Vocational Training -- Part II: Increasing Access to Jobs

“For those who come [to school] for the sake to learn, they will not be employed,” said the director from a provincial polytechnic institute at a recent conference on sharing best practices in vocational training. This bold statement shocked me, for I was taught that young people should be given the space and time to discover their interests and to develop their personality. There is no point of forcing all young people into the finance, garment, construction or tourism sectors unless they had a chance to decide for themselves.

That same evening, I biked home. As usual, I passed by an urban slum and many dimly lit streets, seeing young people in ragged clothes standing idle at the roadside and some parents (with their children) scavenging for sellable items from pungent-smelling rubbish. Suddenly, it daunted on me that my disapproval of the above-mentioned speaker was a result of my ignorance about the realities of life: many people in Cambodia cannot afford to be unemployed at all. It is crucial and urgent to equip people with the skills necessary for productive work the day they step out from school.

Although most young people in developed countries would opt for a university degree than an associate degree from a vocational training school, there is a need for more practical skills in Cambodia. First, developing countries have a much smaller and less active private sector. There are less established businesses where graduates of social science or pure science can easily jump into. In the U.S., college graduates explore lucrative opportunities with consulting firms and investment banks. These positions do not require sector-specific knowledge; in fact, employers prefer candidates with broad interests and experiences. However, these firms only thrive in well-established markets. In Cambodia, most businesses are small and medium enterprises (SMEs) operating with little capital. They already struggle to survive in the current economic environment, let alone hiring consulting services to syndicate capital or contemplate mergers and overseas expansion.

Second, practical and technical skills are essential for infrastructural development. Although Cambodia has picked up fast GDP growth, economic development is restricted to several municipalities and few industries. Most of the country remains rural and most households engage in subsistence agriculture. The technical expertise in developing telecommunications network, paving roads, building bridges and constructing schools and houses are in urgent need. Of course, managerial and budgeting skills are needed for planning and implementing relevant projects as well – but road-builders and electricians are more valuable assets.

That said, vocational training institutes still face many challenges in preparing young people for work. At present, most of the country’s unemployed people are youth between 15 and 24 years old. Many of those unemployed or underemployed have long dropped out from school but others –high school and college graduates – also find their skills not matched with their aspirations and job requirements. Most young people stay idle, waiting for luck to fall upon them; a few start to attend vocational training offered by NGOs or the government. Unfortunately, when these young people turn to training institutes, they also find a lack of qualified teachers, course selection and facilities (e.g. laboratories). Post-training employment is not guaranteed as well, as most institutes have few connections with employers. All in all, very few institutes have the capacity to offer a wholesome package of training, tuition support, career advice and employment service.

Against this unfavourable backdrop, I learned from the conference that some institutes have taken innovative steps to upgrade their services. To increase the supply of qualified teacher, some institutes train their own students to become teachers. These young and mobile student-teachers spend part of their school time travelling in the provinces, gaining practical work experience as well as spreading their knowledge to their peers. Others have sought partnerships with businesses abroad, such as those from India, Thailand and the U.S. These networks serve to provide more internship opportunities and allow the school to offer short courses that cater to the employment needs of their partner companies. Furthermore, to broaden students’ career choices, some institutes offer technical courses in line with academic courses. An electronics student, as an example, would also study physics, mathematics and foreign language. In the end, the graduate obtains a high school certificate as well as an electrician’s permit. These qualifications would open doors to more opportunities for technical training, tertiary education (including evening courses) and higher-paid jobs. Last but not least, the government and the donor community are contemplating the creation of a labour market information system. This system incorporates research on the skill levels of the unemployed, employers’ demand for skills and labour, course offerings from training institutes and business services for budding entrepreneurs. These four initiatives all highlight the importance of quality training, skill versatility and market efficiency.

As the Cambodian society becomes wealthier and as people demand more sophisticated business services and technology, this emphasis on vocational training may become more diluted. Instead, more students may desire university education and knowledge on analysis and management. “When you have the will, you have the way,” another conference speaker remarked. Yes, part of this “will” is to understand current market conditions. Young people will likely start at the bottom and work their way up as the country progresses.

Vocational Training -- Part I: Givers and Takers

The question of whether certain people are givers or takers in their society is a subject for debate. In general, givers are those physically able to work, who are more educated or more endowed with financial resources and natural talents. They can contribute to the society by providing technical expertise for income-generation and by paying taxes for social programmes. In some cases, such as in the United States, those with the ability to spend, especially on brand-name products, houses and cars, contribute to economic growth through consumption. Takers would then be the dependents of these able persons, such as their children, who have yet to enter the workforce. Also, retired persons, who previously worked hard for the society, receive pensions to support their life after work. Nonetheless, this description is a crude generalization. In fact, the social, economic and political contexts of each country would modify these definitions.

