Cambodia Issues Ninth Round of Stimulus Measures

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes

On June 29, 2021, Cambodia unveiled its ninth round of stimulus measures to support businesses and low-income households as the country grapples with a sudden surge in COVID-19 infections caused by the Delta variant.

The package aims to tackle several objectives:

  1. Reduce the socio-economic impact caused by the pandemic as well as reduce transmission rates;
  2. Support business recovery through wage subsidies and tax exemptions initiatives that were issued in the eighth stimulus package; and
  3. Support poor households through cash handouts.

The support measures center heavily on Cambodia’s garment, textile, and footwear (GTF) industries, which contribute to more than 30 percent of the total GDP, 80 percent of total exports, and encompass over 800,000 workers. Suspended workers in these sectors will continue to receive financial aid of up to US$70 per month until the end of September 2021.

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Moreover, the government has continued its measures to support the tourism industry in the form of tax holidays. The industry is also a major contributor to the economy, accounting for some 12 percent of total GDP.

Cambodia’s exports of garments, footwear, and travel goods were down 10 percent for the first 10 months of 2020, compared to 2019, valued at US$8.2 billion. The number of official factory closures registered with the Ministry of Labor as of October 2020 stood at 110, resulting in 65,000 laid-off workers.

Revenue from international tourism saw an 80 percent dip from US$4.9 billion in 2019 to US$1.02 billion in 2020, with Cambodia only recording 1.3 million international visitors. The Cambodian Association of Travel Agents (CATA) predicts the industry needs at least five years to recover to reach its pre-pandemic growth.

Extended support for workers in the garment, textile, and footwear sectors

Workers in the GTF industries that have been suspended from their employment will continue to receive financial aid of up to US$40 until the end of September 2021.

The workers must, however, be registered with the Department of Labor and Vocational Training (DLVT).

Furthermore, the financial aid is dependent on the length of time the employee has been suspended from their employment; the longer the suspension, the larger the financial aid available.

The available financial aid is distributed as follows:

  • US$15 for 7-10 days of employment suspension;
  • US$30 for 11-20 days of employment suspension; and
  • US$40 for 21 days to one month of employment suspension.

Workers in the GTF industries will receive an additional US$30 per month contributed by their employers besides the aforementioned financial aid. Thus, workers in the GTF industries can receive up to US$70 per month.

Extended support for the tourism industry

Suspended workers in hotels, guesthouses, travel agencies, and the tourism industries are also eligible for financial aid of US$40 until the end of September 2021, provided they are registered with the DLVT.

Registered guesthouses, hotels, restaurants, and travel agents that operate in Phnom Penh, Siem Reap, Preah Sihanouk, Kep, Kampot, Bavet, and Poi Pet will continue to receive monthly tax exemptions from July to September 2021. These businesses will still have to submit their tax returns via the E-VAT system every month during the exemption period.

Additionally, these businesses are exempted from paying their monthly contributions to the National Social Security Fund (NSSF), until the end of December 2021. This is a government body responsible for providing social security for workers in the private sector.

Extended support for the aviation sector

Airlines operating in Cambodia can continue to benefit from the ‘minimum tax’ exemption until the end of September 2021. The minimum tax due is equal to one percent of total turnover, except value-added tax (VAT), and is irrespective of whether the taxpayer is in a profit or loss situation.

Also, for the period of July to September 2021, airlines are allowed to defer their civil aviation fee payments.

New support for the logistics sector

The government has exempted the payment of broker license fees for the 2021-2022 period to support the transportation and logistics sector. This exemption will be monitored based on the country’s economic condition.

The waiver of license broker fees will help reduce costs for carriers who have been hamstrung by the decline in business since the start of the pandemic.

Cash assistance to poor and vulnerable households

The government will continue to provide cash assistance to nearly 700,000 poor and vulnerable households from July to September 2021. Since June 2020, the government has disbursed over US$320 million in financial aid, benefiting 2.7 million people.

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