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Cambodia: AVI panel recognises key roles of banking, private sector for COVID recovery
The Asian Vision Institute (AVI) took part in a virtual panel discussion entitled the “Cambodian Economic Outlook 2021” to discuss the successes and challenges faced by the pandemic as well as the outlook for 2021.
The panellists included Nick Beresford, UN Development Programme country representative for Cambodia, Ngo Ravindra international speaker for the World Economic Forum, Chheng Kimlong, president of the AVI, and Lay Sok Heng, deputy director of economic research at the National Bank of Cambodia (NBC).
When asked about how the pandemic had affected Cambodia, Beresford said the first thing to address is how successfully Cambodia has dealt with controlling the virus and protecting public health.
“When it comes to community transmission, it has been very well contained. I say that first because you cannot separate health from the social and economic. Some countries had to learn the hard way that maintaining the health of the population is the smartest economic policy. [However] Cambodia is a very open economy which is very dependent on trade. So, what is unusual about the detrimental impact of the pandemic on Cambodia is its impact has been as much a supply shock as well as a demand shock.”
He said that initial forecasts were much more pessimistic about the effect on Cambodia’s gross domestic product (GDP), but they were handled well because of governmental intervention.
Beresford added, “Social and economic downturn was reduced by the fact Cambodia was very quick in responding with a stimulus package, which included – importantly – a cash transfer programme. The social protection package not only ensured that poverty was reduced but it boosted the country economically. Why? Because protecting those most vulnerable, the people who spend all their money at a local market, has a high economic multiplier effect. What could have been much, much worse, was averted by social spending on social protection.”
Speaking about the policies that have been rolled out by the Cambodian government, Sok Heng agreed that without the stimulus package, growth dates could have declined a lot further.
“People are aware of cash transfers to workers and tax exemptions enacted by the government, but one thing that I would like to highlight in terms of the stimulus package is that the central bank has also been key in supporting the economy too. In terms of liquidity easing, the central bank has [made it possible] in order to support financial institutions so they can, in turn, inject their liquidity into the economy. This is really important [now] because firms and banks need liquidity to support economic activity. It enables banks to lend more to their clients.”
When asked about the sectors most affected by the pandemic, Kimlong said among the major economic foundations of the country, tourism has been hit the hardest.
“Not only has tourism been affected, manufacturing, particularly garment exports, has also declined. Agriculture has also been affected. Many main economic sectors have been affected,” he noted.
“However, at the same time, we have also seen some fundamental changes in the Cambodian economy. Particularly, the export of non-garment goods which actually grew. Bicycle exports grew dramatically and others like electronic products and spare parts also saw an uptick. Therefore, despite the negative effects caused by the pandemic, some sectors have done well. The investment flow into construction also kept its momentum throughout the first part of the pandemic.”
Speaking about the private sector impact during COVID-19, Ravindra said the pandemic has taught that not only is working with the government key to mitigateing the pandemic’s effects, but it has also focused efforts towards the progression of free trade agreements (FTAs) within the ASEAN scope.
Kimlong added that, since the pandemic, there has been a new-found importance for the private sector to work hand-in-hand with the most affected areas of the Cambodian economy to promote Cambodian recovery through innovation.
“For example, I think that the promotion of green agriculture, alongside raw and processed exports under the FTA with China, especially cassava and soybeans, is something we should promote. Beresford added that all of the successes point to the value in diversifying the economy.
Source: https://www.khmertimeskh.com/50817456/avi-panel-recognises-key-roles-of-banking-private-sector-for-covid-recovery/