Such giver/taker debates take on different forms in Hong Kong, Denmark and Cambodia. As an international financial centre, many of the city’s rich and famous work in investment banking and (financial or business) consulting. On the one hand, these Asian-style Wall Street mongers work diligently to create investment portfolios that generate millions of dollars. These sums in turn go back to society via income and corporate taxes, extravagant consumption or donations to charity. On the other hand, some people wonder if these bankers were only “making the rich richer.” Perhaps, these millions of dollars would not trickle down to the society, especially to those most vulnerable children and elderly. Still others question if the city’s commitment to minimal government intervention hampers the creation of adequate social safety nets for the less privileged. In other words, the giver/taker debate in Hong Kong circles around what specific actions qualify for “contribution.”

When I studied abroad in Copenhagen, Denmark, in Fall 2007, I noticed that this Welfare State treats the giver/taker debate differently. I still remember sitting in a downtown park one afternoon and saw a drunk man wandering on the street. My initial thought was, “He is supported the government… to be drunk!” In my opinion, “too much” social protection may dampen incentive to work as most people would rather eat on welfare. However, the Danes would ardently argue against my assumptions, saying that social security allows unemployed people to take time and retool in their skills. Also, knowing that they can fall back to an all-rounded welfare package, Danes are happy to innovate and trial-and-error; these qualities are the fundamentals of a knowledge-based economy. And their economic success has proven their theory a workable one. In effect, the Danes focus on giving the resources, time and space for takers to become givers in the future.

In Cambodia, the giver/taker debate surrounds whether people have the capacity to become givers given current constraints. Despite significant progress made towards the two Millennium Development Goals on achieving universal primary education and gender equality in primary and secondary school by 2015, there are many more hurdles to jump over. For instance, the survival rate from Grade One to Six is merely 52.5% in the 2007/08 school year; the transition rate (the % of primary school graduates moving on to secondary school) is around 78.9%. The net enrolment rate (NER) for lower secondary, upper secondary and university levels are 34%, 16% and <5%>Further, there are few channels for drop-outs to re-enter formal education. Options for vocational training are also limited – the training centres operated by the government mostly lack the funding and human resources to be functional. As a result, it is difficult to match the 250,000 young labour market entrants to jobs each year. Mostly unskilled or low-skilled, these young workers have few occupations to choose from. And if they become unemployed, many return to low-productivity activities, such as subsistence farming. Citing these concerns, in my recent conversation with Mr. Teruo Jinnai, the UNESCO Country Representative, he stressed that productivity is the key for “promoting” people to givers. Hence, the giver/taker debate should firstly focus on the ability to generate income for immediate needs (i.e. What are they doing now?) and secondly on the necessary investments for building moral capacity (i.e. What will they become?).

Mr. Jinnai also has an interesting story to tell. A native of Japanese, he pursued his university studies in Canada. In the following thirty years, he worked in the private sector in Europe and Africa… until one day when he woke up asking himself, “Is my work making a difference to those in need? Am I finding this work and this life meaningful? How can I make my work more rewarding?” These few questions, according to him, compelled him to rethink his priorities and landed him this position. Leaving the money-crunching business world, he then entered the world of cultural preservation and education, a field which has worked for 13 years now.

I cannot help but admire his abrupt switch between careers: How much courage does it take to take a bold step like that? More importantly, our lively conversation shed light on another aspect of the definition of the giver. In addition to undertaking action to make concrete changes in society, emphasizing on long-term human capital investment and urging to provide decent work and education for the needy, a giver needs to be a Thinker. He does not blindly follow what everybody else does but formulate goals through personal reflection and obtain motivation by genuine interest. Surely, I can see Mr. Jinnai’s satisfaction, as he delivered a bright smile talking about his upcoming UNESCO mission to Siem Reap.

Reflections on Ho Chi Minh City – Part II

Yesterday, I mentioned that a Vietnamese businessman claimed “Phnom Penh was like Ho Chi Minh City twenty to thirty years ago.” If I take the liberty to rephrase the sentence, then in twenty years, Phnom Penh should be at least as prosperous as Vietnam today. With reference to my previous post, there will likely be visible signs of increased purchasing power, enhanced standard of living and better governance.

However, these assumptions have been severely challenged by the global economic crisis. While Cambodia enjoyed double-digit growth since 2004, thanks to growth in the garment, construction and tourism sectors, forecasts for 2009 and 2010 appear rather pessimistic. The slump of global demand and investment confidence serve as a reality check for Cambodia, shedding light on some long-sidelined issues: over-reliance on few economic sectors, a single export market and foreign direct investment.

Take the garment sector as an example. Although the sector has grown at an annual rate of above 10% and now contributes to 16% of the country’s GDP, Cambodia’s garment factories are more vulnerable and less competitive than their Vietnamese counterparts. More specifically, close to 70% of garment exports go to the U.S. alone; North America (including Canada) and Europe together receive around 90% of all garment exports. This lack of market diversification closely attaches Cambodia’s garment sector growth to the economic conditions of the U.S. In light of the economic slump since 2008, as American consumers tighten their consumption demand, export figures also plummeted. In fact, in early August this year, the Ministry of Commerce brought down their forecast in the decline of garment export orders to 30% instead of 10% as suggested in January.

