Minister of Economy and Finance Aun Pornmoniroth has called on the private sector and government to work hand-in-hand to sustain the Kingdom’s economic growth as the Covid-19 pandemic grips the regional and world economies, and disrupts production and global demand.
Speaking at a meeting with the private sector late last month, Pornmoniroth said shrinking regional and global growth, coupled with travel restrictions and limited effective measures implemented in response to the outbreak threaten the survival of businesses in the Kingdom’s key sectors.
“The government has always regarded the private sector as a key engine for economic growth and job creation. In the context of the Covid-19 spread, the government and the private sector are facing common challenges and must continue to promote social and economic sustainability,” he said.
Cambodia Chamber of Commerce vice-president Lim Heng said that in response to the crisis, the government has taken a proactive approach to support affected sectors such as garments, tourism, transport and small and medium-sized enterprises (SMEs).
“The government has issued three rounds of intervention measures to prop up the private sector such as tax exemptions aimed at pandemic-hit sectors. This is a big help for us during this tough time and we look forward to work with the government to boost the economy,” he said.
In mid-March, a fiscal stimulus plan of $800 million to $2 billion, equivalent to seven per cent of the gross domestic product (GDP), was announced to ease the overarching effects of the coronavirus in six months to a year.
On April 7, Prime Minister Hun Sen announced that all workers employed by suspended factories should receive $70 per month – $30 from the employer and $40 from the government.
On April 4, the fully state-owned Small and Medium Enterprise Bank of Cambodia (SME Bank) launched with initial capital of $100 million to provide financing for SMEs.
On March 16, the state-owned Agricultural and Rural Development Bank (ARDB) launched a $50 million fund to increase access to credit for SMEs in the local agricultural sector.
Pornmoniroth said the government’s three rounds of support measures will help affected key-sector companies and factories preserve their business structure and continue operations.
Suspended or laid-off garment factory workers will be able to go back to work and SMEs – the backbone of the economy – will continue to operate, he said.
“The private sector and the government must continue to work together closely and prepare to seize new opportunities which may arise during or post-Covid-19,” he said, adding that all input from the private sector will be taken into consideration for the next stimulus package.
A recent simulation done by Asian Development Bank (ADB) revealed that in a best-case scenario on the back of a months-long travel ban and the sharp decline in domestic demand due to the outbreak, Cambodia could face a 1.15 per cent impact to its total GDP amounting to $283.3 million.
If the outbreak lasts for six months, up to $711.4 million could be hived off the GDP. Even grimmer, ADB said a hypothetical worse case situation shows a nearly $1 billion economic loss in the event that Cambodia experiences an outbreak of its own beyond six months.