Cambodia has seen huge growth of foreign aid and loans over the past two decades, but experts are beginning to question its worth—and what conditions might be attached.
Total aid from 1993 to 2012 amounts to around $10 billion, with the percentage of aid coming as loans steadily increasing. And a larger portion of that money is now coming from China, in a shift from the typical international aid patterns. …
Cambodia received a total aid package of $550 million in 2004, according to government figures. By 2012, that number increased to $1.38 billion, an increase of about 14 percent per year.
China has been behind much of that increase, but other aid comes from international donors like Australia, Japan and the US, as well as the Asian Development Bank and the UN. …
But donor priorities have shifted over the years. The health sector, for example, which was traditionally the most funded, has been surpassed by projects for infrastructure in recent years. Again, Chinese money accounts for the shift. Infrastructure aid has increased from $185 million in 2010 to $376 million in 2012. …
Yim Sovann, spokesman for the opposition Cambodia National Rescue Party, said Chinese loans have higher interest rates compared to other donors, and the deals aren’t transparent.
“Some aid is useful, but some is not,” he said. Substandard road construction, subject to corruption and non-transparent bidding, for example, is not good for the country, he said. “Only one or two years after construction, the road is damaged again,” he said.
There are also those who argue that Cambodia is taking in too much aid. …
The dining hall of a garment factory in Phnom Penh’s Meanchey district that supplies clothes to U.S. brand Gap collapsed into a pond Monday, injuring more than 20 workers who were eating lunch, workers and officials said.
The hall, which is part of Top World Garment (Cambodia) Ltd. in Kbal Koh commune but outside the main building, collapsed at 11:40 a.m., according to commune police chief Mao Rith. …
The accident comes only five days after another factory in Kompong Speu province experienced a ceiling collapse that left two workers dead. Government and factory officials yesterday said the Taiwanese-owned Wing Star Shoes Co. Ltd. was safe enough for staff to go back to work.
“Tomorrow, the workers will return to work so that the production chain will not be affected,” said Oum Mean, secretary of state at the Ministry of Labor. …
Cambodian National Rescue Party (CNRP) election candidate Mu Sochua… said the CNRP is demanding a transparent inspection of Wing Star Shoes, as well as all the other factories in the country.
She also called for the prosecution of all the individuals who were involved in the oversight of the building’s illegal construction. …
Cambodian migrant workers sent home $256 million last year, according to a report from a U.N. agency and the World Bank, which was released in Bangkok yesterday.
The report from the bank and Rome-based International Fund for Agriculture Development (IFAD), titled Sending Money Home to Asia, found that migrants from Asia sent a total of $260 billion in international remittances in 2012. …
“[B]ut high [bank] fees and limited financial services outside of urban areas are reducing the benefits of those remittances for millions of rural residents,” says a joint statement accompanying the report.
The report does not specifically outline how serious these problems are in Cambodia, which received $256 million, or 1.8 percent of gross domestic product (GDP), in remittances last year. Workers sending money home are charged on average 5.59 percent on remittances to Cambodia, the report says. ….
But the report notes Cambodia’s high saturation of microfinance institutions (MFIs) in the provinces means that rural access to remittances is likely better than elsewhere.
MFI’s account for 26 percent of transfers to Cambodia, but the costs for these transfers average 10 percent of the amount being sent, the report says. …
Moeun Tola, head of the labor program at the Community Legal Education Center, said many migrant workers, especially those working in Thailand send money back through informal channels, which would not be included in the report. …
The Japanese athletics brand ASICS said Friday that it would push its four Cambodian sub-contractors to join a programme that monitors conditions in garment and shoe factories. …
“We will strongly request to our sub-contractors in Cambodia to sign up to this programme,” Katsumi Funakoshi, ASICS spokesman, said by email. …
The Better Factories Cambodia programme, which is voluntary, was set up in 2001 and is run by the International Labour Organization. It monitors factories making clothing and shoes for export to ensure they comply with a range of issues, such as fire safety, working conditions and prompt payment of wages.
Thursday’s accident showed the programme should also monitor factory construction, its chief technical adviser, Jill Tucker, said. …
She called on the hundreds of buyers from other countries that source from Cambodia, including Japan, to take responsibility for the factories where their products were made and join the initiative. …
The deaths of at least two Cambodian workers and injuries sustained by 10 colleagues at a shoe factory southwest of Phnom Penh once more shine a light on conditions in the global garment manufacturing industry.
