THE ongoing rift within the garment industry serves as a reminder that Cambodia remains an unstable destination for employers, as shown by Phnom Penh’s dismal second-to-last ranking in this week’s employers’ survey by insurance giant Aon.
The Kingdom may have advanced by leaps and bounds in the past two decades in terms of security, but major risk assessors such as Aon are still advising firms to stay away from Phnom Penh – illustrating that the government has considerable work to do to make sure foreign investors feel confident enough to move here.
Aon’s assessment, in a survey of 90 world cities, that the capital remains more risky than the likes of Karachi in Pakistan and Lagos in Nigeria for employment and recruitment is worrying.
The report suggests that foreign firms continue to shun high-risk environments, such as Cambodia because of high crime rates, unpredictable government economic policy and a largely unskilled workforce.
“All of these people risk factors increase costs, sometimes in areas that are not typically associated with personnel cost,” it said.
With a limited pool of highly-trained people in the workforce, options for recruitment remain limited in Cambodia and training costs high, and a lack of adequate healthcare means benefits become expensive.
Crime remains perhaps the greatest deterrent here, not only because of the scare factor but also because of high security costs. Potential employers looking to the Kingdom have been offered little evidence recently that the situation is improving. Reported crime levels rose 20 percent in the Kingdom last year, but cases actually documented are almost certainly only the tip of the iceberg.
To put things into context, New Zealand – one of the safest countries on the planet with roughly a fourth as many people – recorded around 100 times as many crimes as Cambodia in 2009. But in Aon’s survey, Auckland was ranked 36th and Phnom Penh 89th. Only the Bangladeshi capital Dhaka scored lower.
These are not problems Cambodia can address overnight, as they relate to society itself. Still, the virtuous circle that could encourage more foreign firms to come here needs to be accelerated.
At a government level, policies and institutions need to be more predictable, transparent and authoritative.
For instance, although this week’s creation of a body to try to settle garment protests – composed of government labour and industry unions – represents a positive step, the timing of this initiative is less prevention, and more cure.
The government has implemented the beginnings of a social security and healthcare system for employees, but workers often complain of a lack of knowledge.
This all points to uncertainty and, unfortunately for Cambodia, if there is one thing foreign investors despise it’s overly high risk.