Coronavirus pushing Cambodia back into poverty
Cambodia has taken a heavy hit from the economic crisis caused by the COVID-19 pandemic. With firms staring at canceled orders and people losing jobs, fears grow that it could undo the nation's progress fighting poverty.

13 August 2020

Garment worker Ny Thea never expected she would be in such big trouble. Just recently she still earned about $300 (€253) per month in a clothing factory, and on top of that, she took in extra cash renting out a luxury car.

But the coronavirus pandemic has changed everything. The factory fired Thea and 619 of her colleagues, and no one is interested in renting her vehicle anymore. "I can't find a new job. I have no idea how I am going to pay off my debts," she said.

Although the number of coronavirus infections in Cambodia continues to be relatively low, the Southeast Asian country is taking a heavy hit from the economic crisis caused by COVID-19.

While the nation's economy grew by 7% in 2019, it's projected to shrink by as much as 5.5% this year.

Cambodia's fight against poverty

The World Bank as well as the Asian Development Bank (ADB) warn that poverty may significantly increase. According to the ADB, the current crisis could push an additional 1.3 million Cambodians into poverty. That's about 8% of the population.

This is likely to put an end — at least temporarily — to Cambodia's successful fight against poverty over the past two decades.

In 2007, 47.8% of the country's population lived under the national poverty line. In 2014, this number decreased to 13.5%. But the coronavirus crisis is now expected to push the figure back up to about 20%. The national poverty line defines the poor as people who earn $0.93 or less per day.

On top of that are millions of Cambodians who live just above the poverty line. They are also heading toward harsh times.
Full article: https://www.dw.com/en/cambodia-coronavi ... a-54552715

From: Covid-19's Gender Problem in Informal Southeast Asia
August 19, 2020 By Julianna Lai

In a typical recession, the informal sector can absorb losses in formal employment. The current crisis, however, puts informal laborers at greater risk because they often work and live in unfavorable conditions for social distancing. With no means of teleworking, many are simply forced out of work when lockdowns are imposed. Uncontracted daily wage-earners are also less likely to have savings or alternative income stopgaps in an economic downturn.

Unregistered workers make up an estimated 78 percent of the total working population in Southeast Asia, while women comprise the majority of the informal sector in Myanmar, Laos, Cambodia, the Philippines, and Indonesia.

Some sectors badly impacted by Covid-19 are almost entirely informal, as is the case with domestic work and street vendor industries. Other sectors operate with varying degrees of formality, but, crucially, employees are considered to have informal jobs if their employment is unprotected by law and comes with no welfare or benefits, even if their firms are formally registered.

Cambodia's garment industry is an example of the latter category. The country’s largest employer and economic cornerstone—garment manufacturing—reveals the worst of Covid-19's economic side effects. According to ASEAN’s estimates, over 90 percent of total employment in Cambodia is informal.

The garment sector employs the most unregistered women workers after agriculture. As the pandemic wreaks havoc in supply chains and induces consumer anxiety, wholesale and retail trade and industry have been hamstrung by a 50 percent decrease in global clothing demand.

Some Southeast Asian clothing factories have not received orders or even price inquiries from major European Union customers since March. Neglecting their financial responsibilities, numerous Western fashion brands have even backed out of already-completed orders.

As a result, about one-third of Cambodia’s clothing factories have shut and much of the 90-percent female workforce has been sent home. Prime Minister HE originally pledged furloughed garment workers 20 percent of national minimum wage for six months, asking factory owners to cover 40 percent.

[But] Not only have owners been unable to meet this request; the Cambodian Labor Confederation reported in May that just 15,000 of 150,000 known suspended garment workers had been receiving the monthly stipend promised to them.
The application process is arduous, and there is little indication that the government has improved its compensation process. The Labor Ministry only reported paying “more than 8,000” suspended workers in July.

[CEO News Note: This was edited to focus on the situation in Cambodia.]
Full post: https://www.csis.org/blogs/new-perspect ... heast-asia

Keep bringing up the news on garment workers...
So who and what happened which resulted in this???? Everyone knows the answer to this...

While the nation's economy grew by 7% in 2019, it's projected to shrink by as much as 5.5% this year.

Typo? 15-20% seems more realistic.

Long read.

September 21, 20203:46 AM
Updated 15 hours ago
Land to lose: coronavirus compounds debt crisis in Cambodia
By Matt Blomberg, Mech Dara
14 Min Read

SIEM REAP, Cambodia (Thomson Reuters Foundation) - As dark clouds approached her village in northwestern Cambodia one afternoon in July, Set Sreylon prepared for the monsoon that threatened to flood her new family home.

