Thursday, 8 September 2016
CAMBODIA: Will Accepting Yuan Attract Chinese Tourists
Cambodia’s government aims to more than double the number of Chinese tourists visiting the country by 2020. China is currently the second-largest source of tourists to Cambodia after Vietnam, with nearly 700,000 Chinese visitors traveling to the country in 2015, according to Cambodia’s Ministry of Tourism.
Although the number has been growing rapidly in recent years, the government wants to boost the arrivals further, to reach about 2 million Chinese tourists per year by 2020. To that end, it is encouraging the use of the Chinese currency, the yuan or the renminbi (RMB), within Cambodia.
“With this decision, Chinese tourists in Cambodia will be spared the hassle of having to go to money exchangers to convert their currency into either the US dollars or the riel,” Tith Chantha, a secretary of state at the tourism ministry, said.
The official noted that the government has also been implementing other measures to make it easier for Chinese nationals to visit the Southeast Asian country. “We are taking a host of steps such as simplifying the visa process for Chinese citizens and increasing the usage of Chinese language at tourist sites,” Chantha said.
Cambodia’s tourism sector already relies heavily on visitors from China, with many hotels and casinos catering to predominantly Chinese tourists.
“More businesses may decide to accept payments in RMB if that makes them more profitable, but the concerns about exchange rate fluctuation and counterfeiting are likely to limit this,” Joseph Lovell of the American Chamber of Commerce in Cambodia, said.
Lovell said that if Chinese tourists knew they could readily use RMB in Cambodia, it might encourage more visits.
Moreover, Phnom Penh has been one of Beijing’s closest allies in the region in recent years. Both countries also share a deep economic engagement, with China emerging as a major source of foreign investment and aid for Cambodia.
Trade volume between the two countries stood at around $4.4 billion in 2015, an 18-percent increase year-on-year. And both sides aim to raise it to about $5 billion by 2017.
And the latest move to accept yuan payments is seen by many as part of the efforts by Prime Minister Hun Sen’s government to deepen Cambodia’s partnership with China.
Still, many in Cambodia view the decision with concern, particularly given that the country’s economy is already heavily dollarized.
It is estimated that the US dollar accounts for some 83 percent of total transactions and over 90 percent of banking deposits in Cambodia. While the widespread use of the dollar has made the country an attractive destination for foreign investment, it has also meant a loss of monetary independence, which leaves the country more vulnerable to swings in the global economy.
Its central bank therefore encouraged Cambodians last year to use the riel. As part of the strategy, it wanted to organize public education and marketing campaigns to raise awareness about the benefits of using the local currency.
Against this backdrop, many are surprised by the government’s recent decision to encourage use of the yuan and fear a negative effect on the central bank’s riel drive.
“Although the decision will bolster bilateral trade relations, it will negatively affect the efforts of Cambodia’s central bank to increase the usage of the riel in domestic transactions,” Chan Sophal, the spokesman for the Cambodian Economic Association (CEA), said.
The announcement on the yuan also drew a negative reaction on social media, with some accusing the government of sufficiently promoting the riel.
This measure is not needed, Serey N. Hum wrote on Facebook. “What the ministry should do is to promote our notes rather than others’ currency notes. If our country provides firm security, good services, good environment (cleanliness); tourists will come,” Serey said.
“It’s gonna be a strategy but it gonna ruin our currency as well. See, Thailand use Baht everywhere and how many tourists they get. Find other ways please,” another Facebook user Leangheang Lim noted.
Leangheang was referring to the fact that Thailand allows only the use of its domestic currency for payments within the country. And still, 7.9 million Chinese tourists visited Thailand in 2015, ten times more than the number of those who traveled to Cambodia.
Analysts therefore believe the issue of currency doesn’t play a major role in terms of attracting more tourists into the country.
“Compared to other Southeast Asian countries, we’re still lagging when it comes to our infrastructure, services and transportation,” underlined CEA spokesperson Sophal. “The government has to pay more attention to these areas if it wants to achieve its goal of boosting the tourism sector on a large scale.”