China in Cambodia
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In his facebook page, Hun Sen has appeared fragile walking and standing to greet China’s private sectors and official top leaders in Peking during his 4 days urgent visit (January 20-24, 2019) after EU announced to tax Cambodia rice export in 3 years beginning this January 2019 in which Cambodia enjoyed its free tax previous years. Cambodia could loss 40 millions dollar per year from this taxing. While Hun Sen is departing for China, the regular Cabinet meetings was cancelled with order to send only security documents to his office while Phnom Penh city was seen by tanks, military armours, and his personal body guard unit mobilizing in an excuse to prepare a drill. Spectators convinced that by ranking and bureaucratic regulation, whenever Hun Sen is absent, the next person is Sar Kheng who is able to conduct regular business of the governance but the Cabinet’s order is totally opposite.
Frequent updating in his personal facebook page with “likes” hike up over 10 millions is to describe his successes in 600 millions loan and buying rice 40,000 tones, Chinese FDI investments, and increasing importing products from Cambodia etc., while the mainstream China’s news, contradictory, confirming the Xi’s intention to strengthening Cambodia’s consent to broaden Belt and Road Initiative (BRI) and shared future strategic partnership. Note that Cambodia delegates have failed to inspire China to import rice from Cambodia as China has already promised to import Thailand’s trillion tones of rice to feed its people.
In Cambodia, 40 private sectors wrote letter to EU to express their concerns on the economic crisis if EU withdraws EBA from Cambodia. And the ASIA-EU Ministerial Meeting delegated by Cambodia foreign minister Prak Sokhonn met negative responses from both Didier Reynders and Cecilia Malstrom by emphasizing restoring back democracy, rule of law, and human rights respect in Cambodia if EBA’s withdrawal scheme should be halted.
Cambodia Faces Next Trade-Sanctions Move by the European Union
By Jonathan Stearns January 22, 2019, 8:59 AM PST Updated on January 22, 2019, 3:00 PM PST
- EU Commission seeks support from national capitals by Jan. 29
- Any decision to suspend tariff benefits still a year away
The European Union moved closer to imposing trade sanctions against Cambodia as a result of alleged human-rights violations in the country.
The European Commission in Brussels has asked EU national governments to give the green light by Jan. 29 for suspending a policy that lets Cambodia export all goods except weapons duty-free and quota-free to the bloc, according to two officials familiar with the matter. They spoke on the condition of anonymity because the deliberations are private.
Any go-ahead from EU national capitals would still leave a decision by the commission, the bloc’s executive arm, 12 months away. At stake is Cambodia’s place in the EU’s “Everything But Arms” initiative, the most generous part of the bloc’s Generalized Scheme of Preferences for poor countries around the world.
The EU is trying to prod changes in the political behavior of strongman Cambodian Prime Minister Hun Sen while being wary of damaging the country’s economy, where a $5 billion garment industry employs 750,000 people and is the biggest exporter.
Hun Sen, who extended his 33-year rule last July when his party won a boycotted election, has so far struck a defiant tone with the European side.
The latest internal EU preparations to withdraw commercial benefits for Cambodia follow a Jan. 21 meeting between European Trade Commissioner Cecilia Malmstrom and Cambodian Foreign Minister Prak Sokhonn. The Everything But Arms — or EBA — accord featured in the talks.
“We discussed the EBA agreement and the possibility of a withdrawal of the tariff preferences,” Malmstrom said in a Twitter post after the meeting in the Belgian capital. “Reiterated our concerns on democracy, human rights and rule of law. The EU continues to keep the path of dialog open.”
The EU debate over revoking general trade benefits for Cambodia is separate from a decision by the bloc last week to impose tariffs on Cambodian rice for three years as a result of a surge in imports deemed to have hurt European rice producers.