Thursday’s accident at the Wing Star Shoe factory in the Cambodian capital took place when a section of ceiling collapsed onto a group of several dozen workers. The factory, which has 7,000 staff, is contracted to manufacture shoes for Japanese athletics brand ASICS. …
Dave Welsh, the country director at the American Center for International Labor Solidarity, a labour group, visited Wing Star on Thursday and said it looked as though the ceiling at the Taiwanese-owned factory had been “badly overloaded” with materials. …
Garment and shoe manufacturing is now a pillar of Cambodia’s economy: Exports last year, most of which went to the European Union and the United States, brought in 4.6 billion US dollars.
The industry is also the largest formal employer with more than 350,000 workers. …
[Secretary-general of Garment Manufacturers' Association in Cambodia Ken Loo] was quick to separate what happened in Cambodia with the disaster in Bangladesh, and said the ceiling collapse was not indicative of a systemic problem: instead the deaths and injuries at Wing Star, which is a GMAC member, looked more like the consequence of shoddy construction. …
Jill Tucker, the BFC’s chief technical adviser, said although Thursday’s accident was uncommon it had highlighted the need for factories to adhere to building standards too. …
The steady growth of franchises from overseas is likely to continue as young, moneyed Cambodians seize the opportunity to bring name brands into the country, a bank official said yesterday. …
Hoping to help its customers and others invest in franchises, Malaysia-based CIMB Bank yesterday organized a talk on franchising at the Malaysian Embassy in Phnom Penh. …
Thida Heng, CIMB head of retail financial services, said franchises were a reliable investment for young Cambodians looking to get into business and move away from property investments following the 2008 property crisis. …
Food and drink franchises are gradually setting up in Cambodia, taking advantage of the market provided by an increasingly wealthy urban population. …
As work begins on Cambodia’s biggest dam, those advocating against its construction have warned that the region’s rush for hydropower will have a disastrous effect on millions of people who rely on the Mekong River to survive.
Last month, workers began preparing an area in northeastern Cambodia for a huge hydropower project, the 400-megawatt Lower Se San 2 Dam. …
Scientists estimated the Lower Se San 2 Dam could reduce the total fish yield of the Mekong Basin by 9.3 percent.
“So it’s 9.3 percent of 2.1 million tons – which is a gigantic amount,” said Baran. “In other words, this expected loss represents around 200,000 tons per year, which is much more than the whole marine sector of Australia. And, nine times more than the annual inland fish catch in Germany or the U.S.” …
Meanwhile, work on the Lower Se San 2 Dam has started and thousands of people who live in the areas that will be submerged by the dam’s vast 300-square-kilometer reservoir have been told they will have to move. …
One of them is 37-year-old Pa Tou. He said none of the 400 ethnic minority families in Srekor village on the banks of the Se San River wants to leave. …
Pa Tou, who has three daughters, said that will not be possible at the relocation site, which is miles from the river. He said the land there is poor for farming – most of it is rocky or covered with trees – and there are no health clinics and no schools. He fears they will all be left much worse off.
Cambodia’s first dairy factory is being planned for Phnom Penh, as one of the owners, a Vietnam-based dairy company, hopes to tap strong local demand for its products.
The 2.7-hectare factory, in the Phnom Penh Special Economic Zone (PPSEZ), would produce condensed milk, yoghurt and UHT milk, which is milk sterilised at ultra-high temperatures, Manoj Nutchanart, general manager of BPC Trading, the local distributor of Vietnam’s Vinamilk, said.
BPC Trading and Vinamilk would sign a joint-venture agreement next month to build the factory through a new company, Khmer Dairy Products, which will be 51 per cent owned by Vinamilk, Manoj said. Production would probably begin by the end of next year, he said. …
The US embassy in Phnom Penh intends to hold a webinar on doing business in Cambodia, providing information on the benefits and challenges of working in the country for US firms.
“This is the first webinar that will focus on investment opportunities and an overview of Cambodia’s current business climate,” Sean McIntosh, the US embassy’s publicaffairs officer, told the Post yesterday. …
In 2012, Cambodia’s exports to the US were worth about $2 billion, 36 per cent of the Kingdom’s total exports, according to figures from the Ministry of Economy and Finance.
