Cambodia Will Be Not Much Affected by the World Financial Crisis - Friday, 17.10.2008

Posted on 17 October 2008

The Mirror, Vol. 12, No. 582

“There are indications that the value of stocks at the stock exchanges in every country in Asia and in Europe dropped. Can Cambodia avoid this crisis? Experts expressed different opinions.

“Mr. Huot Pum, a professor of economics of the Royal University of Law and Economics, said that the financial crisis will not affect the Cambodian financial system, because Cambodia did not have a stock market, and the fields of insurance and of investors in Cambodia in general do not have much financial relations with the outside world. The Professor said, ‘It will not affect our financial system. Most banks in Cambodia do not have money to buy stocks from foreign countries.’ Mr. Sum Sonnisith, the secretary general of the National Bank said, ‘Our banking system is not affected by this crisis, because there is not yet a full integration into the world economy.’

“However, according to Mr. Huot Pum, this crisis might affect the economy, like the garment sector and the tourist industry, as Cambodia exports most of its garment products to the United States market. Regarding this crisis, Mr. Van Sou Ieng, the president of the Garment Manufactures Association of Cambodia, pointed out that the recent closing down of some garment factories in Cambodia resulted from the influence of the financial crisis in the United States.

“Mr. Vong Sandap, the secretary general of the Ministry of Economy and Finance, said that more or less, the crisis in the United States will really affect Cambodia, for example, in the field of real estate, which is in stagnation. Mr. Sandap added, ‘Facing this crisis, the Cambodian government has taken some action by increasing the minimal capital to be kept by banks from 8% to 16%, and has set a limit for providing loans for buying real estate.

“As for Mr. Chan Sophal, the president of the Cambodian Economic Association, he did not deny the negative impacts of this crisis on Cambodia. Mr. Chan Sophal thinks that different influences relate to foreign investors. This economist analyzed, ‘When the crisis happens, some foreign investors, who have sustained negative impacts from the crisis, will not come to invest in Cambodia.’ On the other hand, this crisis might encourage some investors to look at some countries which are different, including Cambodia. In the period of three years, from 2005 to 2007, the economy grew continually, but this year, the economic growth will drops to 7% because of the rising price of goods. The present crisis will slow down Cambodian economic growth in 2008.

“Cambodia, which was suffered from more than thirty years civil war, has just started to implement a free market economic system early in the 1990s. Although there is such freedom and openness, the Cambodian economy has not had specific relations with the regional and international economy. That is why Cambodia could avoid the financial crisis in 1997 in Asia, and this time also, Cambodia does not get much affected. Cambodia does not benefit much from the international economy, but it also does not sustain much negative impact from the international crisis.”

Cambodge Soir, Vol.2, #54, 16-22.10.2008
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Friday, 17 October 2008