Overcoming Cambodia’s reliance on few trade partners: An analysis by The Asian Vision Institute
The economy of Cambodia is to suffer the effects of two hard blows in the coming months and years. The first is the European Commission’s announced intention to scale back its “Everything But Arms” (EBA) preferential trade arrangement with Cambodia and the second is the novel Coronavirus (COVID-19) pandemic. These events are laying bare the structural weaknesses of Cambodia’s economy, which is over-reliant on the European Union for market access and on China for production capacity, investment and tourist inflow. Cambodia’s most vulnerable citizens, particularly women who work in the garment industry, low-skilled workers and those who have just been lifted from poverty, will feel the brunt of the fallout. The Asian Development Bank and the World Bank have each warned policymakers of the precarious state of the “near poor” in Cambodia. According to official estimates, the current poverty rate is below 10 percent (compared to 47.8 percent in 2007). Although the nation has achieved great success in its fight against extreme poverty, more than 70% of Cambodians still live on less than US$3.20 a day. The Royal Government introduced short-term measures in late February of 2020 to help employers sustain their operations, to help workers who have lost their jobs or whose work has been suspended and to support small and medium enterprises which are the backbone of the economy. The Royal Government is to be commended for this. The protection of livelihoods is tantamount to the protection of human rights. The measures include tax holidays, direct support, training programs, customs facilitation and the reduction of government expenditures. For example, owners of factories that suspend production due to a shortage of raw materials will be expected to pay 40% of wages while the government will pay an additional 20%. An enhanced set of reforms and mid to long term […]