Streets crowded with tuk-tuks carrying visitors to Angkor Wat; lively restaurants and bars; hotels and guesthouses pre-booked for the Water Festival – these scenes disappeared when the COVID-19 pandemic prevented international and domestic tourists from visiting Cambodia’s sights.
Although the country’s public health situation has been relatively unscathed throughout 2020 – Cambodia recorded only 331 active cases and no deaths in November 2020 – movement restrictions reduced household incomes by 30 to 60 %. The situation worsened in 2021 when Cambodia rose from a few cases to more than 60,000 in mid-July 2021.
Contributing to over 70% of jobs and 58% of GDP in 2018, Cambodia’s micro, small and medium enterprises (MSMEs) have been deeply affected by the pandemic. The tourism industry, Cambodia’s second engine of economic growth and where many MSMEs work, is particularly in crisis. In 2019, tourism generated around $ 4.9 billion, or nearly 20% of the country’s GDP, while 2020, hit by COVID, saw international tourism revenues fall by nearly 80%, to $ 1.023 billion.
In 2020 and 2021, to understand the impact of COVID-19 on small businesses in the region, The Asia Foundation collaborated with local partners to conduct several surveys of MSMEs in tourism, crafts, manufacturing and other industries across Cambodia, the Lao People’s Democratic Republic. , Malaysia, Myanmar, Thailand and Timor-Leste.
In July and November 2020 and April 2021, we also surveyed registered and unregistered businesses in the tourism sector in Cambodia. Polls indicated 99% had been affected by the pandemic and lockdowns, with more than 50% severely affected in April 2021. As COVID-19 restrictions were extended, the situation worsened: 54% of those polled reported cash flow problems in November 2020, increasing to 83% by April 2021.
Surveys have found a link between national COVID-19 workloads, perceptions about business survival and adaptation efforts. In Cambodia, a slight majority of companies surveyed saw COVID-19 as a threat to their operations in July and November 2020, when the number of cases was low, but in April 2021, more than three-quarters of companies viewed the pandemic as a threat to their operations. serious threat.
In July 2020, 40% of Cambodian tourism businesses reported layoffs related to the pandemic, while 60% remained stable. Only 16% said they laid off staff between July and November. Instead, many of them had reduced working hours or rotated hours to keep workers. However, in April 2021, amid greater restrictions and a worsening public health crisis, 33% of Cambodian tourism businesses reported laying off employees – twice as many as in November.
Inactive tourism workers were looking for short-term work opportunities to make ends meet. In Siem Reap, the gateway to Angkor Wat and other attractions, many women – who have been disproportionately affected by the layoffs – have left the city, hoping to find employment in the garment industry in Phnom. Penh. Unfortunately, containment measures related to COVID-19 have resulted in the closure of garment factories.
After the first lockdown in April 2020, street vendors, taxi drivers and tuk-tuk drivers felt less affected by the pandemic as domestic tourism and daily life continued. However, as pandemic-related restrictions increased and activity declined, many male tuk-tuk drivers turned to construction work – only to see construction sites close in April 2021, leaving some with only the half of the salary for that month.
Many Cambodian tourism MSMEs have not been able to adapt their business models to digital methods. Only 8% said they had increased their online business in April 2021. Some food-related businesses, such as restaurants and street vendors in Phnom Penh, generated income through online delivery platforms. However, online is not an option for tourism businesses that cannot offer take out or virtual services.
Since the onset of the crisis, governments in Southeast Asia have provided a range of packages to help businesses weather the pandemic. However, communication about support and how to access it has often been inadequate.
Cambodia has provided direct aid, such as money for laid-off workers, and indirect aid, such as debt restructuring. Unregistered businesses are not currently eligible for assistance, but they represent a large portion of employers and workers.
Although Cambodia was relatively successful in disseminating information to registered businesses compared to other countries in the region, only around 50% of MSMEs surveyed had registered and received the necessary assistance. Some said they lacked information on the programs, especially details on processes and eligibility, while others found the application procedures difficult to go through.
The initial optimism of many Southeast Asian MSMEs for an economic recovery in 2021 has been dampened by the latest wave of COVID-19. Despite this, Cambodia could see a faster return to normal due to one of the highest vaccination rates in the region.
Governments must prioritize vaccine deployment and plan for an uncertain future to mitigate the economic fallout from COVID-19 containment strategies. Financial assistance to MSMEs can help reverse the worst effects and prolong the survival of businesses. But to be effective, coverage must include both registered and unregistered businesses.
Beyond existing support mechanisms, governments need to provide targeted and tailored assistance to women, youth, and contract and informal workers – those most affected by the economic fallout. A strong and inclusive economic recovery will require more than online access and minor business adaptations.
Read the Cambodia surveys. Read the latest issue 1.3 of GovAsia on the impact of COVID-19 on MSMEs in Southeast Asia. Find survey reports by country.
This article is part of a collaborative series with The Asia Foundation.
This article is based on research exploring the impacts of COVID-19 on Cambodian MSMEs in the tourism sector and households in Cambodia. The research was carried out in partnership with Angkor Research and Consulting, Center for Policy Studies and Future Forum, and was funded through a partnership between The Asia Foundation’s United States Congressional Appropriation; Department of Foreign Affairs and Trade (DFAT), Australia; and Ministry of Foreign Affairs and Trade (MFAT), New Zealand through the Ambassador Fund. The opinions expressed are those of the authors only.