While the rains were a concern, the 37-year-old feared a bigger threat to her property - the daily visits from debt collectors demanding repayments on her microfinance loan and ensuing credit she had taken out to keep up with the repayments.

With the coronavirus pandemic ending Sreylon and her husband’s jobs in the tourism industry, the mother-of-two was at a loss as to how she would keep the lenders at bay, and clear a growing debt secured by the title to her family’s land.

Her debt - originally a single loan from a microfinance institution (MFI) - had almost doubled in a year to $8,000 and was pursued by various loan sharks charging up to 40% interest.

“You borrow from A to pay B, then you borrow from B to pay C,” she said outside her home in Pouk district, a few miles from Cambodia’s Angkor temples and the tourism hotspot of Siem Reap.

“What’s the end result? You run out of letters and you have to sell your land,” Sreylon told the Thomson Reuters Foundation.

Microfinance was pioneered in the 1970s by Nobel laureate Muhammad Yunus to give low interest credit to poor or rural people to set up businesses but the fast-growing sector has been invaded by predatory lenders who can strip people of everything.

Dozens of interviews with indebted villagers, charity staff, economists, lenders and officials revealed how the coronavirus fallout has compounded microfinance debts, with fears growing that countless Cambodians could end up destitute and homeless.

“The Cambodian microfinance sector was already headed for a meltdown,” said Milford Bateman, a visiting professor of economics at Juraj Dobrila University of Pula in Croatia, and one of the world’s leading academics and authors on the issue.

“COVID-19 has accelerated a slow-moving disaster for the poor as they are gradually stripped of their land,” he added.
POVERTY TO PROFIT

Sreylon is far from alone. She holds one of 2.7 million microloans in a country of 3.3 million households, where the average debt per borrower is the world’s highest at $3,800 - more than twice Cambodia’s gross domestic product per capita.

Since the Southeast Asian nation emerged from decades of war in the 1990s, microfinance has evolved into a $10 billion sector profiting international financial institutions.

The model has been credited with helping drag millions out of poverty by funding farming equipment or small businesses, but activists and academics said it has driven a rising number of borrowers to sell land, migrate or put their children to work.

About one in two Cambodians were landless in 2016, up from a third in 2009, the latest state data shows. It is unknown to what extent this rise was fuelled by the microfinance industry.
Full article: https://www.reuters.com/article/us-camb ... 2S?rpc=401&

Cambodia’s Microfinance Industry in Troubled Waters
A conversation with economist Ron Bevacqua about the crisis facing Cambodia’s microfinance sector.
By Luke Hunt
September 21, 2020
Cambodia’s Microfinance Institutions (MFIs) have been hit hard by the COVID-19 pandemic, amid claims that that overlending to poor borrowers, who can ill-afford to repay, has resulted in land seizures and the further immiseration of the poor.

Ron Bevacqua is an accomplished economist and the author of “Building an Inclusive Financial Sector,” a new book about the microfinance industry in Cambodia, which is available through the National Bank of Cambodia.

Contrary to widespread opinion, Bevacqua argues that Cambodia’s MFIs are not necessarily in crisis, but nor should microfinance be seen as a panacea for poverty.

“To be sure, many microfinance clients do succeed in increasing their income,” he writes. “But the ratio of success stories is low enough that it cannot be said that gaining access to financial services systematically reduces poverty.”
https://thediplomat.com/2020/09/cambodi ... ed-waters/

Title sums it up. The virus is pushing Cambodians back into poverty.

Micro finance works great when there is responsible borrowing.

The problem is that the virus has wiped jobs and income.

No amount of borrowing replaces jobs and income. No matter how responsible the borrowing.

It’s not micro finance issue and predatory lending that’s driving poverty at this point.

Sep 30, 2020
Cambodian garment workers mired in poverty despite stimulus

The Cambodian government has allocated more than US$1 billion to bolster an ailing economy struggling with the withdrawal of European trade perks and the Covid-19 pandemic, but it’s the workers in the once thriving garment industry who are doing it hard.

Under its Everything But Arms (EBA) policy, the EU grants tariff-free access for goods from developing countries that meet international standards on democracy.

But a ban on the main opposition party from contesting elections in 2018 amid a crackdown on dissent and the independent press resulted in Prime Minister HE’s long ruling Cambodian People’s Party (CPP) winning every seat contested.

That angered the EU — Cambodia’s largest export market — prompting the withdrawal of some trade preferences which has cost business an initial $130 million with further losses expected.

Hardest hit is the $7 billion garment industry where about 700,000 workers once earned less than $200 a month producing garments for big brands such as Adidas, Levis Strauss and H&M.

Sao Savorn, 36, lives in a ramshackle dormitory in Phum Tmey in Svay Rieng province and has worked at the Hung Wah factory producing goods for export for the last nine years. Now she is on the poverty line.

