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Cambodia's garment workers struggle to pay debts as lockdown bites

by Yon Sineat and Matt Blomberg | @BlombergMD | Thomson Reuters Foundation
Wednesday, 19 May 2021 08:54 GMT

Garment factory workers and staff wait to receive China's Sinovac coronavirus disease (COVID-19) vaccine at an industrial park in Phnom Penh, Cambodia, April 7, 2021. REUTERS/Cindy Liu

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Coronavirus lockdown in Cambodia leaves tens of thousands of low-paid textile workers without income

* Cambodia enforces strict lockdown as COVID-19 cases rise

* 'Red zone' garment factories closed, halting pay

* Borrowers say unable to access promised debt relief

By Yon Sineat and Matt Blomberg

PHNOM PENH, May 19 (Thomson Reuters Foundation) - After weeks without pay, it was debt that drove Cambodian garment worker Eang Malea back to her factory when it reopened this month, eclipsing her heightened fear of falling ill amid a surge of COVID-19 cases on factory floors.

The 850,000 people who work in Cambodia's $7 billion garment industry have been prioritised for COVID-19 vaccines, but Malea has not yet secured hers and promises of debt relief amid strict lockdowns have not materialised, she said.

"I need to pay rent, utilities and debts," Malea, 26, told the Thomson Reuters Foundation. "I worry that I will get infected by going to work without being vaccinated, but I don't really have a choice."

Cambodia shut clothing factories and put some worker communities under strict lockdowns in mid-April as hundreds of new coronavirus cases were detected each day, with infections at more than 100 factories.

The nation of 16 million people reported less than 500 cases and no deaths in the first year of the pandemic.

But with more than 22,000 cases and 156 deaths since an outbreak in February, authorities on April 19 established "red zones" in areas with high rates of infection - banning people from leaving their homes except for medical emergencies.

As the lockdown left tens of thousands of low-paid garment workers without income, the Cambodian Microfinance Association on April 7 told its members to assist struggling clients, following months of campaigning by advocacy groups.

But several borrowers told the Thomson Reuters Foundation they had not been offered the moratorium, and expressed fear of losing land held as collateral.

"The (microfinance) staff told me that they had not heard of this rule, so they did not have to do it," Malea said during a break at the factory.

The Cambodian Microfinance Association did not respond to requests for comment. It has previously rejected claims of predatory lending and said last year that no land would be seized by any of its 90 members during the pandemic.


Cambodia's microlenders have come under rising scrutiny in recent years, with researchers and activists linking predatory lending to unsafe migration, child labour and coerced land sales.

At $3,800, the average debt per borrower is the highest in the world and more than twice Cambodia's gross domestic product per capita.

The sector has sent thousands of Cambodians into a cycle of debt, with unregulated loan sharks profiting as borrowers take out new loans to pay old ones, researchers have found.

A 2020 survey by trade unions and rights groups found almost a third of workers had taken new loans to pay off existing debt, "as they struggle to feed their families and hold their land under immense pressure from microfinance institutions."

Borrowers struggling to survive the lockdown "shouldn't have to worry about how to pay their microfinance loans," said Naly Pilorge, director of human rights group Licadho, urging the profitable industry to act.

"Many of Cambodia's largest MFIs (microfinance institutions) made record profits in 2020, and now is the time for these institutions to live up to their promise of helping Cambodia's poorest, by offering real and immediate debt relief," she added.

Garment worker Thann Chanthy, 41, has debts of more than $6,000 to microfinance lenders and a loan shark - who she turned to in order to make payments on the original debt.

Chanthy tested positive for the coronavirus along with about 100 of her colleagues at a factory in mid-April. Shortly after arriving home following a stint in a COVID-19 treatment centre, one of the microfinance companies called.

With $3 to her name and no sign of any income or aid, she requested a few months grace, but was told that she had to at least pay $60, she said.

"I have no income for the past three weeks and no savings," she said. "I'm only able to pay if I borrow from a loan shark... I really don't know what to do."

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(Reporting by Matt Blomberg and Yon Sineat, Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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