Wednesday 16, 2019

Statement of Young Entrepreneurs Association of Cambodia on Prakas No. 443 BP / BK on the payment of seniority indemnity

Statement on Prakas No. 443 / BKDN on Payment of Seniority Indemnity On September 21, 2018, the Ministry of Labor and Vocational Training issued Prakas No. 443 on settlement of Seniority Indemnity, implementing the provisions of Royal Decree No 618/010 dated 26 June 2018 which implement some of the provisions in Chapter 4 of the Kingdom of Cambodia's Labor Law. Young Entrepreneurs Association of Cambodia (YEAC) expresses its serious concern about the impact of the Prakas on private sector and entrepreneurs, as well as the investment environment in Cambodia, in particular, the adverse impact on Small and Medium Enterprises (SMEs) of our association. Before the Prakas was endorsed, we received information and sent our representatives to participate in workshop with employer federations and business associations. We expressed specific concerns, especially regarding to the obligation of seniority indemnity in expanse of execution of such obligations retroactively, which would impact on the sustainability of companies and businesses. Employer federations and business associations reminded participants at the workshop that the content of this draft is confidential and only aiming to raise concerns or feedbacks to serve as inputs to be taken for discussion in the upcoming tripartite consultation meeting. Sadly, the tripartite consultation meeting or a public-private meeting was neither existed to raise their concerns nor comments from our members and other stakeholders such as YEAC prior to the declaration of this Prakas. In current Cambodia situation, there are abundant of national holidays and annual leaves, and employees are still at a low level of productivity compared to most ASEAN countries, especially our members, as SMEs have to spend huge amounts on holidays and trainings to increase the productivity of the labor force. Requiring a company to pay a seniority indemnity retroactively to its workers creates an unprecedented and excessive financial burden. While our members as SMEs are putting a lot of effort to comply with the laws as well as supporting government's policies and contributing to the economy's prosperity, but we are increasingly incurring the burden of spending and losing more competitiveness with outnumber companies which are not registered at Ministry of Labor and Vocational Training. The implementation of this regulation as retroactively causes serious concerns for companies and investors who wish to invest in Cambodia in the future since such a retroactively formula regulation is a sign that rules regarding investment and business (the ability of businesses to plan ahead) in the country subject to change beyond the agreement unexpectedly and can be applied retroactive effect. The introduction of new laws or regulations such as Prakas No. 443 and 2 times monthly payment, etc., are the cost with lack of sufficient dialogue with private partners. We concern about the negative impact on investment in the future in Cambodia, as well as the opportunity to create new jobs and the long-term economic growth of the government. Moreover, it seems to be the opposite to the commitment of government in encouraging SMEs through tax incentives or tax exemptions, and other recent measures of the government. YEAC states that we support the seniority indemnity for workers from 2019 onward, but we are deeply concerned about the obligation to pay seniority indemnity retroactively. Therefore, we hope that Ministry of Labor and Vocational Training, as well as the Royal Government of Cambodia will facilitate and consider our concerns on Prakas 443 to encourage companies those who have complied with laws as well as attracting unregistered companies to register in order to create a good business environment and a fair competition environment. Phnom Penh October 05, 2018 Young Entrepreneurs Association of Cambodia