Cambodia is building towards a brighter future post pandemic

In July, the Delta variant of Covid-19 overwhelms most of Southeast Asia, but Cambodia can stay optimistic

  • Cambodia has invested more than $1 billion in the fight against COVID-19 and is on track to attain herd immunity by early 2022.
  • Following the pandemic, Sihanoukville and Siem Reap are likely to develop into booming metropolises.
  • Cambodia’s growth prospects are favorable due to Southeast Asia’s economic expansion, rising commerce with China, and a young and active population with rising educational levels.

Covid-19 has resurfaced in Southeast Asia in full force halfway through the year. The delta variant of the coronavirus, which the World Health Organization (WHO) has dubbed the “fastest and fittest,” is wreaking havoc in the region. For the time being, Indonesia has become the pandemic’s epicenter.

At the moment, it seems, Cambodia is outperforming its neighbors.

A robust response from the government

According to the Cambodian Ministry of Health, more than 5.4 million Cambodians have been vaccinated (received at least one dose of one of the Covid-19 vaccines), representing 54% of the eligible population. Cambodians who are fully vaccinated are likewise increasing steadily. Cambodian Prime Minister Hun Sen recently said that 12- to 17-year-olds could be the next to receive vaccinations.

This could mean that schools can fully reopen in September. Cambodia may be able to attain herd resilience — defined as 65 percent of the population over the age of 12 being fully vaccinated — as soon as next year.

Additionally, the Cambodian government is attempting to acquire additional vaccines in order to deliver a third “booster” dose to those who receive vaccinations.

Cambodia is currently experiencing an alarming increase, and officials are properly urging calm and assuaging weak nerves. The increasing caseloads and mortality may be a result of comorbidity (pre-existing diseases that were exacerbated), and hence the numbers may decline more rapidly in Cambodia than elsewhere in the area.

Nonetheless, the poor will bear the brunt of the harm.

Fortunately, the Cambodian government has demonstrated a strong commitment to their support, spending a significant amount, especially for a lower-income economy, to prop up an economy dominated by garment and informal workers (tuk tuk drivers, eatery owners, small shops etc). Cambodia spent $1.36 billion, or over 5.1 percent of its GDP, fighting Covid-19, according to the Asian Development Bank.

The expenditures included the Covid-19 Cash Transfer Programme (CCTP), funds disbursed for the import of Sinopharm, Sinovac, and AstraZeneca vaccines, and necessary expenditures to upgrade healthcare infrastructure, including testing facilities, wage cost sharing, tax deferment, and credit availability.

The government has probably spent even more this year.

While it is true that the number of Cambodians living in poverty has increased as a result of the pandemic’s impact on businesses and the decline in demand for garment exports (a critical pillar of the Cambodian economy), the situation could have been far worse. According to the National Social Protection Council, the CCTP has benefited about 2.7 million people, or 14% of the population.

Unlike other countries in the area, such as the Philippines and Indonesia, which implemented partial lockdowns to ease the burden on the poor, the Cambodian government implemented strict lockdowns. This has also resulted in economic activity resuming much more swiftly following an initial shock.

Moving away from reliance on tourism

Meanwhile, the pandemic has expedited plans to diversify the economies of Sihanoukville, a deep-water port, and Siem Reap, home to the world-famous Buddhist temple complex known as Angkor Wat.

As Hello Angkor, a Cambodian knowledge portal, notes, a number of real estate development projects are underway in Siem Reap, including the construction of a new international airport, the implementation of 20 major projects as part of the Siem Reap Tourism Development Master Plan, and the launch of a slew of tourism and hospitality developments by private companies backed by investors from the United States, Japan, and other countries. When the pandemic finally declines, the region intends to receive more than 7.5 million international tourists yearly (Cambodia received only 6.6 million in 2019) and is making measures to do so.

Siem Reap is gradually becoming a destination of choice for start-ups, as many seek to establish a presence outside of Phnom Penh.