To add to the slowdown of American and European economies, Cambodian factories tend to focus on a small number of low value-added product lines, such as $10 jeans for GAP, Wal-mart and Target. According to a recent country competitiveness study from UNDP, out of Cambodia’s top five garment exports to the U.S., four are associated with decline in unit price, despite increase in market share. Further, Cambodian factories have become more specialized in a narrow array of products, as the top ten apparel exports have increased its export share from 83% to 88.8% from 2000 to 2004. This trend contrasted with the Vietnamese garment industry, where exports have become remarkably more diverse during the same period. This comparison indicates that Cambodia has only learned to undercut rivals by dishing out more low-valued products at an even lower cost. The sector has neither upgraded in its skill level nor moved to higher-priced, higher-end products. Coming on the heels of last year’s food and fuel price crisis, the economic crisis has further depressed the consumption demand of middle-and-low-income households in the U.S., the target buyers of Cambodian apparels. As a result, garment exports have inevitably declined drastically since mid-2008, stripping more than 51,000 people from their garment sector jobs.

In addition to the lack of market and product diversification, Cambodia’s garment sector is also vulnerable to economic shocks in Asia due to its dependence on foreign direct investment. In 2007, statistics from the Garment Manufacturers’ Association in Cambodia (GMAC) especially indicate that factories owned by Hong Kong, Taiwanese and Chinese investors account for 24.4%, 30.6% and 7.3% of total sector employment. Cambodian-owned factories only operated 8.6% of all garment firms and hired 3.4% of the total garment workforce. Unfortunately, in this economic crisis, Asian NIEs, consisting of Hong Kong, Taiwan, Korea and Singapore, have been more adversely affected than larger economies such as China and India. These small open economies are most exposed to volatile financial markets and most sensitive to plummeting demand. Falling orders from U.S. and European buyers and the credit crunch thus forced many investors to pull out capital from Cambodia, leading to more than 20 export factory closures this year. Most probably, many more subcontracting factories have also closed down. In sum, industry analysts estimate at least 70 closures since June 2008.

The combined slowdown of export demand and foreign direct investment will not only impact the garment sector alone but overall economic performance. At the present stage of development, Cambodia’s garment sector is the single most viable export sector in the country. In fact, in 2006, garment exports as percentage of total exports was 86.4%. The next biggest export categories, namely footwear and automobile parts, only accounted for 5.5% and 1.2% of total exports. To support this fast-growing sector, the country’s network of more than 200 factories forms the largest formal sector employer in the country. Currently, more than 300,000 low-skilled jobs have been created, mostly for young women from the provinces. Earning less than $100 each month, workers tend to send most of their wages back to the poor rural homes to support the livelihood of their extended family. The stagnation of the garment sector, therefore, would have grave implications for government receipts, export performance, household income and remittances. The economic crisis’ impact will likely trickle down to Cambodian society and pose indirect impacts on health, nutrition and education as well.

In order for Cambodia to achieve more sustainable growth, the country has to diversify. Instead of specializing in low value textile exports, the industry should move towards higher-end products for “five-star” customers. To reduce reliance on garment export receipts, the country should start developing other labour-intensive manufacturing sectors, such as toy-making and electronics. Some capital-intensive industries, such as automobile and motorcycle manufacturing, can also be considered, for Japanese and Korean companies have already demonstrated keen interest in developing a production network in ASEAN countries, such as Thailand and Vietnam. Such diversification will serve to spread risk and generate more profitable business opportunities for Cambodia.

Appropriate policy coordination from the government and the civil society would be crucial for these potential developments. For instance, movement to the electronics sector and high-end clothing would require more skilled workers. In effect, the government has to allocate more resources for vocational training programmes. At present, government ministries still lack the administrative and technical capacity to manage vocational training centres. Very often, the dearth of qualified trainers renders donor-supported facilities dysfunctional after the project period. Surely, these issues cut deep into existing problems with Cambodia’s education system, the quality of instruction and curriculum development.

Let me end this analysis with an anecdote. On my way to Ho Chi Minh City, I received an SMS message from a friend asking me to buy a haversack from the Ben Thanh Market. “My current [backpack] is spoilt,” she said. “Please get a nice brand but blue or black colour la… The quality [in Vietnam] is better than Cambodia.” Indeed, although shopping in Cambodia can be a bit cheaper, most people still perceive Cambodian brands as of lower quality. In fact, if the product (say, a shirt, a handbag or a DVD player) is a “brand-name” one, it must have some defects or be a fake. When will Cambodia rid this image and acquire the capacity to produce higher-end and more quality-assured products?

