On the whole, 2021 was a year of slow recovery for the Cambodian and broader global economy, and was heavily shaped by the spread and evolution of SARS-CoV-2 and emergence of new variants of the novel coronavirus, which causes Covid-19.
The pandemic and the complex spectrum of crises it has provoked over the past two years has profoundly changed the way people live, work and do businesses, as well as invest.
The World Bank projects Cambodia’s economic growth at 4.5 per cent this year, up from its 2.2 per cent estimate for 2021, as more Covid-related restrictions are lifted. But the Washington-based multilateral development bank warns that a new major outbreak could put recovery at risk.
The Post’s May Kunmakara conducted an exclusive interview with key Cambodian-based business leaders in various sectors to better understand the concerns and challenges they face and gain insight into their action plans to move ahead in 2022.
Banking: Acleda Bank Plc president and group managing director In Channy (Photo Above)
Last year we generally saw robust growth, with a simultaneous increase of about 20 per cent in both loans and deposits.
Contributing factors include government Covid control measures that brought down the number of new infections and deaths, and led to the vaccination of more than 90 per cent of the population, which is a high rate compared to other countries in the region and farther afield.
A second factor would be the government’s move to allow the country to resume economic activities in early November, prompted by the high vaccination rate, when I observed that businesses were roaring back into action, albeit for a short time.
And a third would be the circular on credit restructuring issued by the National Bank of Cambodia, which has given Acleda Bank a lot of cash to drive significant growth.
With socio-economic activities in full swing in 2022, economic growth will be even greater than in 2021, as the rate of vaccinations continues to grow.
Although the presence of the new Omicron variant is an inconvenience, I am not worried because more than 90 per cent of our population has already been vaccinated, and the mortality rate caused by disease associated with the strain does not seem to be all that high, and recovery times appear to be shorter.
Growth in the financial sector will be key in getting more cash circulating in the economy, thus pushing growth even faster.
Education: Westview Cambodian International School chairman Ly Virak
I think the sector’s performance in 2021 was better than in 2020 thanks to the high vaccination rate. People have less anxiety, and parents and students have demonstrated better adjustment to online learning.
With restrictions lifted in almost all sectors – including schooling, save for preschool programmes for children aged under 5 years – and the announcement of the end of the February 20 Community Event, we closed the year with optimistic prospects.
Economic prospects in 2022 are brighter than in 2021, considering important factors such as Cambodia’s high vaccination rates and increasing numbers around the world, relaxation in international travel rules, and the resumption of schools and most other sectors.
If preschools were allowed to reopen, growth in the education sector would likely be at pre-pandemic levels.
Tourism: Channel Group chairman Sar Sarin
In 2021, the tourism industry remained in positive growth territory.
Although we did suffer a bit of a blow from the Delta variant early in the year, the industry improved somewhat over the last few months as internal and outbound tourism picked up following November’s economic reopening.
We do expect the industry to gradually improve, albeit not at a very fast pace.
Although the new Omicron variant will remain prevalent, it will likely not have a large impact on our lives given that most of the population has been jabbed.
I do, however, foresee that tourism will grow much more than in 2021, undergirded by a recovery plan set by the government to boost the industry.
Garments: Garment Manufacturers Association in Cambodia (GMAC) chairman Van Sou Ieng
Provided that conditions remain as stable as they are now, we can be optimistic in 2022 that our exports will continue to grow, probably to a moderate level for garments and a more respectable degree for travel goods. A shift in garment orders from China and Myanmar will continue to benefit Cambodia.
But nothing is without risks. Internally of course we need to be efficient in terms of cost control as a production-based economy. A pension fund scheme will soon be implemented, and we are also approaching elections (commune elections in 2022 and general elections in 2023), so wages could be expected to rise higher than in previous years. Social and environmental compliance costs are also expected to rise.
Green production and sustainability will be a new area of focus and cost increase. Suppliers must have environmental-protection and clean-energy programmes in place, and there must be targets and reports that show progress over time. This cannot be done without further capital investment.
Public Relations: Two Way PR Co Ltd managing director Kim Hoan Pheng
To me, communications is key, and our core offering to our clients – we make sure that we communicate well among ourselves too. When first faced with the pandemic, I promptly held a discussion with my team on the situation and potential scenarios.
Fortunately, through our mission, we have sustained our business during the tough pandemic times. We’ve seen great economic progress thanks to effective government management of Covid-19.
The rapid Covid jab rollout in Cambodia allowed the government to greenlight the resumption of the whole spectrum of socio-economic activities in November, which has been greeted as a dandy move for business operations.
I foresee that 2022 will be a great year for businesses, and the new investment law recently launched by the government will be another attractive feature for investors.
Rice: Cambodia Rice Federation president Song Saran
The rice sector has performed satisfactorily despite the setbacks caused by the pandemic. We saw increased exports to major markets like China whilst volumes to the EU has logged little growth in the past two years.
Fortunately, farmers have had good harvests despite experiencing some flooding and drought in different areas, which shows a level of resilience in the agricultural sector.
Disruptions to the supply chain as a direct result of Covid-19 led to unprecedented increases in transport and international freight rates, which saw many exporters scrambling to secure ships and containers.
Higher freight costs meant significant erosion of margins, and both buyers and sellers have had to adjust deliveries and contracts to mitigate the risks of high inventory holdings (sellers) and a lack of stock to sell in the market (buyers).
Overall, the Cambodian rice sector remains strong at the grower level with good harvests, whilst millers and exporters have struggled to compete in certain markets. The pressure of high transportation costs continues to weigh the sector down, and this is expected to continue into early 2022.
Despite the aforementioned challenges, the outlook remains strong due to – the end of EU rice safeguard measures in January, which would see more importers in the bloc purchase Cambodian rice; ongoing positive trade relations with China, as a major buyer; and continuous government efforts and supports for farmers, including various funding and sector development schemes.
A number of exciting developments are underway, for example, solar-powered rice mills, the broadening use of by-products – such as rice husk and bran – to create new products, and new innovations making rice production easier and increasing quality and yields.
American Chamber of Commerce in Cambodia (AmCham) president Anthony Galliano
The Board of Governors and the membership can reflect on 2021 as a pivotal juncture in AmCham’s history as we enter a golden era for the chamber.
The chamber achieved extraordinary success and prosperity, primarily due to an intense and committed focus on its members as the nucleus of our mandate and activities. The board’s duties developed beyond general supervision to more of an active management role, evolving into a working board.
The focus was primarily on delivering value and engaging our members, understanding how the chamber can support the growth of their business, assisting them in expanding their network, and addressing market concerns through appropriate channels.
The chamber escalated its advocacy initiatives in order to represent and advance our member’s business concerns and challenges.
AmCham now has seven advocacy committees to champion our member’s sectorial positions – real estate; information and communications technology (ICT), women’s affairs, beer, tax and legal, corporate social responsibility (CSR), and education.
The challenges of Covid created a more vigorous call to action with AmCham members generously giving back to the country and community where we do business. A newly formed CSR committee will substantially intensify AmCham’s CSR pursuits in 2022.
The board fully intends to build on the achievements in 2021 with very aggressive and ambitious goals and projects. The board expansion has availed new exceptional talent with innovative ideas to compliment and extraordinarily gifted team.
Cambodia will rebound and recover strongly in 2022, substantially due the superb management and containment of the pandemic by the government, and the development polices which will foster investment and economic growth in the Kingdom.
AmCham will be aligned and work united with its membership to not only support the growth and prosperity of their business, but assist in the economic and social development of the nation in what will be a golden era for AmCham.
These interviews have been edited for length and clarity.