Cambodia’s Development Goals Threatened by Economic Downturn UN Sees Opportunity for Reform in Downturn

Monday, November 23, 2009

PHNOM PENH, 23 NOVEMBER 2009: How Cambodia can mitigate the effects of the global economic downturn is becoming an increasingly urgent topic as the pillars of the country’s rapid economic growth – garments, tourism and construction – suffer in the wake of the global economic downturn. An estimated 20-30 percent of workers in garment factories, construction sites and the tourism industry have lost their jobs since late 2008, resulting in the loss of US$35-40 million in remittances. The poor, and mainly women in the case of the garment sector, are bearing the brunt of the downturn.

In a small village in Kompong Cham, some of the 30-40 people who went to Phnom Penh and Siem Reap in search of work have started to come home. After two years in Phnom Penh, Chun Phon and his wife Rany lost their jobs at a construction site. They had been earning about US$150 each month and sent about US$100 home to support their children who stayed in the village. “The money we earned was just enough to live on,” said Rany.

This story is being repeated all over the country as foreign investment in construction dwindles, garment orders decline and tourist income drops off. But the downturn presents challenges not only to individuals, but also to Cambodia’s progress toward the achievement of the Cambodia Millennium Development Goals.

The most profound impacts of the downturn are being felt by the poor and near poor, particularly those who are in debt, and are increasingly have difficulty repaying. This is especially true in rural areas, home to many of the vulnerable who moved to the cities in search of employment. Women have proven to be among the most sensitive to the effects of the crisis. After losing jobs at garment factories or in construction, and lacking other skills, those who continue to live in the city often have no choice but to enter the entertainment industry. The report points out that dependents, such as the children these women support, are also affected by the downturn.

The UN in Cambodia has undertaken a study to gain an understanding of the impact of the downturn as well as to identify measures to minimise the damage to human development achievements, restore progress in poverty reduction and prepare for the future. The resulting report, The Global Economic Downturn: Opportunity or Crisis?, was released today. The report assesses the impact the crisis has had on a national level as well as the impact on people in Cambodia. It goes on to describe policy options that can help to mitigate the impact, including equitable access to fiscal stimulus spending, and structural reforms to improve the country’s global competitiveness and position it for economic recovery.  The report highlights the need to develop a nationally integrated social protection system to mitigate the impact of the economic downturn in the short-term and to enable a return to sustainable and equitable growth in the long-term.

UN Resident Coordinator Douglas Broderick noted that “social safety nets are no longer regarded as a luxury that only rich countries can afford. They are increasingly relevant and successful in less-developed countries.” However, he cautioned, “on average, safety net expenditure in developing countries is in the range of 1 to 2 percent of GDP, but Cambodia’s estimated expenditure is currently lower than 1 percent.”

The downturn has provided the country with an opportunity to accelerate reforms to prepare for the future and to improve Cambodia’s global competitiveness. Recent events have also provided an impetus for such reform. The UN is committed to working with the Royal Government of Cambodia to achieve the country’s development goals. The downturn presents new obstacles and policy challenges, but there are also opportunities that cannot be ignored.

Phon and Rany are very worried about what they are going to do next. “We don’t have a rice field and we have very little money now… we need it for everyday living, for my children” said Rany.

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For further information, please contact:

Margaret Lamb, (855) 023 216 167, ext. 277, mobile 012 707 457, Email: margaret.lamb@undp.org

Monory Sarom, (855) 023 216 167, ext. 426, mobile 012 690 495, Email: monory.sarom@undp.org

 
this is the press release of United Nations in Cambodia