2016 was an important year in Cambodia’s transition to an industrialised economy, with some major pieces of labour legislation coming out after years of intense debate. The Trade Union Law was passed in April, the culmination of a long and arduous negotiation process between employers and trade unions.
As the single federation representing, promoting and safeguarding the rights and interests of employers here, the Cambodian Federation of Employers and Business Associations (CAMFEBA) has played a vital role over the years in giving form to labour and social legislation and moulding employer-worker relations in the Kingdom.
The B2B team sat down with Sandra D’Amico, vice-president of CAMFEBA and managing director of regional human resource services provider HRINC (Cambodia and Myanmar), to discuss the work of the association regarding industrial relations:
With 2017 fast approaching, what would you say have been some of the highlights of the year as far as business regulation goes and as far as CAMFEBA’s work is concerned?
When it comes to the actual running of a business, the first thing that comes to mind is the fact that tax registration can now be done online. In terms of labour and social affairs, which are the areas CAMFEBA really focuses on, an important landmark was the passing of the Trade Union Law, for which unions and employers came together and had extremely constructive debates over the years. This law has been a huge highlight in terms of moving to a more industrialised economy, and improving employer-worker relations.
Another huge leap forward for Cambodia has been the introduction and the implementation of the medical care scheme, a component of the National Social Security Fund (NSSF). From a legislative and development perspective, the introduction of medical care services is incredibly positive for the country and its future generations.
Another achievement has been the strengthening of the minimum wage negotiation process. The process has become much more data-driven, transparent and constructive, with a much more robust dialogue between the parties involved. Thanks to this, a Minimum Wage Law is now in development, and we will be negotiating it in the coming months.
What are some of the issues that CAMFEBA is currently lobbying for?
We will continue to lobby for certain changes in the Labour Law. We want more clarity and more diversity in employment contracts. We have also raised with the Ministry of Labour and Vocational Training the issue of annual leave days, given the huge number of public holidays. I do think that certain parts of the law need to be relooked at as Cambodia’s economy evolves.
Another issue we will be looking at in the coming year is the development of the pension scheme for the NSSF. We need to look at our competitiveness in terms of our total social security contributions, and see how we fare against other countries in the region.
Next year, we will continue to monitor the minimum wage negotiations in the garment sector, providing support to the Garment Manufacturers Association in Cambodia, and making sure that we continue to build on what we did last year. This is really important to make sure we enjoy a harmonious industrial environment and to help attract new investors.
What would you like to see accomplished in 2017? Any particular piece of regulation that you would like to see passed?
CAMFEBA is working on the development of the labour courts, and we want to make sure this is done right. With a relatively good Trade Union Law, we definitely need to ensure that we have a good dispute resolution system in place. We have the Arbitration Council at the moment, which is really good, but whose decisions are not binding. What we want to see in the labour courts is the integration of the Arbitration Council, because it is a very effective tool for mediating. We also want to see independent labour courts. We don’t want labour courts that are absorbed into the current court system, which is not always effective in resolving disputes.
For 2017, we also want to see that the new Minimum Wage Law is clearly defined, with no ambiguity, and with clear participation of the unions and the employers. Finally, we want to monitor the implementation of the Trade Union Law, and really make sure that is being realised on a practical level.
It’s been close to a year since the ASEAN Economic Community (AEC) was established. What do you think have been some of the tangible effects of being part of this economic community, particularly when it pertains to owning and running a business in Cambodia?
We have seen a lot more roles models come out of Cambodia – young entrepreneurs who are going around the region making connections. It’s been wonderful to see young Cambodians come out and lead on associations, make regional contacts and represent the country. From a business perspective, we’ve seen is a lot of automation of Cambodia’s processes. The introduction of the tax treaty with Singapore, for example, has opened up additional opportunities.
Thanks to my work with HRINC in Myanmar, I have certainly seen a lot of talented Cambodians working in Myanmar. I also see Cambodian entrepreneurs setting up businesses in Myanmar all the time. I think we need more of that, and we need to enable and give people the tools they need to think bigger. I think there are going to be a lot more exciting Cambodian ventures and enterprises thanks to the AEC.
What are your thoughts on the new online business registration system, and what do CAMFEBA’s members say about it?
I registered my business online earlier this year and my experience was wonderful. It is much easier and much more transparent than the previous system. The system has its flaws, but, as CAMFEBA, we applaud the efforts of the government on transitioning to an online platform. Compared to neighboring countries, Cambodia is fairly advanced in its IT infrastructure.
You conduct business in various countries in the region. When it comes to the ease of opening and running a business, how does Cambodia fare compared to neighboring countries?
For setting up SMEs, there is no country in the region faster than Cambodia. We are also a lot cheaper than any other country in the region in terms of startup capital required. In other countries, setting up a business is quite daunting due to long bureaucratic procedures. Cambodia is less bureaucratic. When it comes to setting up an SME, Cambodia far exceeds any other country in the region.
A lot of social enterprises have been popping up around Cambodia, and social entrepreneurship has become a widely-used term. Why is having a sustainable impact important in Cambodia, and how can it be achieved most successfully?
I think Cambodia has a lot of to do in terms of valuing and taking care of its environment. The business environment has to look at how it differentiates itself from other countries. For example, in Myanmar, the investment law puts a huge emphasis on responsible business, stipulating that a certain percentage of profits has to go towards corporate social responsibility. Cambodia could do something similar.
As the region opens up more, Cambodia does need to take care of its environment, whether it is city planning, traffic congestion or trash collection. I think that social businesses can certainly help in this regard. But I think we also need to be careful of using social enterprises for business purposes, which we have seen happen. The government needs to take care of that; it needs to make sure that the people are protected. It needs to make sure that social enterprises represent social enterprises. Right now you don’t really have a business registration for that. You can register a business or an NGO, but you don’t really have anything in between.
Complaints have arisen across the country of a widening skills gap. What needs to be done to curb this situation, and what initiatives does CAMFEBA propose to narrow the gap?
What I’ve seen after 10 years of working in the issue is that there is an enormous amount of study out there and there is less action. In the last four years, the Ministry of Education has done remarkable changes into the primary and secondary education systems, which has helped produced better professionals with better skills. Unfortunately, we haven’t seen many changes in technical and vocational training, despite great initiatives like the Cambodian Culinary Institute.
In a number of industries, especially the banking, telecom and hotel sectors, people are being trained to high standards. But we do need more action. We need more training institutes set up by the private sector; institutions like CamEd Business School and the American University of Phnom Penh, which have been doing a superb job in training the new generations of professionals.