— With assistance by Nikos Chrysoloras
Greater Sino-Cambodian effort sought for Belt, Road
Op-Ed: China Daily
By AN BAIJIE | China Daily | Updated: 2019-01-22 01:28
China and Cambodia should speed up connecting the Belt and Road Initiative with Cambodia’s development strategy, President Xi Jinping said on Monday.Read More …
Cambodian leader’s election vow of higher minimum wages and seniority payments for garment workers has put new economic pressure on an industry that was already coming undone
ជាសរុប នយោបាយប្រជាភិថុតិរបស់របបហ៊ុន-សែនចំពោះកម្មករ-កម្មការិនីរោងចក្រកាត់ដេរបានកំពុងមានវិបាកកម្មត្រឡប់មករកខ្លួនវិញ ក្នុងខណៈការរំលាយនិងរំលោភលើសិទ្ធិនយោបាយរបស់គណបក្សសង្គ្រោះជាតិក៏ជាចំណាប់ខ្មាំងចងខ្លួនលោកហ៊ុន-សែនភ្ជាប់ទៅនឹងសសរកន្លោងផងដែរ។ លោកហ៊ុន-សែនរៀបចំជួបកម្មកររាប់មុឺននាក់តាមរោងចក្រដោយតម្រូវអោយរោងចក្របង់ថ្លៃម៉ោងដែលគេមកចូលរួមស្តាប់លោក ហើយលោកហ៊ុន-សែនមានស្រោមសំបុត្រលុយអោយពួកគេពីដៃផ្ទាល់ផងដែរ។ មិនតែប៉ុណ្ណោះ មានការតំឡើងប្រាក់ខែអតិបរមាពី១៧០ដុល្លាមួយខែកាលពីឆ្នាំមុនមក១៨២ដុល្លាក្នុងមួយខែដើមឆ្នាំនេះ បង្កើតច្បាប់បង់ប្រាក់អតីតភាព(severance pay)ដល់កម្មករបើមានការបណ្តេញពីការងារ បង់ប្រាក់បុព្វលាភនិងប្រាក់បំណាច់(seniority bonuses and indemnities) ព្រមទាំងផលប្រយោជន៌(benefits)ផ្សេងទៀត ដោយបើកប្រាក់ខែដូរពីបួនអាទិត្យ(មួយខែ)ម្តងទៅជាពីរអាទិត្យម្តង។ ជាការសំគាល់ រោងចក្រមួយចំនួនបានបិទទ្វារ អត្រានាំចេញឆ្នាំ២០១៨មានត្រឹម៤ភាគរយ ចុះមកពី១៩ភាគរយ ហើយអុឺរ៉ុបបានចាប់ផ្តើមយកពន្ធអង្ករកម្ពុជា និងរៀបចំនីតិវិធីដកEBA។
Op-Ed: Asia Time
That approach bore fruit, despite widespread and persistent criticism of official corruption and limited labor rights. Cambodia’s embrace of free market policies catapulted the economy in the 2000s, growth rates that underwrote the CPP’s staying power.
But, according to Chanco, the “broad thrust of the [the CPP’s] policies have been populist – and in many cases, interventionist – in nature” since the 2013 general election, when it was nearly beaten by the opposition CNRP. At the time, the opposition had campaigned on a manifesto of higher wages and other populist measures.
The minimum wage of garment workers remained largely static up until 2013, but the CPP has “co-opted the CNRP’s minimum wage agenda over the last five years,” says Chanco.
The CPP arguably felt the need to expand even further its populist pledges after it dissolved the CNRP in November 2017 and in the run-up to last July’s general election, which it won overwhelmingly in a poll many observers viewed as a sham.
As the CPP promised on the hustings, the monthly minimum wage for garment factory workers rose on January 1 to US$182, up from $170 last year. That marks a near 300% increase from the $61 minimum wage earned by workers in 2012.
One independent estimate suggests that the latest minimum wage hike will cost garment sector employers an additional $90 million in wages and bonuses this year.
Added to this, thanks to CPP promises made last year, employers must now pay workers fortnightly, not monthly, a logistical headache which will also raise administrative and financial costs.
“It’s absolutely the case that Cambodia’s minimum wage has increased too fast over the past few years,” says Chanco.
He says wages have been hiked while labor productivity has remained stagnant and in places even fallen in recent years. At the same time, the price of Cambodia’s garment products has also fallen on international markets without improvements in quality.
Now at $182 per month, Cambodia’s minimum wage for garment workers is only a few dollars less than wages in Vietnam and is considerably higher than the average wages paid in Bangladesh.
Vietnam, which exported $35 billion worth of garment products last year, considerably more than Cambodia, also has far better industrial and logistical infrastructure and boasts overall higher productivity rates, analysts say.
That’s reflected in the cost of power, with electricity rates in Cambodia almost $0.20 per kilowatt-hour, while in Vietnam they are about $0.07.
The World Bank’s Logistics Performance Index ranked Cambodia 98 out of 160 global countries. Vietnam was ranked 39, Thailand 32 and Indonesia 46.
The Cambodian government will spend considerably more of its budget in 2019, which increased by 11% from last year, on infrastructure, public works, urban development and vocational training. Investment from China, its main ally, will also bolster Cambodia’s infrastructure.
But there are rising concerns that this may be too little, too late, as Cambodia’s manufacturing rivals, Vietnam, Bangladesh and Myanmar, are also investing heavily in their own manufacturing capabilities.