Resources:

World Bank East Asia & Pacific Update: Battling the Forces of Global Recession, April 2009

Trade Competitiveness Map

UNCOMTRADE

UNDP Cambodia Country Competitiveness Study, July 2009

Reflections on Ho Chi Minh City – Part I

After a bumpy six-hour bus ride, I arrived at Ho Chi Minh City (abbreviated as HCM), a thriving southern Vietnamese city, for a quick escape from Phnom Penh. This short vacation was intended as a “visa trip,” but nonetheless, I saw it as an opportunity to compare and contrast the development of two countries once tightly connected during the Cold War era.

Prior to my travels, although Vietnam appears more “developed” on paper, I expected that every aspect of HCM would be a magnified version of Phnom Penh – more motorbikes, more traffic, more messy streets, etc. However, my three-day experience there proved me wrong: HCM is visibly more developed and the Vietnamese people certainly have a higher standard of living and higher purchasing power.

What strikes me first about HCM was cleanliness. Take the example of local markets, the home of numerous stalls selling raw food, cooked food, souvenirs, clothes and electronics. In Phnom Penh, the Central Market and the Russian Market are the main tourist markets. For the former, outside the recently renovated indoor building are scattered stalls operating under shaky tents. For the latter, under dim lights, one can feel the unevenly paved floor, which often floods when it rains. In both markets, the cooked food sections are nightmares. Dirty plates are littered on the tables, with flies flying all over the place. In HCM, the Ben Thanh Market, the must-go tourist market, is inside a brightly lit indoor building. Most stalls have their inventory orderly displayed on shelves without completely obstructing the walkway. What impressed me the most was how food sellers would post pictures and display samples of their food and drinks to attract customers. Sometimes, even English menus are available; and you would not see dirty dishes everywhere.

My second observation was city-planning. In Phnom Penh, although traffic is busiest on several main roads, the whole city is very dusty. Partly due to air pollution and poor city-planning, it is impossible to find decent-sized parks for jogging and exercise. Some people gather at the Olympic Stadium and small parks for morning and evening aerobics; others run their dogs near the Independence Monument, where there is no shade and the noise of tuk-tuks and motorbikes continue to deafen your ears. If you want to play basketball or tennis, appropriate facilities are yet to be established. In contrast, in HCM, I was most impressed by its parks. Located at the heart of the city, the park next to the Reunification Palace has trees stretching several metres up in the sky. Sand pits and slides were created for children; joggers run shaded paths. Around the city were several sport clubs with tennis courts, dance studios and basketball courts. Walking in the park, the green spaces and tall trees seemed to have insulated noise from the busy streets. For about ten minutes, you can feel relaxed and forget about the crazy traffic on the next big road ahead.

The Vietnamese are also visibly wealthier than Cambodians. In addition to the Japanese and Korean sports cars on the road, I saw more “brand-name” consumer goods around the city. In the night, you can see neon light signs of various established brands: Sony, Panasonic, Philips, Toshiba, LG, Sanyo, Sony Ericsson, Motorola, etc. In contrast, the dearth of foreign brands in Phnom Penh indicates the people’s lower purchasing power. Since Cambodia is still a Least Developed Country, most people would not earn enough to purchase those expensive, imported products. Instead, many can only afford a narrower variety of products, often with lower quality or of an older model. Indeed, the urban Vietnamese appear to have moved past the stage where they only fend for basic necessities. More people now have the ability to desire for higher standards of living.

While there are many more motorbikes in HCM and most motorcyclists drive faster, I nonetheless feel that the traffic there has more order. In HCM, roads tend to be straighter and better-paved. There are more traffic lights and fewer unexpected lane-cutters. Cars tend to move quickly but orderly along clearly delineated lanes – motorbikes on the outside lane and cars on the inside one. Most motorcyclists would wear helmets for their own protection. In Phnom Penh, during my everyday 20-minute biking exercise to work, I often see the opposite of the above-mentioned list. Motorbikes would come from literally every direction; few people have the patience to wait for the green light. One can see illegal U-turns everywhere; cars often got stuck in traffic while motorbikes brush past. In the end, to be cautious, everybody is a “slow driver.” In my opinion, without functioning traffic rules and well-educated drivers, traffic would not move fast. I would see the “order” in HCM as a proxy for government institutions with higher capacity to enforce rules and maintain order.

While wandering inside a bakery in Saigon’s backpacker district, I had a brief conversation with the shop’s Cantonese-speaking manager. Finding out that I work in Phnom Penh, his immediate comment was, “Phnom Penh was like Ho Chi Minh City twenty to thirty years ago.” In other words, in twenty to thirty years, Phnom Penh should be at least as developed as Saigon. Would the current path of economic development and the level of human capital be sufficient to bring prosperity to Cambodia?

To be continued…

Cambodia’s Visible and Deep-seated Scars

Cambodia had had a turbulent history of war, revolutions, mass killings and poverty from the 1970s to the late 1980s. Among the most notorious were the dark years of the Khmer Rouge between 1975 and 1979. At that time, government leaders carried out a radical and aggressive programme to weed out the intellectual, the rich and the ethnically “impure.” Estimates of the death toll range from approximately one million to three million; in any case, the country was left in devastation by the end of the regime. (And then the country went into another ten years of civil war.)

