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Logo of Phnom Penh Post newspaper Phnom Penh Post - Economy is first SARS victim

Economy is first SARS victim

Prime Minister Hun Sen is shown around the newly refurbished Phnom Penh International Airport (above) on May 6.

THE government said the SARS virus has so far cost the ailing tourist industry at

least $10 million. That was according to officials attending a May 8-9 conference

where industry leaders offered ways to revive the sector with travel promotions and

a renewed focus on domestic travelers.

"We have to do something to bring them back," said Nuth Nin Doeurn, secretary

of state at the Ministry of Tourism (MoT), on the drive to boost tourism.

Gloomy reports in the wake of SARS have economists lowering their predictions for

the country's expected 5 percent growth in GDP this year. Some economists believe

the virus could knock a half percentage point off that figure, although they said

most industries would remain relatively unaffected.

"For sure there will be an impact on the economy, but it all depends on how

long it goes on," said Cambodian economist Sok Hach.

He said the impact would likely be confined to tourism, although he warned it could

affect related industries such as transport. The country's major export earner, the

garment industry, is unlikely to be hurt, because most exports go to Europe and the


"For garments there won't be a significant impact, but now people don't want

to go to [SARS affected] places like Hong Kong to sign deals and so on," he

said, foreshadowing one potential effect of an outbreak here.

But tourism, which ranks among the country's most important revenue streams, has

been crippled by the SARS epidemic. The number of flights arriving in Phnom Penh

and Siem Reap have been slashed and strict quarantine measures elsewhere in Asia

have discouraged non-business travelers.

The MoT reported that tourist arrivals are down at least 22 percent in March compared

to last year. Hoteliers in Siem Reap, home to Angkor Wat, say the figures for April

are likely even worse. Any hope of a rebound is probably more than two to three months


About 800,000 foreign travelers and nearly 3 million domestic tourists toured the

country last year. The sector generated $576 million - around 20 percent of GDP -

but if the region remains affected by SARS, this year could result in lower earnings

as airports, hotels and tourist attractions sit empty.

The Phnom Penh Hotel Association (PPHA) reported occupancy rates of only 35 percent,

down from 60 percent a year ago. In Siem Reap some major hotels are completely vacant

while others that normally charge up to $300 a night cannot fill more than ten rooms.

"It's down terribly," said PPHA's vice president, Tek Ket. "I've never

seen it this bad."

Ket said that if the crisis continued for another month, then major hotels in the

capital such as the InterContinental could face "big difficulties", including

the possibility of temporarily shutting down.

The MoT and private sector businesses said they would focus instead on replacing

some of the 17,000 missing tourists with travelers from within Cambodia and nearby

countries such as Malaysia and Vietnam. They plan on marketing Cambodia as a SARS-free


"If we do it right, with promotion and SARS finished in a month or so, then

I think [tourist arrivals] could be up at least 10 percent or more by the end of

this year," said the MoT's Nuth Nin Doeurn.

Tourists pass a sign warning of the symptoms of SARS.

But the country representative of the Asian Development Bank (ADB), Urooj Malik,

said SARS remains a serious threat to the economy. "This epidemic is already

affecting travel and tourism," he said, adding that if it lasted beyond three

or four months, the economic impact on the region could be "quite substantial".

Chhim Narith, undersecretary of state at the Ministry of Commerce, indicated some

of the other long-term effects that might be in store. The decline in foreign direct

investment (FDI), which hit a four-year low last year, has already been exacerbated

by fears associated with the outbreak. Cambodia attracted only $60 million in FDI

last year compared with $230 million in 1998.

"Some investors had already looked into investing in Cambodia," said Narith.

"After the SARS problems, they have postponed their investments."

Although Southeast Asia ranks among the world's most robust economies, SARS threatens

to derail the region from its steady economic growth rate of 4.1 percent. In its

latest report, the ADB noted that SARS could lower economic growth in developing

Asia by 0.1 to 0.2 percentage points this year.



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