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After a year that saw the world polarized by the COVID-19 pandemic, more countries should emulate the bonhomie displayed between Laos and Cambodia over the past year as the two developing economies look to get past the public health crisis together.
Cambodia is nearly done with the pandemic.
Over 11 million Cambodians have received a second shot of a COVID-19 vaccine and the country has survived the epidemic mostly unscathed (even though it saw cases surge this year due to the contagious delta variant earlier in May).
Cambodia looks set to open to tourists in November – business travelers and tourists will need a medical certificate, a visa and they will need to be double vaccinated if they want to enter the country. When they do arrive possibly before the end of the year, they could see early signs of a revitalized economy. According to a recent forecast, the International Monetary Fund stated that extensive government support and recovery in external demand could see the economy grow by 5% next year.
Cambodia’s agricultural product exports have surged by nearly 50% over the past year while there has been healthy growth in international trade and investment as well. It won’t be long until investing in Cambodia becomes promising once more; Cambodian real estate prices could soon rally after a yearlong slump.
Laos, on the other hand, has struggled.
Only 28.6% of Laotians have received a full dose so far. Relying only on donations of the COVAX vaccine by GAVI, the global health partnership of public and private sector organizations, the Laos government has not been able to procure as many doses. Meanwhile, the country’s healthcare infrastructure is not up to the mark and has not been able to reach out and conduct mass vaccination campaigns as effectively.
At least, Laos can consider itself lucky for having endured only 23 deaths due to COVID-19. Laos has less than half the population of Cambodia and is one of the fastest-growing economies in the world but the Asian Development Bank expects growth to slow to 4% next year, down from an earlier forecast.
Laos will likely not be ready to open itself up to the outside world for a while yet.
Good neighbors help each other
That’s probably why Cambodia has decided to play a bigger role in helping Laos recover. While challenges remain – both sides are embroiled in a border dispute with Vietnam due to issues caused by France’s abrupt exit from Indochina – close relationships between political leaders who have prioritized public health and have fostered high-level friendships as well as their common relationship with China (this year, Chinese companies will help finish construction on the first expressway in Laos), means the two countries have a lot in common.
At the end of September, Cambodia, which was the first in Southeast Asia to receive vaccines from GAVI, donated 200,000 doses of the Sinovac vaccine. As a recipient of China’s vaccine diplomacy, Cambodia has raced ahead of other countries in implementing Chinese vaccines that have been known to reduce severity of COVID-19 infections and slow down their spread even if they might not be as effective as other vaccine candidates.
Cambodia’s donation will greatly boost Laos’ goal of ensuring 50% of the population gets vaccinated by the end of the year.
To put it in context, Laos secured 59 vaccines per 100 people while Singapore, its wealthier neighbor, secured 162 vaccines per 100 people, at the end of September. Without the funds to purchase vaccines, Laos’ progress would be slow and people would hesitate to step outside when it’s not safe. Unlike Cambodia, which is a relatively open economy, Laos does not depend on exports so recovery in other markets would not have a knock-on effect the same way as it has for its neighbour. (According to the World Bank, Cambodia’s exports account for 62% of its annual economic output, nearly double the proportion in Laos.)
That’s why it’s a remarkable show of neighborly support at a time when countries around the world have closed borders and citizens have been quick to blame incoming arrivals from foreign countries for any emerging signs of COVID-19 cases. Donating vaccines is the last thing that many politicians consider for the fear of angering their constituencies.
Last year, Cambodia even provided two million face masks alongside medical supplies like face shields, ventilator machines, safety boots, hand sanitizers, temperature checking machines and more to Laos to help it fight the growing COVID-19 epidemic.
Cambodia and Laos can boost each other’s recovery
Cambodia and Laos know they need to work together. The two have common challenges as they need to work together to alleviate poverty, promote growth of new industries, deal with transnational crime and combat climate change. The basin of the Mekong River has been flooding regularly while changes in weather due to man-made climate change have also led to unexpected droughts. Cambodia’s Tonle Sap, a freshwater lake, hit historic lows for the third straight year recently.
