The government has introduced the fourth round of stimulus measures aimed at ensuring economic and social stability during the outbreak of the Covid-19 disease.
The move, which was announced on Tuesday, is designed to help businesses, factories and enterprises to stay afloat while reducing the burden on poor people through social assistance programmes.
“The fourth round of measures also focuses on helping to rehabilitate and boost business possibilities and allow businesses to contribute to economic growth in the post-crisis context,” a government statement said.
The government will ease the practice of withholding tax for local and foreign lenders. For new loans, it has decided to reduce the withholding tax rate on banks and microfinance
institutions from external and domestic sources to five per cent (borrowed from countries with agreements on Double Tax Avoidance (DTA) and the prevention of fiscal evasion and borrowing from non-DTA countries) for 2020.
The government will also lower withholding tax rates on banks and microfinance institutions from both external and domestic sources to 10 per cent (both loans from DTAs and non-existing countries) for 2021 and adjust the withholding tax rates on banks and microfinance institutions from both external and domestic sources to normal levels in 2022.
For finance sources for working capital, the Ministry of Economy and Finance will set up a “Credit Guarantee Fund” with a budget of $200 million.
The fund can secure loans using market principles to help alleviate cash flow and working capital bottlenecks of businesses in all sectors, creating at least $2 billion.
The Ministry of Economy and Finance will also allocate $300 million in additional financing to act as a catalyst to boost growth in key sectors during the crisis and thereafter.
The government has decided to expand the coverage and budget volume for the “Cash for Work” programme in 2020 to $100 million to absorb unemployed workers from factories and workers returning home from abroad.
This is expected to be achieved through local micro infrastructure and construction projects aimed at promoting agriculture and sustaining the economy.
Minister of Economy and Finance Aun Pornmoniroth said on Monday that the series of measures will stabilise seriously affected businesses and improve the lives of workers, employees and the general population.
“We have already put in place three rounds of measures already to help the private sector survive, especially in key sectors such as tourism, aviation and textiles.
“We have also stabilised the lives of workers from these sectors through fiscal exemptions – allowing them not to contribute towards employment and healthcare risks – and credit waivers,” he said.
The government also plans to launch social assistance programmes to alleviate hardship and stabilise people’s lives through cash transfers to poor families. This will be done through the “Cash for Work” programme and short-term vocational training.
Royal Academy of Cambodia economics researcher Hong Vanak said the fourth round of measures will help the private sector maintain business balance.
“The measures are always to help the people, especially the business sector because all businessmen are looking forward to government support during this time, but if Covid-19 continues to linger, the government will find it hard to help them,” he said.
A social assistance programme to help poor families and vulnerable groups with equity cards throughout the country is also underway with a special focus on children under the age of five, disabled people, people from 60 years and older, and people living with HIV.
The government will also launch the first step of the IT Business Registration Platform in early June to promote the registration of companies, in particular those that intend to apply for loans from the government’s special financing programme.