Logo of Phnom Penh Post newspaper Phnom Penh Post - Acleda’s Channy: Impact of EBA decision on local banks limited

Acleda’s Channy: Impact of EBA decision on local banks limited

Content image - Phnom Penh Post
Acleda Bank Plc president and group managing director In Channy. Heng Chivoan

Acleda’s Channy: Impact of EBA decision on local banks limited

The European Commission on February 12 announced the partial withdrawal of the Everything But Arms (EBA) scheme, citing a severe and systematic violation by Cambodia of principles in the four core human and labour rights.

The suspension affects one-fifth or €1 billion ($1.08 billion) of Cambodia’s annual exports to the European Union.

The Ministry of Economy and Finance on January 30 downgraded its economic projection for this year to 6.1 per cent from 6.5 per cent, citing the impact of the EBA withdrawal and the outbreak of Covid-19 in China.

To discuss the impact that the partial withdrawal of the EBA will have on the Cambodian economy, The Post’s May Kunmakara speaks with In Channy, president and group managing director of Acleda Bank Plc.

How do you think the government will react to the partial withdrawal of trade benefits under the EBA?

The government has a very firm and clear policy when it comes to the EBA. I often say that the EU must consider the situation in other Asean member states before imposing sanctions on Cambodia.

For example, Vietnam and Laos are communist countries, so their human rights situation cannot be better than Cambodia. Why would the EU sanction us but reward Vietnam? It doesn’t make any sense. It proves that the decision on Cambodia is politically motivated.

There are many instances of human rights violations in Asean. In the Philippines, people are sentenced to death without trial, while in Thailand, many newspapers have been shut down and political parties have been dissolved.

Here we have a lot of political parties, media organisations and NGOs, so I think the decision made by the EU is unfair.

Given that a lot of garment workers take loans from banks and microfinance institutions, how would you say the EBA decision will impact the financial industry?

The financial sector will be indirectly affected. The industry that will be impacted most directly is the garment industry. Based on figures from the Garment Manufacturers Association in Cambodia (GMAC), around 40,000 jobs will be affected by the EBA decision and by the coronavirus outbreak in China.

Covid-19 is set to have a huge impact on the garment industry, as fabric factories in China are shutting down, which means sooner or later garment factories here will run out of raw material.

Some local factories are likely to suspend operations as the supply of fabric dries up. I believe the workers that will be laid off by factories that suspend operations will find new jobs with which to support their families, so I don’t think the impact on the industry will be that big.

Given the EBA and the coronavirus outbreak issues, what is the outlook for the financial sector this year?

Our biggest concern is the virus outbreak because it will affect investor sentiment and affect the whole economy. It will impact the hospitality, transportation, and manufacturing sectors, among others.

A good thing here in Cambodia is that we have hot weather. The virus cannot thrive in this climate. China has predicted that the outbreak will be over by April when the temperature there rises.

Let’s talk about the EBA. We all thought that the EU was going to revoke the EBA in full, but it ended up only withdrawing trade preferences on certain garment products.

This means the impact won’t be as severe as anticipated. This is good news for the financial industry, although it is tricky to make predictions because, as I said, the EBA only affects us indirectly.

I think the impact of the EBA on our industry is limited because we are flexible – we can alter our products based on market needs.

Last year, the financial industry grew by about 20 per cent. If this year, we grow slightly less (say below 20 per cent), it would be good news as the International Monetary Fund and the World Bank have warned us of the risk of fast growth.

Also, the industry is now diversifying and doesn’t rely so much on loans to the real estate sector.

This interview has been edited for length and clarity.

MOST VIEWED

  • Ministry requests school opening

    The Ministry of Education, Youth and Sport on Thursday said it would request a decision from Prime Minister Hun Sen to allow a small number of schools to reopen next month. Ministry spokesman Ros Soveacha said if the request is granted, higher-standard schools will reopen

  • Kingdom eyes India FTA, China deal set for August

    Cambodia is studying the possibility of establishing a bilateral free trade agreement (FTA) with India to open a new market with the second-largest regional economy. This comes as an FTA with China is scheduled to be signed next month while similar negotiations with South Korea

  • Judge lands in court after crashing into alleged thief

    Sen Sok district police on Thursday sent a Koh Kong Provincial Court judge to the Phnom Penh Municipal Court on manslaughter charges after he crashed his car into a woman riding a motorbike on Wednesday, killing her. District police chief Hour Meng Vang told The

  • Gov’t to boost Siem Reap tourism

    The Ministry of Tourism released the results of an inter-ministerial committee meeting concerning Siem Reap province’s Tourism Development Master Plan for 2020-2035 on Wednesday, revealing the government’s plan to improve the overall tourist landscape there. The meeting was attended by Minister of Tourism

  • Residents ordered to remove structures on Phnom Penh’s canal

    Phnom Penh municipal governor Khuong Sreng has ordered authorities to act against the perpetrators who built houses along the Luo 5 canal in Meanchey district. The municipal administration plans to create a committee to solve the matter. The order was given on Wednesday while Sreng led

  • ‘On the offensive’: Cambodia to load up on loans to stimulate economy

    As the dust settles on the economy, Cambodia comes to grips with what needs to be done to turn the economy around, starting with a big shopping list for credit ‘We are going on the offensive,” Vongsey Vissoth, Ministry of Economy and Finance permanent secretary

  • Government set to make up for cancelled April holiday

    The government is set to make up for a five-day Khmer New Year holiday late this month or early next month. The holiday was earlier cancelled due to the onset of Covid-19. The announcement is expected on Friday as the government is studying a range

  • Families told to register for cash handouts

    The government has called on poor families to apply to commune authorities for evaluation to receive financial support during the Covid-19 crisis. A $300 million budget has been planned for implementation within a year. Ministry of Economy and Finance secretary of state Vongsey Visoth said this

  • Crumbling prices, rent ruffle condo segment

    The prolonged decline in international arrivals to Cambodia intensified by renewed Covid-19 fears has driven down condominium sales prices and rental rates in Phnom Penh, a research report said. CBRE Cambodia, the local affiliate of US commercial real estate services and investment firm CBRE Group

  • Over $3M in traffic fines collected in two months

    Traffic police officers collected over $3 million in fines throughout the Kingdom during the past two months when officers strictly enforced the law in accordance with a May sub-decree, officials said. As incentives, law enforcement officers received between 200,000 and two million riel ($50 to $500) each. The figures