Laos, which is well-known for procuring more than 80% of its energy needs from renewable sources, can help Cambodia learn how it can decarbonize.
Both countries depend on tourism as well although Cambodia is much more well-known on the global tourism map due to Angkor Wat, a famous temple complex. Tourism accounted for just over 10% of the economy in Laos in recent years.
Cambodia’s recovery will benefit Laos as long-term travelers and business travelers would be keen to return to Southeast Asia and travel to both countries.
Cambodia (and Singapore) are hoping to act as a sandbox next year where important business meetings take place to continue projects that were halted due to the pandemic. With Cambodia taking over the chairmanship of ASEAN, it is expected to become an important destination within the region where key decisions affecting Laos will also be made.
Laos looks set to learn from Cambodia in terms of its good work on financial inclusion as well. Soramitsu, the Japanese firm that helped build Cambodia’s Bakong digital payments system, is planning to work with the Laos government to research what a central bank digital currency in Laos might look like.
Bakong has the potential to greatly enhance financial inclusion in Cambodia as the e-riel, an electronic version of the Cambodian currency, has helped the unbanked get access to digital financial services and reduce the transaction costs associated with remittances. (The National Bank of Cambodia has enrolled 5.9 million users and increased awareness of digital finance. However, users are ultimately loyal to the best service provider so payment wallets continue to be prominent.)
In Laos, a quarter of the population remain unbanked and struggle like their Cambodian counterparts to access affordable credit for economic activities. Cambodia’s experience will surely help digitalize the economy and lead to opportunities the way it has in China.
Cooperative atmosphere slowly filtering down
Beyond cooperation at the highest levels, Cambodians and Laos residents are also supporting one another in other ways.
There have been many reports of Cambodians helping migrant workers from Laos working on construction projects. The two sides have also become closer over the course of the past 18 months through cross-cultural dialogue and internet-based discussions.
Similarly, many Cambodian companies are looking to extend a helping hand with an eye on long-term involvement in the country as well.
Recently, Prince Holding Group, a fast-growing conglomerate, donated US$1 million to the Lao government to support anti-pandemic initiatives. Earlier in the year, Neak Oknha Chen Zhi, chairman of Prince Holding Group, similarly donated US$3 million to Cambodia’s anti-epidemic activities when the country appeared to be trapped in the death grip of the delta variant that had arrived in Southeast Asia. Cambodia ChenZhi, a naturalized citizen, has been around for more than a decade and is clearly becoming an influential figure in Cambodia.
Prince Group, as the firm is known, includes the Prince Real Estate Group, Prince Bank, Belt Road Capital Management, Canopy Sands Development and Cambodia Airways, firms that have played a major role in Cambodia’s decade of rapid economic growth. It’s likely these companies will play a part in Laos as well through aid, charity and business initiatives. By leveraging their experience in Cambodia, they will be able to similarly make an impact in advancing economic development in Laos.
It’s in Cambodia’s interests to see Laos develop as well. Not only will it attract higher levels of investment in Cambodia, it will boost Cambodian real estate as banks and investors are more likely to support companies with cross-national ambitions in a globalized world. Canopy Sands Development, a member company of Prince Group, is also remarkable for its work on Ream City Sihanoukville, a coastal development project built on sustainable principles that will be the first project of its kind in the Mekong Delta region.
Of course, we still have a long way to go till we get to the end of the pandemic. In these fractious times, it’s good to see positive examples of international cooperation between two neighboring countries who can look past their historic differences and focus on the common good.
This year, Cambodia and Laos celebrated 65 years of (mostly) peaceful diplomatic relations and will surely find opportunities to work together even more in the coming years.
The two sides are set to square off in the Suzuki Cup on December 15 as well! Whoever wins, you can be sure that it will only be a temporary celebration. The second year of the COVID-19 pandemic has brought the two countries much closer and it is hoped that the new year further improves that relationship so that citizens can look forward to a brighter post-pandemic future.