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As of date, the Royal Government of Cambodia has not put forth a coherent policy response to mitigate the affects from the global financial crisis. However, some measures at the ministry level that aimed at promoting economic growth, employment, equity and efficiency, which is the part of the government's existing Rectangular strategy are being considered as the response to the financial crisis. These measures are divided into four main policy areas, including 1) fiscal/monetary policy, 2) protecting the poor and vulnerable; 3) supporting productive and sustainable enterprises and 4) safeguarding workers' rights.
3.1 Fiscal/ monetary policy to stimulate demand, income and employment
Real estate: In attempt to limit the exposure of bank to the global property slump, the National Bank of Cambodia placed a cap on bank lending to the real estate sector, limiting it to 15% of bank's total loan portfolio (approximately US$2.5 billion in total). Moreover, the NBC has also reduced the bank reserve requirement from 16% to 12% in order to boast the property sector and help the economic recovery.
ASEAN fund: In October 2008, Asian and European nations gathered in Beijing to discuss the global financial meltdown and to build a consensus on a common approach to the crisis. The meeting of ASEAN+3 has resulted in agreement to set up a US$80 billion emergency fund, which 80% was contributed by Japan, S. Korea, and China, and the rest was by 10 ASEAN countries. The Members was allowed to borrow from the fund when facing a liquidity crunch and balance of payment problem.
3.2 Protecting the poor and vulnerable group
National social security fund: In 2002, the law on Social Security was passed to permit the establishment of a National Social Security Fund (NSSF) that is a public, legal and financially autonomous entity. The main purpose of the NSSF is to a lighten difficulties with old age, disability, death, working risk, or any other incidences such as maternal illness. This fund is managed by multilateral party, consisting of high raking public officials from relevant ministries, representatives of employers and representatives of workers, presided by an official from the Ministry of Labor. Up to 2009, around 300 businesses have been contributing to the fund.
Labor market program: This program is set by the government in 2009 and consists short-term vocational training for people dropping out of school and the people in vulnerable sectors like T&C industry and construction. It is conducted and financed by relevant ministries, departments, and NGOs, at the national and provincial levels. However, some obstacles occurred in term of lacking of funds and resources, absence of quality certifying agencies, little connection between training and job placement, and low technical expertise.
Agriculture: In response to the tumbling of global commodity price, which hit rice farmers in Cambodia, the Ministry of Agriculture, Fishery and Forestry (MAFF)recommends farmers to stockpile their rice in face of the current low prices and hold off selling until prices improve. In the meantime, farmers should plant quick growing vegetables and crops for some income.
Labor: Ministry of Labor (MOL) has set a policy to encourage migration abroad as a way to reduce poverty and improve livelihoods. There are around seventeen companies permitted to export migrant workers. In 2008, 2,654 workers went to Malaysia; 4,000 to Thailand; 2,400 to South Korea. It is estimated that the migrant workers sent US$300 million per year home, which contributed to approximately 4% of GDP in 2007.
Job opportunities for women: In order to solve the problem of a shortage in job opportunities for young women, the Ministry of Women's Affairs collaborating with the Ministry of Commerce and Ministry of Industry, Mines and Energy has formed a strategic plan to:
- Develop skills and self-confidence among women entrepreneurs in the informal sector and encourage them to register their businesses.
- Stimulate business through micro-credit injections
- Improve access to information and news about productivity and accessing services
Agriculture fund: On 7 January 2009, MAFF announced that it will launch a national agriculture fund to boast agriculture productivity by offering low-cost loans to farmers and encourage information exchange to enhance market knowledge. The fund will start with US$25,000 in seed, capital, with additional funds expected from donors and the government.
3.3 Supporting productive and sustainable enterprises
Textile and clothing sector: The government announced it will cut export fees on garments and other related bureaucratic costs by 10% at the 14th Government-Private Sector Forum in November 2000. It is a measure to help the industry through the slump of demand in global markets. Moreover, to mitigate the fall in demand in western markets, especially in the US and EU, as well as to sustain employment levels, the government is also helping the industry diversify into new markets. The Ministry of Commerce and representatives of Cambodia's garment industry went on an expo trip to Japan in late November 2008. In addition, the government announced in February 2009 that it will suspend the advance profit tax for another 2 years to 2011. Beside ,in 7 January 2009, there was the meeting of the ASEAN Federation of Textiles and Apparel in Phnom Penh, aimed at finding strategies on how to safeguard the industry from the global economic downturn and joined by delegates from Cambodia, Vietnam, Lao, Thailand, Malaysia, Indonesia and Singapore. This meeting brought the recommendations for regional producers to source raw materials from ASEAN rather than China that would cut transportation costs, negotiate with developed nations to ease tariff restrictions and ease regional trade barriers
Rice millers: On 8 January 2009, the Ministry of Rural Development (MRD) announced that it will lend US$15 million to the Rice Millers Association to buy up rice and upgrade their machinery, as a way to increase productivity and modernize the agriculture/agro-processing sector.
3.4 Safeguard worker's rights
As proposed by the Industrial Relations Working Group, the Prime Minister has made decision on:
- Creation of a Law on Unions, to be handled by Ministry of Labor
- Council for Legal Reform and Ministry of Justice to draft law on Labor Court and to
strengthens respective roles of the Arbitration Council and the Committee for the settlement
of demonstrations and strikes.