Politics are also hurting Cambodia’s competitiveness. The EU is now weighing whether to withdraw Cambodia from its Everything But Arms scheme, which grants Cambodian exports duty-free status.
Cambodia exported roughly $5.8 billion worth of goods to the EU in 2017 under the scheme. The loss of that access is already prompting some investors and purchasers of Cambodia-made goods to move to other, more competitive markets, according to industry reports.
In December, the Ministry of Commerce reported that exports grew by just 4% in 2018, worth $11.2 billion, compared to 19% growth the previous year. Under a new government edict introduced by the government last September and which came into effect on January 1, factory owners now must also make new payments for seniority to employees.
Intended to replace severance pay, in which owners had to pay workers if they were laid off, the new seniority bonus equates to the wages of 15 days’ work and other benefits, and must be paid annually, half in June and the other half in December.
In December, thousands of garment workers went on strike because they wanted seniority payments to be made in one lump-sum rather than two payments made each year, as the law stipulates.
Garment workers who spoke to Asia Times on the condition of anonymity said they are fearful that their employers could try to change their contracts to cancel out their back pay, or could abscond from the country without paying their bonuses.
There are also fears that after factory owners make the first tranche of seniority payments in June, they will face cash-flow problems, meaning they could close down before the second set of payments are made in December.
Following the recent unrest, some 1,200 workers were sacked by garment factories in the capital because of their “illegal” strikes, a move supported by local courts.
Some analysts, however, argue that the strikes were merely an excuse for garment factory employers to slim down their workforce in anticipation of falling shipments and profits.
“These new policies, especially the seniority payment, are being blamed for layoffs in the garment sector,” said Sophal Ear, associate professor of diplomacy and world affairs at Occidental College at Los Angeles.
The Garment Manufacturers Association in Cambodia (GMAC), an industry body, “is justifying manufacturer layoffs of employees but disregarding who is to blame: not the employees, but the government for coming up with these policies,” he added.
“So why isn’t the government stopping these layoffs? Because it can’t. It launched a policy to get garment workers’ love, but then manufacturers get around it by laying off workers.”
There is not a reliable estimate of how much the seniority payments will cost employers. But it is likely to be in the tens of millions of dollars, especially considering that payments could be backdated for almost 10 years, while some liberal guesses put the total figure close to $100 million.
Continue reading on full article in Asia Time…
China’s growing dominance is met with equally growing concern in Cambodia. Despite the economic gains, too much dependence on China comes with significant commitment and risk. Reliance on China’s aid may induce Cambodia to fall into a debt trap, resulting in a loss of autonomy as a sovereign state and the deterioration of its relations with other ASEAN member states.
The lack of transparency and accountability of China’s projects is also causing social and environmental challenges in Cambodia. Criticism that Chinese companies are racing to exploit Cambodia’s resources while paying little regard to international best development practices are common among civil society actors.
The Kamchay dam, the first large-scale Chinese investment project in Cambodia, is a telling example. The dam destroyed 2000 hectares of productive forest, threatened animal species, lowered water quality and negatively affected the livelihood of local communities.
Chinese firm Union Development was awarded a concession of nearly 40,000 hectares — almost four times the amount allowed under Cambodian law — to develop a multi-billion dollar tourism hub in Cambodia’s Koh Kong province. Human rights groups allege that fishermen who had lived in the area for generations were summarily evicted, taken inland and told that they were now farmers.
Chinese investment in Cambodia’s real estate market is almost exclusively aimed at the Cambodian upper class, as well as Chinese tourists and businessmen. This is driving market prices up, making housing unaffordable for most Cambodians.
Chinese investment is also transforming Sihanoukville, once Cambodia’s premier seaside resort, into a bustling casino town. The unprecedented surge in Chinese tourists and casino development in Sihanoukville is benefitting a small group Cambodia’s rich elite, but many other Cambodians are being driven out of the area by the skyrocketing cost of living.
Even though Chinese investment is bringing wealth to Cambodia, this wealth is mainly kept within Cambodia’s Chinese community. Chinese residents and visitors in Cambodia buy from Chinese businesses, eat in Chinese restaurants and stay in Chinese hotels. The trickle-down effect to local businesses is minimal.
China’s economic power and influence can be a source for sustainable development in Cambodia, but for this to happen requires strong leadership from both countries. Both sides must make concerted efforts to promote transparency, accountability and inclusiveness in development projects.
Shared responsibility and multi-stakeholder partnership should be the guiding principles of foreign investment in Cambodia to ensure that Chinese investment and aid contributes to Cambodia’s economic, social and environmental progress in the long run.
Read the entire article at AsiaForum