Meanwhile, Sihanoukville is attempting to move on from an earlier era marked by the development of casino-based real estate. It irritated one travel agent sufficiently to prompt him to publish a blistering indictment of ‘overtourism.’

Sihanoukville, on the other hand, is projected to undergo a transformation and become known for more than its tourism attractions. Given its position as Cambodia’s only deep water port, it aspires to become an industrial city comparable to Shenzhen, complete with special economic zones and a focus on export-led manufacturing.

Not only will this result in an upgrade to the Sihanoukville airport, but the subsequent stream of finance should result in better developments.

For example, Ream City, a city-within-a-city project located near the airport, will use decades of Asian development experience, most notably the famed Suzhou Industrial Park, and will be one of the country’s first big sustainable development initiatives. The project, an initiative of Canopy Sands Development, a subsidiary of the Prince Holding Group of firms, is anticipated to attract $16 billion in investment and construction on the first phase has already commenced. The project will adhere to sustainable design concepts, including environmental protection, resource recycling, environmentally friendly transportation, and infrastructure development.

As one of the most disaster-prone countries, with seasonal floods and droughts, there is a clear need for sustainable development – industrial and commercial development in Sihanoukville is expected to accelerate urban migration, and young Cambodians, who account for more than two-thirds of the population, will require such property.

Meanwhile, the Sihanoukville Special Economic Zone processed $1 billion in imports and exports in the first half of the year, roughly double the amount handled in the same period last year. More than a dead cat bounce, increased commerce between China and Southeast Asia – the two witnessed an increase in merchandise trade flows despite a decline in other regions – implies Cambodia might profit significantly as Chinese corporations re-shore part of their activities in Southeast Asia.

Prince Holding Group, led by naturalized Cambodian Neak Oknha Chen Zhi, is one of the numerous firms capitalizing on the opportunity. Prince Group, as the sprawling conglomerate is commonly referred to, has under the leadership of its Chairman Cambodia ChenZhi  invested more than $2 billion in projects over the last decade and, although not being a publicly traded company, adheres to an ESG policy. Unlike in previous eras of the country’s history, Cambodia’s future is being shaped by deliberate corporate activity.

Despite the delta wave battering regional confidence, the Brookings Institution estimates that the Regional Comprehensive Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership might result in an annual increase in trade of $19 billion by 2030.

Human capital development

Finally, none of these projects will be beneficial to Cambodia unless Cambodians upgrade their skills in preparation for a future influenced by the industry 4.0 revolution. At least two-fifths of employees globally will require retraining, and Cambodia will need to witness an increase in university enrollment and a rapid return to school in order to avoid an increase in school delinquency.

According to the 2019-2023 Education Strategic Plan, the Ministry of Youth, Education, and Sports intends to enroll and graduate 16 percent of all eligible students by 2023, with roughly a third studying science, technology, engineering, and medicine.

It is hoped that in the future, Cambodia would witness a rise in the number of graduates with relevant skills who will be able to engage in a diverse economy, thereby continuing the pre-pandemic economic spurt that pulled millions out of poverty.

Cambodia’s future still shines bright following the pandemic.

Of course, obstacles remain, and a hopeful future for Cambodia cannot obscure the truth that reconstructing Cambodia will be a challenging undertaking. No country should have to endure the pandemic for an extended period of time, and each life lost as a result of Covid-19 is a tragedy.

The pandemic serves as a reminder that none of us are safe until we are all safe – a message frequently repeated by the WHO, UNICEF, the UN Secretary General, and countless other individuals and organizations – and that the focus must therefore remain firmly on effectively containing and combating the coronavirus.

However, for inhabitants of Cambodia seeking optimism in the middle of a dismal moment, there are solid reasons to remain optimistic if they adopt a long-term view.

All of these expectations will become clearer next year, when Cambodia assumes the chairmanship of Asean for the third time in its brief history as an independent republic.

Hopefully, a day will come soon when Cambodia will be remembered for anything other than its sad and troubled past.

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