Furthermore, figures from the Council for the Development of Cambodia (CDC) show that from 2005 to 2011, US investment reached about $922 million. …
When the owner of Kingsland garment factory fled the Kingdom last year, enough pressure was applied to its sourcing companies H&M and Walmart to persuade them through their intermediaries to compensate workers left jobless. Distance could no longer absolve them of responsibility.
Just like the Kingsland employees who took their protest to the US and Swedish embassies to lobby Walmart and H&M, former Mfone employees took their protest to the Thai and Singapore embassies last week to apply pressure on the parents of the failed Cambodian company. …
For Dave Welsh, country director for the American Centre for International Labour Solidarity, companies that are inextricably linked to failed organisations should also be held to account. …
“Look at the corporation as whole, not just at Mfone. Look at the corporate links in Singapore and Thailand,” Welsh said. “The analogy of the situation is H&M and Nike aren’t incorporated in Cambodia, but they are morally, if not legally, on the hook for things that happen in their factory.” …
The bilateral trade volume between Cambodia and the United States was worth about 499 million U.S. dollars in the first two months of this year, down 2 percent compared with 510 million U.S. dollars at the same period last year, the statistics of the U.S. Department of Commerce showed Tuesday.
The United States is Cambodia’s largest export destination. …
The World Bank upgraded Monday its GDP growth forecast for Cambodia to 7.0 percent for this year, up 0.3 of a percentage point from its last projection in December.
“In Cambodia, a likely stabilization in high-income country conditions should support further improvements in garment production and exports,” the bank said in explaining the upgrade. …
Cambodia’s growth last year, estimated at 7.3 percent, was “faster than expected,” the update said, adding that it was “bolstered by the strong performance of agriculture, construction and tourism and a recovery in garments.”
In a separate statement, World Bank East Asia and Pacific Vice President Axel van Trotsenburg said the region accounted for about 40 percent of global growth last year. …
The Food and Agriculture Organization of the United Nations (FAO) has raised its forecast of global paddy production in 2012 by about 1.5 million tonnes to 730 million tonnes (487 million tonnes, milled). …
The scaling up of production mainly concerned Asian countries, in particular Cambodia, Indonesia, Thailand and Viet Nam, but also western African States, such as Guinea, Mali and Senegal. …
Cambodian milled rice is becoming more popular throughout Asia, particularly in Malaysia, which is the number one importer of milled rice from the Kingdom. …
Hean Vanhorn, deputy director-general of the Ministry of Agriculture, Forestry and Fisheries and director of the single-window secretariat for facilitating milled rice exports, said though Malaysia ranked highest for milled rice exports, Cambodian could further capitalise on Malaysian demand for fragrant rice. …
But Cambodia also still faces challenges in managing the use of different seeds grown in different areas, he said, adding that officials could not always control the quantity of these unspecified seeds. …
The Cambodian government is targeting to increase rice exports to 1 million tons by 2015, and is investing in rice processing facilities and providing credits to farmers. …
The Cambodian government on Thursday dismissed media reports in Australia linking Prime Minister Hun Sen to a mining company under investigation there for corruption.
Earlier this week, The Age newspaper reported on Australian documents that described officials from BHP Billiton seeking a special meeting with Hun Sen prior to being given mineral exploration rights in 2006.
The government’s Quick Reaction Unit, which deals with media, said in a statement Thursday the report was “exaggerated” and meant to “dishonor” Hun Sen ahead of the July national elections. …
Advocacy groups, environmentalists and policy-makers have wrapped up five days of events surrounding Mekong River issues in Washington.
“Mekong Days,” a series of talks, films and other forums that ended Tuesday, highlighted issues in the region, where some 60 million people live.
The Mekong River, a major source of food for many in the region, is currently under increased pressure from hydropower dam projects and the potential impact of climate change. Environmental advocates say the dams could hurt fish stocks in the river, even as temperature and rainfall changes threaten agriculture and livestock. …
A recent study funded by USAID, “Mekong Adaptation and Resilience to Climate Change,” found increasing threats to livestock, fisheries and other agriculture. …
At least 11 dams are currently planned for the lower Mekong, a major concern for fish populations that migrate up and down the river. China has built four dams upstream already, and Laos is in the process of building a dam in Xayaburi province, despite objections from Cambodian and Vietnam.
