A woman working at a money exchange shows 500 Cambodian riel notes to photographer in central Phnom Penh March 12, 2011. The much delayed stock exchange regulator Securities and Exchange Commission of Cambodia (SECC) said that all prices of securities will be quoted in local currency riel. Cambodia is highly dollarized and that many foreign investors want to see US dollars quoted in the upcoming bourse. REUTERS/Samrang Pring (CAMBODIA - Tags: POLITICS) - RTR2JSDU

Whoever said it – Mark Twain, Benjamin Disraeli or another casualty of Churchillian Drift – it is a useful attitude to take of there being three types of lies: “lies, damn lies, and statistics.”

It is inescapable if only because the ruling Cambodian People’s Party rarely misses a chance to remind us that under its watch the poverty rate (usually defined as living on less than US$1.90 a day) in Cambodia fell from 53% in 2004 to 20.5% in 2011 and 13.5% in 2014. The government, indeed, ought to be praised for overseeing this, while we must also assign credit to the fact that this has largely been achieved thanks to the proliferation of the free market, with some redistributive elements.

But we must temper our applause. For starters, it is all too easy (and allows one to think the job is almost finished) to assume that just because most Cambodians have exited poverty it means that they have suddenly found prosperity. It does a patient some good to know his condition is critical but not terminal, but it doesn’t give him too much reason for optimism – he is still closer to death than he would want to be. It is just the same when it comes to poverty; the person who leaves the confines of monetarily defined poverty is still closer to destitution than he or she would want, and far closer to destitution than to material comfort.

Controversy broke out last October when the United Nations Development Program, working with the Oxford Poverty and Human Development Initiative, decided to judge Cambodian standards by a newer metric, “multidimensional poverty.” Rather than just income and consumption, this metric takes into consideration health, education, and living standards – and when it was applied to Cambodia, the UN’s report put the poverty rate at 35%. I wrote about this report and the government’s heated response in my Diplomat column published on October 24, 2018.

But another chance to reconsider Cambodia’s poverty rate presented itself this month thanks to a report published this month by the World Bank, “Cambodia Economic Update: Recent economic developments and outlook.” Two choice passages from the report are as follows:

“Poverty reduction continued, but the bottom 40% are doing less well than before.…Though impressive gains continued to be made, the reduction in poverty during 2013-17 was less than during 2009-13, mainly because economic growth benefited the non-poor more, while urban poverty stagnated compared [with] the earlier period. Consumption per capita for the bottom 40% grew at 13% during 2013-17, while it expanded at 22% for the top 60%.…

“There are still many households that are only just above the poverty line and have limited ability to absorb shocks, even small ones. Any negative shock reducing consumption per capita by Cambodian riel 2,000 (US$0.50) would double the poverty rate.”

The first statement isn’t too difficult to comprehend for anyone who has spent some time in Cambodia, especially in Phnom Penh. It is obvious to visitors or residents that wealth inequality is growing (the Asian Development Bank estimates that almost 70% of Cambodians still live on less than $3.20 a day) and that Cambodians have a way of making sure that inequality is as conspicuously demonstrated as possible.

Take a meander around Phnom Penh’s small Diamond Island (Koh Pich). A film released in 2016 about development on this jut of what was farmland only a few years ago, and titled after it, is not only a good indication that Cambodian art has a solid and healthy form of realism to it, but that it isn’t lost on observers that Koh Pich is a physical representation of a place the poor are intended to build but not enjoy – indeed, almost all new major buildings in Cambodia are now for private consumption by the wealthy, whereas the edifices designed by the great Vann Molyvann in the 1960s were intended for public use and enjoyment.

The second quoted statement from the World Bank report ought to be more closely inspected. It should be assumed, I believe, that this comment refers to a reduction of consumption of 50 cents per day, rather than per month or year. But it is unclear of what poverty rate it is referring to. A World Bank update from April was still quoting the poverty rate taken in 2014, which was 13.5% of the population, and which also stated: “Around 4.5 million people remain near-poor, vulnerable to falling back into poverty when exposed to economic and other external shocks.”

I cannot be certain, but it would appear that what the more recent World Bank report means is that the poverty rate could double to 27% of the population if consumption per capita falls by 50 cents a day. Yet it is unclear what this means for the 4.5 million “near-poor” Cambodians (just under a third of the population). In any case, even the most optimistic rendering of the World Bank’s assertion makes for depressing reading. At best, the loss of 50 cents, the price of a can of Coca-Cola, could see poverty levels grow from about a seventh of the population to more than a quarter. At worst, it could thrust half the population back into poverty.

A second query must be made to the World Bank statement, too. My above-stated scenarios rest on the assumption that consumption per capita is relatively equal. But we know, clearly, that it isn’t. The rich consume a disproportionate amount compared with the poor, which affects the national aggregate.

So is the situation graver than the statistics make out? Most likely. For if the rich naturally spend more on consumption, the statistics for how much the poor consume as nationally aggregated is inflated. Is it the case, then, that a reduction of consumption of less than 50 cents for the poor is likely to double the poverty rate? And how much less?

The World Bank informed us back in 2014 that “the loss of just 1,200 riel (about $0.30) per day in income would throw an estimated 3 million Cambodians back into poverty, doubling the poverty rate to 40%.” That was income; the latest statistic is about consumption, though the two might not be too far apart. Whatever the case, we’re talking about fine margins (30-50 US cents), and what most people in the richer parts of the world would consider loose change.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Join the Conversation

13 Comments

  1. Asking questions are really nice thing if you are not understanding anything completely, but this paragraph presents nice understanding even.

  2. It’s a shame you don’t have a donate button! I’d most certainly donate to
    this brilliant blog! I suppose for now i’ll settle for book-marking and adding your
    RSS feed to my Google account. I look forward to new updates and will talk about this blog with my Facebook group.
    Chat soon!

  3. Please let me know if you’re looking for a article writer for
    your weblog. You have some really great posts
    and I believe I would be a good asset. If you ever want to
    take some of the load off, I’d absolutely love to write
    some content for your blog in exchange for a link back to mine.
    Please shoot me an email if interested. Cheers!

  4. Greetings from California! I’m bored to tears at work so I decided to check out your site
    on my iphone during lunch break. I enjoy the information you present here
    and can’t wait to take a look when I get home.
    I’m shocked at how quick your blog loaded on my phone ..
    I’m not even using WIFI, just 3G .. Anyways,
    wonderful blog!

  5. Unquestionably believe that which you said. Your favorite justification appeared to be on the web the easiest thing
    to be aware of. I say to you, I certainly get irked while people consider
    worries that they plainly do not know about.
    You managed to hit the nail upon the top and also defined out the whole thing without having side-effects , people can take a signal.
    Will likely be back to get more. Thanks

  6. Nice post. I was checking continuously this blog
    and I am impressed! Extremely useful information particularly the last part 🙂 I care for such info a lot.

    I was looking for this certain information for a very long
    time. Thank you and best of luck.

  7. Naturally I like your web-site, however you need to test the spelling on quite a few of your posts. A number of them are rife with spelling issues and I find it very troublesome to inform you. Nevertheless I’ll certainly come again again!

  8. you are really a good webmaster. The web site loading speed is amazing.

    It seems that you’re doing any distinctive trick.
    Also, The contents are masterwork. you have done a fantastic job on this matter!

Leave a comment

Your email address will not be published. Required fields are marked *