Davies, 18 June 2020, Khmer Times

“Housing developers come under the Ministry of Economy and Finance (MEF) regulation. However, mortgage lending are [sic] not regulated by them. So, I am not sure if MEF has that data. We do not capture that data [too] and information on the risk is not shared with the banking sector.”

Credit Bureau Cambodia CEO Oeur Sothearoath, 11 June 2020, The Phnom Penh Post

“តាមការដែលខ្ញុំកត់សំគាល់ឃើញ គឺប្រជាពលរដ្ឋ [ខ្មែរ] គឺគាត់មានទឹកចិត្ត ប៉ុន្តែអ្វីដែល ចំណុចដែលខ្វះខាត ចំណុចសំខាន់ហ្នឹង គឺ​គាត់ត្រូវការមេ … ដល់មានដឹកនាំផ្ទាល់អញ្ចឹង ទៅ គឺមនុស្សទៅហើយ។ ប៉ុន្តែដល់មករយៈក្រោយនេះ គឺថាមេដឹកនាំ វាអត់មាន។”

អនុប្រធានគណបក្សសង្គ្រោះជាតិ អេងឆៃអ៊ាង ថ្ងៃទី​ ៨ មិថុនា​ ២០២០ ទូរទស្សន៍អាស៊ីសេរី                

The latest UNCTAD report says economies for Developing Asia, covering Cambodia, are projected to suffer up to a 45% decrease in foreign direct investment inflow due to the pandemic. Chheng Kim Long of Asian Vision Institute claims Cambodia’s reduction exceeds 40%. The World Bank says the pandemic has hard hit Cambodia’s three main drivers of economic growth: tourism, manufacturing exports, and construction, which together accounts for more than 70% of the growth and almost 40% of paid employment. This means 1.76 million jobs are at risks.

Tourism professionals predict it will take at least four years for the industry to bounce back. This forecast now appears optimistic after the latest outbreak has swept through Beijing, a supplier of about 40% of all foreign tourists to Cambodia. GMAC secretary-general Ken Loo expects July and September conditions to be worse for garment workers. Of about 580 garment and footwear factories, more than 180 have suspended their operations, while another 60 are at risk of closure. The construction industry is choking with high vacancy rate in commercial and residential markets. Owners and operators are racing to the bottom to lower their rents.

Major players in these sectors are scrambling for air. GMAC demands a 30% wage cut. Tour operators are puzzled why Hun Sen keeps Cambodia open for tourists yet imposing stringent financial and health constraints on them to enter. Property agent Dan Davies calls on those with spare cash to swoop up property bargains during the distress, which would keep him in business.

Meanwhile, a major foundation for the whole economy is wobbling. Many consumers and investors are in debts. Loss of incomes or jobs has already begun to cause distress, especially those borrowers who have no savings. Dan Davies expects the market to be flooded with properties this year as speculators or investors could no longer service their loans.

What raises a stink is that nobody knows the exact extent of the debts. The number of USD 28 billion debt, which bankers and government officials have bandied about, excludes loans by pawn brokers and mortgages by housing developers. Oeur Sothearoath says this shadow banking is unregulated and unreported. Loan restructures may become futile if the Covid-19 outbreak persists like it has in America and now in Beijing.

Yet, Hun Sen’s responses to the pandemic are bewildering. He cuts the State budget by half for 2021-2023, while Keynesian economists would require a public sector to spend like crazy to raise economic activities, while his NBC technocrats inject more liquidity into the banking system.

Thus, Covid-19 has thrown Hun Sen into deep water. But his lucky star may still shine as his antagonists in-exile could waste the crisis and throw him another lifeline. From 10,000 km away, Sam Rainsy incites Cambodian people to revolt. From his comfort in-exile, Eng Chhai Eang says people are ready but nobody leads them. The self-proclaimed national rescuers still prefer to rely on remote control; they still blame Hun Sen for Sam Rainsy’s failure to return last November.

Ung Bun Ang

22vi20

Fake News You Can Use

Hun Sen must find some solace in announcing construction projects worth a total of USD 1.37 billion for the first five months of 2020. Sarin Vanna gloats that the Cambodian construction sector is doing well compared to others in the world.

Spin doctor Sarin Vanna glosses over the facts that the five-month number makes up only 37% of the entire foreign direct investment flow into Cambodia in 2019, and that they are just projects on paper. It is most likely only a few of them will ever materialise. Only cowboy speculators and investors will proceed with expert forecasts of high vacancy rate and funding and debt crisis that has no end in sight.

However, everyone including Hun Sen deserves a break. Right?

“Construction investment projects in Phnom Penh were recorded at more than $1.3 billion from January to May. While many sectors globally are facing a serious downturn in their fortunes because of the knock-on effects of COVID-19, the Kingdom’s capital received a total 583 projects during the five months period.”

Phnom Penh municipal Department of Land Management, Urban Planning, Construction and Cadastre Director Sarin Vanna, 17 June 2020, Khmer Times

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