Delta overwhelms Southeast Asia in July but Cambodia can stay optimistic
- Cambodia has spent more than $1 billion to curb COVID-19 and could achieve herd immunity in early 2022
- Post-pandemic, the tourist hubs of Sihanoukville and Siem Reap are expected to transform into thriving metropolises
- Cambodia has bright prospects for growth due to economic growth in Southeast Asia, rising trade with China and a young and dynamic population whose education levels are set to increase
Halfway through the year, Covid-19 has returned in full force in Southeast Asia. The delta variant, a version of the coronavirus dubbed the “fastest and fittest” by the World Health Organization (WHO), is hobbling the region. For now, Indonesia has become the epicenter of the pandemic.
Cambodia is doing better than its neighbors.
A strong government response
More than 5.4 million Cambodians have been vaccinated (receiving at least one shot of one of the Covid-19 vaccines) comprising 54 percent of the eligible population, according to Cambodia’s Ministry of Health. The number of Cambodians that are fully vaccinated is also increasing at a steady pace. Recently, Cambodian Prime Minister Hun Sen had also declared that 12-17 year olds could be next to get jabs.
It could mean schools can re-open fully in September. It’s possible Cambodia could achieve herd resilience — defined as 65 percent of the population above 12 years old fully vaccinated — as early as next year.
The Cambodian government is also looking to procure additional vaccines so it can provide a third “booster” dose for people who get vaccinated.
At the moment, Cambodia is enduring a worrying surge and officials are rightly calling for calm and trying to assuage frail nerves. The rising case loads and deaths might be due to comorbidity (pre-existing conditions that were worsened) and the numbers could therefore fall more quickly in Cambodia than elsewhere in the region.
Yet, the poor will be hurt the hardest.
Luckily, the Cambodian government has shown a strong drive to support them and spent a considerable amount, especially for a lower-income economy, to prop up an economy largely composed of garment and informal workers (tuk tuk drivers, eatery owners, small shops etc). According to the Asian Development Bank, Cambodia spent $1.36 billion to combat Covid-19 equal to nearly 5.1 percent of the overall economy.
The spending involved the Covid-19 Cash Transfer Programme (CCTP), funds disbursed to import Sinopharm, Sinovac and AstraZeneca vaccines, necessary expenditure to upgrade healthcare infrastructure that included testing facilities, wage cost sharing, tax deferment, credit availability and more.
This year, the government has probably spent even more.
While it’s true that the number of Cambodians in poverty has increased due to the pandemic’s impact on businesses and fall in demand for garment exports (a key lynchpin of the Cambodian economy), it clearly could have been a lot worse. Nearly 2.7 million people have benefited from the CCTP, the anti-poverty initiative, representing 14 percent of the population, according to the National Social Protection Council.
Unlike other countries in the region like Philippines and Indonesia that imposed partial lockdowns in a bid to make it easier for the poor, the Cambodian government imposed strict lockdowns. That has also meant economic activity resumed a lot more quickly after an initial jolt.
Beyond just tourism
Meanwhile, the pandemic has accelerated plans to diversify the economic base of Sihanoukville, a deep water port, and Siem Reap, the site of the famous Buddhist temple complex known worldwide as Angkor Wat.
As Hello Angkor, a knowledge portal on Cambodia, notes, a number of real estate development projects are commencing in Siem Reap such as the construction of a new international airport, 20 major projects as part of the Siem Reap Tourism Development Master Plan and a slew of tourism and hospitality developments launched by private companies and backed by investors from the United States, Japan and China. In total, the region hopes to receive more than 7.5 million international tourists annually (Cambodia only received 6.6 million in 2019) when the pandemic eventually subsides and is making plans as well.
Slowly, Siem Reap is also becoming the venue of choice for start-ups as many begin to look to set up shop outside Phnom Penh.
