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Experts Fear Economic Impact of Political Tensions in Cambodia

In this Wednesday, Feb. 27, 2013, Cambodian vendors sit in their jewelry booths in the Central Market (Phsar Thum They) in Phnom Penh, Cambodia. Beneath a lemon-yellow art deco dome, the Central Market offers miles of no-strings-attached window-shopping.

Cambodia’s economy relies heavily on textile manufacturing, tourism, real estate and construction, which are all easily impacted by political upheaval, analysts said.

The closure of independent media, NGOs and the arrest of Cambodia’s opposition leader, Kem Sokha, in recent weeks, has raised concerns that the country’s economy could suffer repercussions.

Economists, shopkeepers and political analysts who spoke to VOA Khmer this week said they were already noticing signs of a slowdown.

Sou Chantha, a political scientist, said the situation in Cambodia was worse than in the lead-up to previous elections and was likely to affect tourism and the economy.

“From now until the election day, the political situation is unlikely to calm down and political tensions will increase, affecting the economy. I think maybe after the election, especially after a new government is formed, the economic situation will stabilize,” he said.

Prime Minister Hun Sen’s government has in recent weeks detained three political party leaders, ordered a U.S.-funded “democracy promotion” NGO to close its office and forced the closure of more than two dozen FM radio stations and the Cambodia Daily newspaper.

U.S. Ambassador William Heidt said in a statement last week that the steps taken by the government were isolating it from the international community. The U.S. Embassy has also recently issued a security warning for Cambodia and warned that escalating tensions may cause tourists visiting the region to spend their money in neighboring countries instead.

Som Seantung, the owner of Piphubmode, a jewelry and fashion store in Phnom Penh, said that he had seen sales decreased sharply compared with the same period last year, a trend he attributed to the rising political tensions.

“My sales reduced more than 50 percent because of the political situation and the approaching election. We are concerned and are following the political situation. We hope it gets better so that we can have more investment,” he said.

Nget Chou, a senior economic adviser at a consultancy in Phnom Penh, said investors had become warier of Cambodia since tensions began to escalate. “There are few companies starting businesses. I have spoken with some investors and it seems they are watching the situation and waiting until it gets better,” he said.

Cambodia’s economy relies heavily on a small number of sectors, notably textile manufacturing, tourism, real estate and construction, which are all easily impacted by political upheaval, analysts said.

Son Chhay, a senior opposition Cambodia National Rescue Party lawmaker, said the potential impact on Cambodia’s economy was worrying.

“We see that Cambodia receives aid mostly from Western countries for development. They give customs exemptions on our exports ... especially in the textile and garment sectors,” he said.

“If these countries react, we could see our economy in serious trouble.”

The garment and textile sector alone employs some 700,000 Cambodians and last year exports totaled about $6 billion, according to the Garment Manufacturers Association in Cambodia.

Despite the concerns, Sok Eysan, a ruling Cambodian People’s Party spokesman, denied there would be any significant economic impact as a result of the tensions.