The most visible physical remnant of the dark years is the Toul Sleng Museum, formerly Khmer Rouge special forces (S-21) prison. Official accounts (and yes, the Khmer Rouge kept meticulous account of torture and confessions) indicated that 20,000 prisoners had once entered the prison. Only seven came out alive. The rest, researchers believe, were killed and buried in a mass grave site called Choeung Ek. I have passed by Toul Sleng on numerous occasions (for church and for work). Every time, I have an eerie feeling thinking of those who suffered bloody and painful deaths.

Today, many Cambodians have decided to move on in pursuit of better lives for their family. Most would rather benefit from the country’s economic growth than to fall victim to more hatred. Nonetheless, emotions are buried deep inside. Sometimes, simple conversations can bring up bitterness.

Case I.
Conversation with a colleague while he helped to upgrade my computer’s virus programme…
“You know, my grandparents were from China also. But I have not seen them for more than 30 years now… When I was a kid, I was put in a children’s camp. You have heard of the Khmer Rouge? They took the children away from their parents…”

Case II.
Conversation while at dinner with my Cambodian and Filipino colleagues…
Filipino colleague (just finished eating a spider – gross!): Chinese eats everything too!
Me: That’s true. When I was a primary school student, there was a store that sells snake meat. They would have cages of live snakes outside their store…
Filipino colleague: Yes, they have snakes in the Philippines too! (Turning to the Cambodian colleague) Have you eaten snake?
“I have eaten when I was a boy in the camp. We were too hungry and had to eat snake. I have not eaten snakes since then.”

Case III.
Conversation while thanking my landlord for the delicious ly-chees he brought back from his annual vacation…
“Some of them (the ly-chees) are not so sweet. When I was young in the camp, we eat the wild ones. There are many black seeds and it was not sweet… I was fourteen then and was old enough to stay with my mother…”

I was often shocked by how easily these conversations lead to the Khmer Rouge. Indeed, many aspects of life can serve to remind them of their painful encounters more than 30 years ago.

Such mass atrocities impact this generation as well.

Case IV.
Lunch conversation with a 28-year-old colleague…
Colleague: How tall are you?
Me: About 1.7m. And yourself?
Colleague: “I am 1.68m. But my older brothers, they were born during the Khmer Rouge time. They did not have food when they were young. So now they are shorter than me.”

Case V.
Leisure conversation with 22-year-old college student from the province…
“My parents were forced to marry during the Pol Pot regime. And then the regime forced them to separate. They are together happily now, but my family has been very poor…”

Whenever the topic of Khmer Rouge comes up, the atmosphere would suddenly turn very heavy. I would not know what to say. It would be very awkward. But deep inside, I felt that it is good that people still talk about it. Nowadays, we listen to “experiences” from the Khmer Rouge. But in twenty or thirty years, we will be hearing “stories” of those terrible years. We, as the younger generation, should learn about the past and prevent similar tragedies from happening.

Conferencing Is a Cultural Experience

Speaking of tourism in Cambodia, most people would think of Siem Reap, or more specifically, the Angkor Wat, the UNESCO World Heritage Site. Indeed, every year, two to three million tourists enter Cambodia and almost 50% would visit the Angkor Wat. For the past few years, tourism is one of the fastest-growing industries in Cambodia. Together with the garment and construction sectors, these three sectors form the country’s major pillars of growth.

Unfortunately, since 2008, the tourism sector has experienced much shock. The political instability in Thailand, in particular, dramatically reduced the number of tourists entering via Thai border checkpoints. The economic downturn has also limited the number of five-star American and European visitors. Most recently, the spread of the H1N1 influenza has sown much scare across Southeast Asia. With the death of more than forty patients in Thailand, many people in the region are afraid that the virus has become more deadly. These factors have caused the number of inbound tourist to decline. The inflow of visitors from formerly top-ranked countries, such as Korea, Japan, China, Thailand and Australia, has hence been adjusted downwards.

To recapitulate the sector’s performance from January to June 2009 and to propose remedy strategies for the July to December 2009 period, the Ministry of Tourism held a national conference on 29-30 July. As my first conference in Cambodia, I found the experience a culture shock.

First, I realize that conferences organized by the government are meant for information as well as for show. The keynote speaker would be assigned a king-sized “special seat” in the stage’s centre-front. All other speakers would sit on the stage listening intently to the “important” speech. Representatives from the ministries and the Prime Minister’s office were invited to deliver long, though not-too-substantive, speeches. In fact, one Secretary of State in MoT delivered a two-hour speech (with 100 PowerPoint slides) to explain the country’s seven tourism strategies. To my surprise, nobody moved. When I had to leave at noon for lunch with a colleague, I felt the whole auditorium’s eyes staring at me… so embarrassing!

Second, it was quite a scene observing people’s behaviours during the break time. Every half-day session included a twenty-minute break with food and coffee. Everybody would rush to the food and grab a mountain of snacks and desserts. When eating fruits with seeds and skin, some would even throw the rubbish on the floor, just like most people would while shopping in the local markets. By the end of the break, the floor was filthy with remnants of food. The drinks counter was soaked with spilled water and coffee.