“These days I’m facing a big problem because Covid-19 has deeply affected my family’s finances. We don’t get much work to do and I have small children and my mum is also old,” she said.

“I don’t get any extra working hours because of the coronavirus and my income is low compared to before. And now I’ve heard we will be facing losses of about 20 percent due to EBA, which means my work will be even less.”

The Garment Manufacturers Association of Cambodia (GMAC) insists the EU made a mistake by withdrawing trade preferences, which came into effect on Aug. 12, amid the pandemic and that 450 factories have suspended work and another 83 have closed, hurting about 150,000 workers.

“Numerous brands and retailers in Europe and North America have canceled or delayed orders due to the drop in retail sales in Europe from the pandemic,” GMAC secretary general Ken Loo said. “Consequently, millions of Cambodian citizens could fall back into poverty due to this crisis.”
https://www.ucanews.com/news/cambodian- ... ulus/89733#

newkidontheblock wrote: ↑Tue Sep 22, 2020 2:32 am Title sums it up. The virus is pushing Cambodians back into poverty.
Micro finance works great when there is responsible borrowing.
The problem is that the virus has wiped jobs and income.
No amount of borrowing replaces jobs and income. No matter how responsible the borrowing.
It’s not micro finance issue and predatory lending that’s driving poverty at this point.

'Morning Nuke, Yes, Cv is the main driver of the recession right now.
But micro finance is thriving on it and turning it into much more of a tragedy.

"Responsible borrowing" of the kind we are expected to practice in the West is a concept unattainable by most rural Cambodians. for obvious reasons. To argue otherwise is either ignorance or disingenuousness.

"Micro finance works great when there is responsible borrowing."
Yes micro financing as it was originally conceived by the Grameen Bank at low interest rates with a genuine intention of helping people.
Since the concept has been privatised, the MFI's are raping, plundering and pillaging the desperate poor like pirates.

I note no recommendations about "responsible lending" by highly educated, legal powerful, ruthless "bottom line rules" lenders in order to get interest rates at 20+% plus fees or to take Cambodia's poorest families land and security for a pittance.
The "responsibility" message is preached only at the poor.

You did not challenge that it was "predatory" though. Phew!
Even a staunch no-rules buyer-beware cappo cannot deny that.

Pure exploitation of the desperate, illiterate and financially uneducated.
imo (only), Unconscionable. Heartless capitalism naked at it's very worst.

I also have little patience for the argument that it is better than traditional money lending systems here.
That is the drug dealers defence.
Fact is, Cambodia in this day and age should be able to introduce a system of lending to poor farmers and small biz wannabe's that genuinely helps people out - and helps build the nation.

Cambodia’s poverty rate to double to 17.6 pct due to COVID-19: UNDP
Cambodia’s poverty rate could nearly double to 17.6 percent and unemployment could rise to 4.8 percent, according to a policy brief that assesses the socio-economic impact of COVID-19 in Cambodia released by the UN Development Programme (UNDP) on October 8.
VNA Friday, October 09, 2020 16:16

Hanoi (VNA) – Cambodia’s poverty rate could nearly double to 17.6 percent and unemployment could rise to 4.8 percent, according to a policy brief that assesses the socio-economic impact of COVID-19 in Cambodia released by the UN Development Programme (UNDP) on October 8.

It was launched through careful consultation with the Cambodian Ministry of Economy and Fiance (MEF) and other partners.

The impact assessment uses three models to measure impact and model scenarios that can mitigate further risks resulting from the pandemic.

The assessment estimates that economic growth could contract from an original 6.5 percent for 2020 to minus 4.1 percent. Under this scenario, the poverty rate and unemployment are forecast to surge to 17.6 percent and 4.8 percent, respectively. Cambodia’s poverty rate fell significantly to 10 percent last year from 53.2 percent in 2004.

A social protection stimulus of 3.5 percent of GDP would limit GDP contraction to minus 3.3 percent and lessen the impact on unemployment and poverty to 4.4 percent and 14.2 percent, respectively, the assessment says. This social protection stimulus would prevent 570,000 people from sliding back into poverty.

“The modelling of economic and social impacts can help us better understand the impact of this global pandemic on Cambodia and how we can best design stimulus packages in response,” said Nick Beresford, UNDP Resident Representative.

Earlier this week, the Cambodian government announced it will extend the COVID-19 relief programme for another three months for about 600,000 poor families, equivalent to more than 3 million people.

Chhour Sopanha, director of Cambodia’s Social Welfare Department of the Ministry of Social Affairs, said the extra fund is up to 300 million USD.

The country has so far set out two phases for the support, with the first phase covering June and July, and the second phase covering August and September./.
VNA