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Gov’t rolls out 10th round of relief measures

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Garment workers leave from a factory in Phnom Penh. Hong Menea

Gov’t rolls out 10th round of relief measures

The government has rolled out the 10th round of economic relief measures to manage the impact on key sectors from Covid-19 and the ongoing recovery process, and bolster economic growth during and after the crisis.

Economists, however, say the move does not do enough to stimulate domestic growth.

The support measures centre on the severely-hit textiles, garments, footwear, travel goods and tourism sectors, aiming to keep businesses afloat in the fourth quarter of this year as the pandemic drags on, according to a government statement on October 28.

The government in October-December will continue to provide $40 per month to suspended workers in these sectors as part of its cash handout programme amid the pandemic.

The aid, however, will only be available to workers of businesses that meet the legal criteria to suspend employment contracts and have received the necessary permits from the Ministry of Labour and Vocational Training.

Factory owners must add $30 to the handout, increasing the total disbursement to $70. Employers in the tourism sector, on the other hand, are encouraged to voluntarily provide as much money as possible.

Additionally, hotels, guesthouses, restaurants and travel agents registered with the General Department of Taxation will be exempt from taxes for the fourth quarter.

The obligation to pay monthly contributions into the National Social Security Fund (NSSF) for occupational risk and healthcare schemes will also be waived during any period of business suspension over October-December.

The government has also extended the minimum tax exemption for domestically-registered airlines and allowed them to defer civil aviation fee payments, in the fourth quarter.

The statement said the 10th round aims to further reduce the socio-economic impact of the Covid-19 crisis, and rehabilitate and prop up businesses in the context of the gradual reopening, which is engineered in line with the “new normal”.

Royal Academy of Cambodia economics researcher Ky Sereyvath described the latest round of measures as part tax reduction policy, and part fiscal policy that is tailored to shift costs and help boost economic growth.

However, the outlined spending measures would likely not stimulate economic growth as much as public expenditure, Sereyvath told The Post on October 31.

On the other hand, the government could be looking to ensure adequate revenue generation that does not deviate too far from pre-Covid performance, he said.

He lauded the fresh round of stimulus measures as “a right and equitable strategy” for the society, which he said shows that the government “still stands behind and supports the people no matter the situation”.

The extended tax breaks for the tourism and aviation sectors promote employment in the country and the re-establishment of flights, he said, claiming that the waivers of NSSF payments would also encourage unemployed workers.

"The Cambodian government does not have a policy on this subsidy, but they can set a separate budget," he said without elaborating.

Pacific Asia Travel Association Cambodia chapter chairman Thourn Sinan welcomed the government's continued assistance to workers employed in the fields of tourism, as well as garments and textile-based products.

He said the stimulus measures are focused on relieving some of the burden on workers and employees in these areas.

Even as Cambodia reopens most domestic services and forges ahead with plans to welcome vaccinated international tourists in the near future, the aforementioned sectors are still reeling from Covid-19, he said.

"What the government should consider doing is to provide financial assistance or low-interest loans to business owners or tourism businesses to prepare for the return of tourists in the future,” Sinan said.

“That would last longer."

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