The prolonged spread of Covid-19 continues to dismantle the Cambodian restaurant industry. New research from the Cambodia Restaurant Association (CRA) shows sales have been decimated by the pandemic, falling 50% last year from 2019 and now 60% below 2020 levels.
This represents a cumulative decrease of 80% from 2019-2021.
Speaking at the “First Restaurant Taxation Webinar” on August 23, ARC President Arnaud Darc cited a long list of issues hampering the industry, as reported by restaurant owners during of the last 16 months.
Some of them are the sharp lack of consumer demand brought on by Covid-19, the imposition of rules that have forced catering establishments to change the way they do business, and a trend towards working from home that has practically eliminated lunch time. crowd for traditional restaurants and quick service restaurants (QSR).
The CRA estimates that the share of consumers dining at sit-down restaurants has fallen by 85% since the start of the pandemic, he said. “We note that traffic is not just a movement[ing] take out – we estimate that only 16% ordered more to replace meals in traditional restaurants.
Darc said the reverberation effects felt on the Kingdom’s restaurant scene have been devastating for owners and workers. The industry has essentially shut down, pressuring companies to turn around and figure out how to add curbside collection and delivery to operations, turn their kitchens into “ghost kitchens” and make kits. of meals, he said.
“We can’t change the crisis, the closures or the course it’s going to take, but they can and have changed their operations and will likely continue to do so long after this pandemic is over.
“While the restaurant industry has been affected by the pandemic, note that the actual impacts may be difficult to measure as the effects have been far from evenly distributed,” said Darc.
On the flip side, he said, street food carts, fast food outlets and over-the-counter food services are some of the businesses that are better at coping with current circumstances, mainly because of the need. reduced staff, as well as the affordability of their products and how easy they are to package.
“Since the start of the pandemic, half of SMEs [small- and medium-sized enterprises] in our industry are gone and we still expect to see more closures in the near future, ”he said.
Chairing the webinar, Eng Ratana, director of the Large Taxpayers Department of the General Tax Directorate of the Ministry of Economy and Finance, noted that economic activity has suffered a slowdown due to Covid and that the restaurant industry was no exception.
To address the setbacks of the crisis and help business leaders in these difficult times, the government has adopted a number of response measures, he said.
“The economic situation has deteriorated considerably and has seriously affected the collection of tax revenues. However, we appreciate the private sector for nonetheless complying with the law and paying responsibly and on time. ”
Anthony Galliano, CEO of Cambodian Investment Management Holding Co Ltd (CIM Holding), said the hospitality sector is shrinking rapidly, despite government backing, and stressed that there must be a stimulus package that includes tax incentives to stimulate investment that promotes longevity and sustainability.
The “silver bullet” could be to refine the status of small taxpayer, which offers substantial tax advantages and benefits, he said, noting that although this is not stated in the law, it is virtually impossible for foreigners to register as small taxpayers.
Since small taxpayers charge 10 percent value added tax (VAT) but only pay more than two percent, do not pay withholding tax except on rent and wages, have a tax form simple, have lower profit tax levels, lower patent tax and are not subject to audits, this might be the most appropriate model to jumpstart the industry, he suggested.
“The government should consider allowing foreigners in practice in this category, extending the threshold to $ 500,000 of income and allowing limited liability companies as a means of resuscitating the industry, encouraging investment and to promote sustainability in an industry that has a 60 percent failure rate at the best of times, ”said Galliano.