This messy scene surely contrasted with my experiences in the U.S. I remember going to a Peruvian dinner in the Capitol Hill where waiters would constantly check for rubbish and empty glasses/plates. People would line up for food and would rather eat slowly than to look like a voracious hungry person. My observations in Phnom Penh certainly serve to affirm that food and eating practices are very “cultural.”

Despite all these weird and not-so-pleasant moments, the conference was enjoyable in some ways. The location, Chaktumuk Theatre, was at the Tonle Sap riverside. At break time, it was so relaxing to just stand in at the bank and watch the water move slowly and peacefully. Furthermore, the sessions have helped to introduce me to the complexities of the tourism industry. I learned about tourism as a business, what it means to develop a tourism “product,” what considerations goes into developing a national attraction (e.g. via eco-tourism) and what kinds of tourist inflows there are (e.g. home-stays, package tours, etc.). Also, I learned of the broad policy areas involved, especially concerning immigration and customs policies. All in all, I would not say this conference was the most productive. But I assume that I have learned SOMETHING about Khmer culture and the Cambodian economy after this eight-hour day.

Reflections on Factory Scene

For many Asian countries, engagement in the garment global supply chain is a “must” for economic development. As a child, I studied Hong Kong’s development from a fishing village to a financial centre. The city’s road to prosperity inevitably crossed paths with the garment industry. Many young women and men were once employed in the sector until labour costs became too high. Then manufacturers decided to move to southern China. Nowadays, more factories have moved to Bangladesh, Vietnam and Cambodia, where wages are even lower.

To minimize expenses on labour, the garment industry and other labour-intensive industries have a reputation of poor working conditions. I once remember reading an Oxfam publication, “Turning the Garment Industry Inside Out,” which investigates the industry’s impact on the global workforce. An anecdote was taken from the Oral History of Hong Kong Marginal Workers and depicted the harsh life of the family of Mei Chun and Ah Leung, both factory workers. At that time, I did not understand why they complained of having to find four part-time jobs and why they suffered from constant fatigue. But now, I have a better perspective.

During my second week in Cambodia, I accompanied some factory advisors to observe factory conditions. In this country, Better Factories Cambodia is a well-established ILO project. It originated from a trade deal between the U.S. and Cambodia, but now receives support from various aid agencies. The project’s staff members would pay unannounced visits to more than 200 export-oriented garment factories on half-year intervals. The evaluation report would serve as a guideline for factory improvement and international buyers can choose suitable partners from such reports.

An important aspect of the monitoring is to make sure that workers are paid fairly and regularly. Through interviews with the management and the workers, as well as reviews of relevant payroll documents, the inspectors will discuss whether the wage rates and contract types have been set according to legal standards.

Indeed, low-skilled garment workers earn very little for their hard and mundane work. In Cambodia, the basic wage of a regular worker (from 7am to 11am and 12pm to 4pm each day, 48 hours per week, 26 days per month) is a meagre $50 each month. This amount, for sure, is barely enough for survival in the city. Moreover, most garment factory workers are young women from the provinces. Remittances to their home villages will also take away a portion of their wages. In effect, one needs to work overtime to earn a living wage.

Consider a woman who would like to earn at least $100 each month. Her hourly wage is just $0.24. By law, she could earn 150% of her basic wage when working overtime between 4pm to 10pm. So she earns an additional $28.1 each month by working 3 overtime hours 6 days a week. Then, on Sundays, the law requires factories to pay their workers 200% of basic wage. So she earns $15.4 more for working 8 hours for 4 Sundays each month. Lastly, the employer must pay attendance bonus of $5 (minimum) and cost of living allowance of $6 (minimum) each month. In sum, this worker earns $104.5 for working from 11-hour days from Monday to Saturday and 8-hour days on Sundays. The salary of this sort of “formal employment” is much lower than that earned in the more demeaning and risky entertainment industry, where some report more than $250 just from tips and “other services.”

In addition to low pay, factory work can be hazardous to health. As I walked on the factory floor, I was immediately overwhelmed by heat and noise. In some factories, the poorly ventilated factory floor can be as hot as 35oC. The noise of hundreds of sewing machines can be deafening and the facility’s lighting might be insufficient. Workers often sit in the same spot and do the same action (e.g. sewing together a pocket for jeans) for many hours. To get bonuses for meeting production target, some workers even avoid taking bathroom breaks. In the end, the workers’ eyes, shoulders and backs become badly strained.

There are other potential occupational hazards in the garment industry as well. For instance, some workers are hired to iron shirts and jeans before shipment. The environment there is hot and there is a chance for skin burn. In a factory that does dyeing (or washing), workers might deal with corrosive or toxic chemicals. Incorrect usage, improper storage and other sorts of accident can cause much physical harm.