Local instant noodle company Men Sarun failed in its plan to export canned noodles to US markets this year, and an official confirmed that failures stemmed from both the unstable market price and increasing costs of transportation.
Choun Kol, deputy general director of Men Sarun Investment, told the Post that the export plans were temporarily suspended, though producing machines have already been imported but not yet been installed.
According to information he received from his business partners in the US, the cost of transportation has increased to around $6,000 per container in recent months, from about $4,000 earlier in the year. The move stemmed from increasing gas prices. …
CONSTRUCTION is progressing on a $1.5 million baby-products factory that will be among the largest in the Phnom Penh Special Economic Zone (PPSEZ).
Combi (Cambodia), which owns the factory, announced the plans for its new facility in an online job listing yesterday.
The five-hectare factory was scheduled to open in January next year, So Somara, the company’s human-resources officer, told the Post. …
Combi had two factories in China, but manpower costs there were higher, and workers could easily switch to another job that was nearer to their homes or suited them better, he said.
The temporary factory in the PPSEZ employs 200 workers, and the permanent one will require 300 more staff. …
Unions and labour rights groups have spent recent months unashamedly drilling home a stark reminder: Cambodia’s minimum garment wage, at $61 per month, compares poorly with those in Thailand – where workers earn more than $200 a month – and Vietnam, which has a base wage of $110 in some areas.
One country deliberately left out of these comparisons is Myanmar, where, according to different sources, the minimum wage for garment workers languishes between $28 and $40 a month.
With the lifting of sanctions opening up what was long regarded a pariah state, stakeholders in Myanmar’s garment industry are expecting an explosion as Western investors seek to cash in on the opportunities such conditions spawn. …
Vong Sovann, deputy secretary-general of the Ministry of Social Affairs’ strike resolution committee, told the Post that the government was strongly considering how an emerging garment sector in Myanmar might affect Cambodia’s billion-dollar industry, which provides about 85 per cent of the country’s exports and employment for 400,000-plus workers. …
When a contingent from Stanford Law School in the US visited Cambodia last month, Stephan Sonnenberg, a clinical lecturer from its International Human Rights and Conflict Resolution Clinic, said global brands were well placed to vacate a country quickly if they found a better option elsewhere.
“They can threaten to [leave Cambodia], and they have a global distribution network that’s engineered very specifically to be able to do that at very short notice,” he said.
To what extent brands, vendors and factories in Cambodia are willing to leave the country is something Rong Chhun, president of the Cambodian Confederation of Unions, is keeping a close eye on. …
Yim Serey Vathanak, a trade unions national project co-ordinator for the International Labour Organization, believes established investors in Cambodia might be reluctant to start fresh somewhere else without major incentives to do so.
“Some brands race to the bottom and don’t want to be responsible for working conditions,” he said. “Maybe some [investors] are willing to move because their production here is small . . . but for those who want to keep their reputation, there isn’t much difference in leaving Cambodia for lower wages.”
Threats of such a migration, at this point, are a “red herring”, according to Dave Welsh, American Center for International Labour Solidarity country manager. “Brands are not yet showing signs that they support a Burmese industry,” he said, adding that a minimum wage of about $40, “to the extent that it exists” in an economy that’s not formalised, would rise as inflationary pressures took effect. …
When tales emerge from the retail supply chain, they’re usually tragic, like the alleged sweatshop conditions at the Foxconn (HKG:2038) plants that churn out Apple (NASDAQ:AAPL) products, or the 112 Bangladeshi workers who died when their factory, where clothes for Wal-Mart (NYSE:WMT), Sears Holdings (NASDAQ:SHLD), and Disney (NYSE:DIS) were made, burned to the ground.
But workers at one factory in the developing world appear, at least, to have a happy ending. For two months, around 200 garment workers have been keeping vigil, day and night, outside their former factory in the Cambodian capital, which made clothes for Wal-Mart and H&M (PINK:HNNMY). The workers claimed that for four months their wages were inexplicably cut, before the owner closed the factory altogether — with no notice, or severance. But their strike has ended in success, reports the advocacy group Warehouse Workers United. The Kingsland factory workers won over $200,000 in back pay. …