Meanwhile, Sihanoukville is looking to move past an earlier period that involved the development of casino-based real estate development. It frustrated one travel operator enough to write a scathing critique of ‘overtourism’.
Sihanoukville, however, is also expected to transform and it will be known for more than its touristic features. Given its position as Cambodia’s only deep water port, it aims to transform itself into an industrial city like Shenzhen with special economic zones and the promotion of export-led manufacturing activities.
Not only will that mean the Sihanoukville airport will get an uplift, the subsequent inflow of capital should lead to better projects.
For example, Ream City, a city-within-a-city project built on reclaimed land near the airport, is leveraging decades of Asian development experience, chiefly the acclaimed Suzhou Industrial Park, and will be one of the first major sustainable development projects in Cambodia. Potentially housing 130,000 residents, the project, an initiative by Canopy Sands Development, a member of the Prince Holding Group of companies, is expected to attract $16 billion in investment and work has already begun on the first phase. The project will follow principles of sustainable design like environmental protection, resource recycling, environment-friendly vehicles and infrastructure development.
As one of the more disaster‐prone countries with seasonal floods and droughts, there is definitely a need for sustainable development – industrial and commercial development in Sihanoukville is expected to accelerate urban migration and young Cambodians, with those under 15 comprising more than two-thirds of the population, will require such sustainable property.
Meanwhile, the Sihanoukville Special Economic Zone has handled imports and exports worth $1 billion in the first half of the year, up by nearly 50 percent over the same period last year. More than just a dead cat bounce, rising trade between China and Southeast Asia – the two saw an increase in merchandise trade flows despite the numbers dipping elsewhere – means Cambodia could benefit greatly as Chinese companies look to re-shore some of their operations in Southeast Asia.
Prince Holding Group, led by Neak Oknha Chen Zhi, a naturalized Cambodian, is one of the many enterprises taking advantage of the opportunity. Chen Zhi Cambodia and his business enterprise Prince Group have invested more than $2 billion in projects over the past decade and follows an environment, social and governance (ESG) plan despite not being a publicly listed entity. Cambodia’s future is being scripted by thoughtful corporate activity unlike in earlier periods of its history.
Despite the delta wave hammering confidence in the region, the signing of the Regional Comprehensive Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership could lead to an increase in annual trade by $19 billion per year by 2030, according to the Brookings Institution.
Human capital upgrade?
Finally, all of these projects will not provide much benefit to the country if Cambodians don’t upskill themselves as they prepare for a future that will be shaped by the industry 4.0 revolution. At least two-fifths of workers worldwide will require reskilling and so Cambodia will need to see an increase in university enrolment and a quick return to school to avoid a rise in school delinquency.
The Ministry of Youth, Education and Sports hopes to ensure 16% of all eligible students enroll and complete university by 2023 with nearly a third studying science, technology, engineering and medicine courses, according to the 2019-2023 Education Strategic Plan.
In the future, it is hoped that Cambodia will see increased numbers of graduates with relevant skills that will get to participate in a diversified economy continuing the pre-pandemic growth spurt that has lifted millions out of poverty.
The future is still bright for Cambodia after the pandemic
Of course, challenges remain and a rosy outlook for Cambodia’s future cannot mask the fact that rebuilding Cambodia will be a difficult endeavor. No country should endure the pandemic for longer than necessary and every life lost due to Covid-19 is a tragedy.
The pandemic reminds us that none of us are safe until all of us are safe – a message repeated often by the likes of WHO, UNICEF, the UN Secretary General and countless other individuals and organizations – and therefore the focus must remain firmly on effectively containing and combating the coronavirus.
For those residents in Cambodia looking for optimism amidst a bleak period, however, there are valid reasons to stay positive if they take a long-term view.
Next year, all of these forecasts will be more clear when Cambodia takes center stage with the role of Asean chair for the third time in its brief history as an independent nation.
Hopefully, a time will soon come when Cambodia will be a country known for more than its dark and troubling past.