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China Comes to Cambodia’s Aid Amid Pandemic-Driven Raw Materials Delays

China has arranged vessels to ship raw materials to Cambodia for garment and footwear production from now till May, Cambodian Prime Minister Hun Sen announced Tuesday.

“The vessels will deliver raw materials to Cambodia from this March until May [or] until the [COVID-19] situation has eased,” Hun Sen told university graduates at a ceremony in Phnom Penh. The first shipment, he said, arrived Monday, and a second one is due Wednesday.

The news follows reports that roughly 200 predominantly apparel factories are poised to suspend or slow operations because of supply-chain disruptions in the wake of the coronavirus pandemic. The Southeast Asian country’s more than 600 garment factories employ 700,000 workers—most of them young women—and contribute 40 percent of the country’s gross domestic product. In 2019, the garment and footwear sectors delivered $9.32 billion in gross revenue, an 11 percent uptick from the year before.

More than 60 percent of the raw materials used by the country’s garment and footwear producers hail from China, according to the Cambodia Garment Manufacturers Association.

“We are very thankful to the Chinese Ministry of Commerce for helping to push for the fast delivery of raw materials to Cambodia,” said Heng Sokkung, Secretary of State at the Ministry of Industry and Handicraft, calling China “a friend in need [who] is a friend indeed.”

He noted that the expedited delivery arrived after a delegation from the Chinese Ministry of Commerce met with Minister of Industry and Handicraft Cham Prasidh on a recent visit. Prasidh presented Chinese officials with a list of scarce but “necessary raw materials.”

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The minister also instituted a “Green Lane” to hasten shipments through customs and logistics processing.

Meanwhile, Prime Minister Hun Sen has urged Cambodia’s microfinance institutions and commercial banks to consider deferring loan repayments from garment workers facing duress from the production slowdown.

“Microfinancial institutions and banks should suspend either total loan payments or the interest component of these repayments for garment workers who are in financial difficulties,” he said at the inauguration of a new highway on Tuesday. “They face job suspension [and] so should be helped with some form of loan suspension, too.”

Both the Association of Banks in Cambodia and the Cambodian Microfinance Association have expressed their support for the measure. They have also called on banks and financial institutions to continue to supply loans to small- and mid-size enterprises experiencing difficulties as a result of the outbreak.

“Banks and financial institutions should actively continue providing loans to these priority sectors, as well as tourism-related businesses and the construction, garment and footwear sectors,” they wrote in a joint statement this week. “Banks and financial institutions should exercise flexibility in dealing with loan repayment issues for customers affected by COVID-19. They should also continue to take necessary actions to protect their employees to ensure clients can continue to depend on the reliability and sustainability of banking services.”

The Cambodian Microfinance Association estimates that 2.1 million Cambodians borrowed a combined $7.5 billion from a microfinance institution in 2019, a 30 percent increase from the year before.