Unfortunately, for many factory workers, their education level is too low to find higher-paid jobs. Therefore, they are stuck with part-time jobs that are just equally as hazardous, such as scavenging or hostessing. Unless more vocational training is provided, they are unlikely to break out from poor working conditions.

For Cambodia, nonetheless, I feel a bit more hopeful. With Better Factories Cambodia, the factory management and international buyers have become more conscious of worker’s health and safety. Furthermore, as the Cambodian people’s general education levels increase (and education is a success story here), more young people will have more diverse job choices. With more experience and expertise, the garment factories may also move towards higher-valued goods. In the past, many countries moved toward prosperity from labour-intensive textile production to higher-skilled electronics manufacturing and further, to the development of commercial services. Hopefully, Cambodia will gradually move forward to that direction as well.

Blessed with Hospitality

Just one day before my arrival at Phnom Penh, I received an email from a Hong Kong missionary. Her email said that her co-worker has rented an apartment but will not come back until next year. But it is not close to the riverfront. With this brief message, I did not know where exactly the place is, what it looks like and how much the rent would be. I carried her cell phone number to Phnom Penh, with my fingers crossed that perhaps her apartment would work out.

When I arrived at Phnom Penh, however, I totally forgot about this contact. Instead, with the help of my colleagues and my Cambodian friend, I went flat-hunting with some travel agents. The expatriate community here has certainly pushed up rental prices; $250 a month would be considered cheap. But this amount would not cover cable TV ($10), electricity (~$15) and water (~$15). Some landlords would even charge tenants for security guards and trash pick-up.
During my first weekend, I finally got in touch with this Hong Kong missionary and visited the place. Thank God, the place is just $140 a month. Although there is no air-conditioning, the apartment has everything -- seriously, everything. There is a bike and helmets, detergent, hangers, TV, cooking utensils, laundry basket, books, CDs, etc. What’s more can I ask? So I moved in on my fourth day.

My initial hesitation about this apartment is that the location is quite far from work. But soon my doubts were erased. My neighbor, a Singaporean missionary, is very nice. During my first week here, she brought me and another Singaporean student all over Phnom Penh. We ate Khmer beef stew, coconut and durian ice-cream (inside a coconut shell), hand-made Chinese noodles, (half-priced) pastries and drinks at five-star hotel and the best iced coffee and Vietnamese pho at the Russian Market. I could not believe my luck in finding such a great neighbor.

What’s more, because my apartment is a bit far from the touristy districts, everything is cheaper. It is cheaper to make telephone calls, get motorbike rides, buy groceries and even park bicycles. Also, despite being “far” from work, my bike ride is only 15-20 minutes; there is also a sports stadium and a modern (air-conditioned) shopping mall within biking distance.

I also feel so blessed with my landlord here. He is an agricultural specialist and is currently employed under a UNDP contract. In his work, he provides technical advice for self-help groups and farming cooperatives in the Battambang Province. While he often stays in Battambang during the week, whenever I see him in the weekends, he would make me sit down and talk about my work here. He would then enthusiastically tell me why agriculture is so important and what he wants to do for his country when his contract with UNDP expires in less than half a year. (Recently, he said he got a grant from the UK to continue his work with farming communities. I am so happy for him.)

Just last week, he took his annual leave and brought his family (his mother, wife and children) to a northern province. After he returned, he called up one evening and said he had souvenirs for me. He excitedly talked about the natural scenery of a part of Cambodia which he had never been to. In the end, I retreated upstairs holding a bundle of ramudan (“guai-lo” ly-chee) on my left hand. On my right hand, I held several tropical fruits unknown to me and some Cambodian sticky rice stuffed in bamboo.

Cambodian hospitality is surely not confined to my landlord and my encounters with missionaries. Just yesterday, I met up with my Singaporean friend and some of her friends for a farewell party. At her guesthouse was a woman by the name of Mrs. Lam. She was originally from Guangdong Province and spoke Cantonese. Together with her seven sisters, her family owns almost the entire Street 294, also called the Golden Street in Phnom Penh, and runs a guesthouse business. In our conversation, I asked of what fruits are best-buys in Cambodia. She immediately threw out many names and asked her daughter to take out “samples.” That night, I left with a Cambodian-growth sour mango. She insisted that I come back for more when the chance arises.

Also just yesterday, I spoke with a friend about her visit to Siem Reap the week before. She said, “Siem Reap was great, but I felt homesick – “Phnom Penh”-sick. Now I echo with her. When I have to leave in the future, I will surely cherish these blessed memories.

Stretch of the Economic and Financial Crisis

For an outsider of the financial market like myself, I was oblivious to the impacts of the credit crunch. Even as the subprime crisis broke out, and with the collapse of Bear Stearns, I thought, why should I care, since I am neither a Wall Street monger nor a real estate speculator?

When I took my seminar class on international finance in Fall 2008, my friends and I would watch the latest financial news from the TV in the Grille during break time. We saw how the Dow Jones index dropped from 11,000 before the bankruptcy of Lehman Brothers to10,000… then 9,000… and even below 8,000. Still, while I knew that the plummeting financial market will likely affect my employment prospects, I had no idea about how contagious the financial crisis can be.

