Hun Sen says the Kingdom's laid off workers should return home to rural areas to contribute to the agricultural sector, which critics say is also in crisis.
A farmer plants rice in a paddy field outside of Siem Reap. Prime Minister Hun Sen warned on Tuesday that those laid-off would have to return to their villages to do farming work.
estimated growth in the agricultural sector last year, according to the IMF
At the end of 2008, it was estimated that the country's largest sector grew 2 percent compared with 8.1 percent growth for the rest of the economy
PRIME Minister Hun Sen told the country to ignore productivity growth predictions Monday and to instead focus on working in a bid to escape the worst of the economic crisis, as evidence mounted that Cambodia is heading for a recession.
Speaking to farmers in Kampong Speu province, the premier said that laid-off workers should return home to farming jobs in a bid to shore up agriculture as a driver of Cambodia's economic growth.
"We are the ones here [in Cambodia] ... some say 1 percent [GDP growth], some say 2 percent, 3, 4, 5. But these things don't depend on predictions, it all depends on what we do," said Hun Sen. "The agriculture sector is part of our economic growth, we have to try hard nationwide; industry should keep on going, too."
Cambodia was better off than industrialised countries in that their workers had no farming communities to return to in most cases, he added.
The prime minister's comments come after the International Monetary Fund revised down its 4.75 percent growth forecast for 2009 made in December on Friday to minus half a percent. Hun Sen last month estimated 6 percent growth this year.
"Our country is less badly off than others," he said on Monday. "It is not too dangerous."
On Tuesday, however, Minister of Commerce Cham Prasidh said that the garment industry had contracted a huge 72 percent in January compared with the same period in 2008, from about US$70 million to $250 million. More than 20,000 garment factory workers have lost their jobs already this month and 10,000 more jobs are expected to follow, the Free Trade Union of Cambodia said this week.
"We don't want to lose [jobs], but the problem is that the countries that are supposed to buy our products have no money to buy our goods," he said, adding that he hoped the world's main developed economies could recover soon.
Referring to the construction sector, he said it had not been affected severely as no building sites had been abandoned.
"They say the economy is falling, but house prices remain stable," Hun Sen said.
His assessment of the construction sector contrasts sharply with that of the IMF: "Construction activity and foreign investment are ... slowing rapidly as external investors cut back and financing conditions tighten," it said.
Overall, the prime minister said that Cambodia was on the up. "If we compare it to the period we have just lived through during the Pol Pot regime, now it's much better," he said.
Critics question premier
Sam Rainsy Party lawmaker Son Chhay disputed the prime minister's assessment that agriculture could pull the country through the economic downturn, saying that cassava and other crops could not even get to market. A Thai blockade against cassava and other crops have seriously affected cross-border trade in agricultural products this year, causing prices to drop, he said.
If we compare it to ... the Pol Pot regime, now it's much better.
"We already face an agricultural crisis," he said, adding that the government needed to do more to develop an agricultural industry that would create demand for agricultural raw materials from the Kingdom's farms. He estimated at least 1 million jobs had been lost in the economy as a whole since the economic downturn first hit the country last year.
"Don't expect to see 6 percent [GDP] growth ... I guess it will be no more than 2 percent," he said.
Chan Sophal, president of the Cambodia Economic Association, said that the fast-evolving nature and instability of the world economy made it difficult to make a realistic projection of the performance of Cambodia's economy over the remainder of the year and beyond. "But various predictions from different institutions will make it more accurate," he said.
ADDITIONAL REPORTING BY CHUN SOPHAL AND HOR HAB