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This week's Mekong Memo Cambodia covers headline stories related to the economy, diplomacy, technology, and crime. Topics include surging credit growth, expanding air travel routes, digital governance initiatives, ASEAN disaster management, and strengthening ties with nations like China, India, and Australia. The headline piece is a hard-hitting, must read article on Cambodia's cyber-fraud epidemic, suggesting deep elite complicity in an industry generating billions annually.
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The Fraud Monster Has Taken on a Life of Its Own
Government media has been actively deflecting from the country's burgeoning cyber-fraud epidemic, which involves human trafficking and enslaves over 100,000 foreign nationals. The U.N. estimates the scam industry generates up to $12.5 billion annually, implicating the ruling elite in facilitating and profiting from this criminality. Despite official denials and claims of stringent naturalization processes, evidence suggests a deep-seated collusion with organized crime, leading to a cycle of denial, repression, and cover-up by the Cambodian People’s Party. The scale of the issue threatens to destabilize the state, and the country may find it has created a monster that it can’t contain.
Read more: The Diplomat
Credit Growth Dangerously High
Private credit growth, particularly in the real estate sector, has reached historically high levels, with the credit-to-GDP ratio at 189% in 2022. The National Bank of Cambodia and international bodies like the World Bank and S&P Global have raised concerns about the rapid increase and its implications for financial stability. Despite a slowdown in construction and real estate sales, credit in these sectors continues to rise, fueled by speculation and not necessarily by demand. The IMF acknowledges the risks but remains optimistic about economic growth, driven by tourism and exports. On a national level, PM Hun Manet has assured the public that public debt is still manageable, will not lead to a “debt trap,” and funds are being used to fund national development.
Regional Air Travel: Vietjet and Qatar Airways Enhance Routes
Vietjet is introducing daily flights from Hanoi to Siem Reap, while Qatar Airways resumes services, signaling a steady growth in regional air travel. These developments, starting December 15, are set to facilitate increased tourism and business exchanges between Vietnam and Cambodia. The expanded flight options illustrate the aviation industry's adaptation to post-pandemic travel demands, and executives at both airlines are quick to boast of potential economic benefits through improved connectivity in Southeast Asia.
Public Services to Go Online at Sub-National Level
Takeo province is set to introduce digital public services on an initial basis before the services are rolled nationwide if the project is successful. This project to streamline public services by allowing citizens to request services via mobile phones, is expected to reduce costs and save time. The move is part of an effort to modernize public services in line with the government’s plan to improve administrative efficiency through digital technology.
Read more: Khmer Times
CSX Embraces Sustainable Financing
The Cambodia Securities Exchange (CSX) is actively promoting sustainable financing, urging investors to consider green, social, and sustainability bonds. With recent green bonds issued by environmentally conscious companies, CSX aims to shore up the economy while contributing to social and environmental development. The program aligns with increasing investor interest in sustainable financing, potentially enhancing private sector growth and the welfare of the nation. The CSX, since its launch, has listed 20 companies and collected over $330 million in capital, reflecting a growing market for responsible investment.
Read more: Khmer Times
IMF Commends Governance Efforts
The International Monetary Fund (IMF) has recognized Cambodia's efforts to enhance governance and fight money laundering, following its exit from the Financial Action Task Force's "grey list." The IMF's Article IV Consultation team, after a full review, commended the nation's efforts and encouraged further governance and transparency to attract foreign direct investment. Despite challenges in the garment sector and a cautious post-pandemic outlook, Cambodia's economic growth is projected to continue rising, supported by the recovery in tourism and high-tech exports.
One-China Policy Support Re-affirmed
In a recent statement, Cambodian Prime Minister Hun Manet affirmed the new government's dedication to the One-China policy, reinforcing the nation's longstanding diplomatic ties with China. The commitment was highlighted during the Belt and Road Forum in Beijing, marking the 65th anniversary of Cambodia-China relations. The policy reinforces Cambodian support for Chinese global initiatives and sets the stage for further cooperation under the so-called “Diamond Hexagons” framework established by both countries earlier this year.
Read more: Khmer Times
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