From the New York stock exchange, the credit crisis soon spread to European markets. As European and American consumers lost money, they demanded less consumer goods. The emerging markets then also experienced economic shock as orders for garment, electronics and construction materials slowed down; tourism, as well, as in decline.

Now in Cambodia, my work is closely related the development community’s response to the financial crisis. From various published sources, the real growth of Cambodia’s economy is expected to decrease from more than 10% in 2007 to negative in 2009. As garment factories receive fewer orders for shipment, many factories have closed down and more than 500,000 factory workers have been laid off (World Bank estimate). Some industry analysts even estimated 700,000 have been cut. Cambodia’s construction sector, which boomed during the last few years as a result of foreign investment and increased income, has slumped as well. In particular, as Korean currency, won, plummeting in exchange value and the Korean economy performing weakly, constructions projects were forced to stop. In addition, for small and medium business owners, access credit has become more difficult as banks become more cautious in lending. This checklist of negative impacts from the economic downturn can certainly be seen in other small, open economies as well.

Fortunately, with crisis often comes opportunity. (My internship position, for instance, would not come about without the poor economy.) The development community especially sees this crisis as the jump-off point for more efficient and innovative development ideas. With limited resources, the public and NGO sector will likely have to cooperate more with the private sector. Further, instead of holding the hands of their beneficiaries, development agencies will have to empower their target groups to generate income, build sustainable enterprises and walk on their own feet. These positive signs seem to suggest that the economic crisis can lead people to focus on building competitive and sustainable economies in the developing world – a piece of good news amidst bad ones.

Some interesting reading:

Recent New York Times story on the impact of the economic crisis on Rwanda’s construction and tourism sectors: “Just When Africa’s Luck was Changing” (August 1, 2009)

World Bank East Asia & Pacific Update – Battling the Forces of Global Recession (April 2009)

Asian Development Bank Economic Outlook 2009: Cambodia

International Monetary Fund World Economic Outlook – Crisis and Recovery (April 2009)

First Impressions of Phnom Penh, Cambodia

So, here I am, in Phnom Penh, Cambodia. This part of the world was once stricken by war, mass killings and famine. Today, Cambodia is a young country of 14 million but remains one of the poorest countries in Asia. Most of Phnom Penh and parts of Siem Reap and Battambang have become more urbanized, but more than 4.5 million people are still employed in the primary sector. Agriculture accounts for about 30% of GDP. In 2006 and 2007, the country recorded real growth of above 10%; but estimates for 2009 have been significantly adjusted downwards due to the global economic downturn. Per capita annual income is approximately $600. A university graduate could earn about $200 to $300 per month but more than 20% of the population, mostly in rural areas, still live with less than $1 each day. Since the end of the Cold War, Cambodia’s devastated economy picked up growth. The garment industry and tourism (almost 50% to Siem Reap) have especially thrived. Cambodia’s open and untapped economy also attracted much foreign direct investment (FDI). In recent years, companies from Korea and China have especially propped up the construction and real estate sectors.

Phnom Penh totally exceeded my expectations as capital of a Least Developed Country. The streets are roaring with Toyota cars and trendy-looking motorbikes. There is no lack of French, Korean, Chinese and Vietnamese restaurants. There is a western-style grocery store called Lucky where you can find all sorts of imported products as well as Korean and Japanese markets. For just USD$10 each month, you can install cable TV with CNN, BBC, French/German/Italian channels, Taiwanese channels, CCTV-1 and CCTV-4, as well as regional channels from Singapore, Laos and Vietnam. Basically, for foreigners, just a bit of money can enable a decent standard of living.

Surely, poverty exists but most poor people are hidden. For instance, garment factories are often located in the suburbs of Phnom Penh or in nearby provinces. With the economic downturn, many workers have been dismissed but they still hang around the factory area. In the central districts, the government has attempted to eradicate urban slums and relocate poor people into small flat or apartments. Those vacant dilapidated buildings can then be pulled down and the land can be sold to land developers. Sex industry is also sizable in Phnom Penh. Some women work as bar hostesses and massagers (indirect sex work) while others work in brothels (direct sex work). As a result of cultural taboo, the hardships of these women are seldom publicized. Further, outside the city, many rural peoples engage in low productivity agricultural activities. Without proper training on farming techniques and business management, they have little access to markets and earn barely enough for living. However, walking down Phnom Penh busiest streets, such as Sihanouk, Monivong, Norodom, such faces are rare to be seen.

My motivation to come to Cambodia is to learn about economic development and how field offices of development agencies work. In the next six months, I will intern at the International Labour Organization, a United Nations agency that has played a significant role in upholding workers’ rights, empowering poor people and encouraging entrepreneurship in Cambodia. It’s my hopes that this internship will open my eyes to the positive forces in Cambodia.

Sources: Asian Development Bank Economic Data