Stress and Debts Rising as COVID-19 Ravages the Economy
- Cambodianess
- April 21, 2020 1:50 AM
The Coronavirus Disease 2019 (COVID-19) health crisis has plunged many businesses deep into debt, with some on the verge of bankruptcy. A lot of people are facing unemployment with insufficient monthly income, but there is another aspect to the issue. The complicated entanglement of debts between numerous parties, whether it is a form of business investment or just trying to help each other during a hard time. Samnang and Sothie have heard plenty of stories that revolve around debts during the COVID-19 epidemic.
Sothie: Hey Samnang! Recently, has there been many people who don’t return the money they owe you?
Samnang: Are you trying to mock me by asking this question? Do I look like a person who has a tremendous surplus of money to go about lending to other people? I, myself, also borrow money from others.
Sothie: Nah, I was just kidding! I have heard a lot of stories about debts lately. Have you heard the same thing?
Samnang: I have never went through a single day without hearing those complaints, since the spread of COVID-19. There are actually two sides to the issue. The first side is the debtors who owe their money to the banks or the financial institutions. The second side is between businesses owners who owe each other money in regard to their businesses. Sometimes, when lending any amount of money, formal and reliable documentation is needed to represent the transaction. However, due to trust and friendship, some people lend their money without any form of reliable documentation. As soon as COVID-19 became such a powerful force, some debtors have struggled to pay back their creditors, whereas others just pretend that nothing has happened.
Sothie: Is not that bad news for the creditors?
Samnang: This issue has rendered some creditors unspeakable. Some are losing their minds. Upon request, debtors are responding to creditors by saying that they have no money, that the economy is hard, sales have declined or the owners are not available at the moment and other related excuses.
Sothie: Are there any debtors who just pretend not to pay back their debts?
Samnang: Well, I can’t say it’s rare, the COVID-19 outbreak can be a great excuse for some people to avoid paying what they owed. There are many people with this kind of mindset and attitude.
Sothie: Samnang, however there are still some people out there who honestly lack their financials during this crisis. Is that not true?
Samnang: Of course, there are people who really are facing dead-ends, unable to return their debts on schedule. What is seen on the outside of some wealthy people does not actually show the entire image. Those wealthy people also experience hard times in maintaining their revenue streams.
Sothie: So, what should be done if the debtors keep delaying or avoiding returning back the money they owed?
Samnang: If formal documentation has been signed, the creditors will have the advantage to further request back the money, or even file a complaint. However, if no formal documentations were made, things can get a bit more complicated. Some people are quick to exploit a legal loophole. As you can see, in Cambodia the majority of business owners lend and borrow money without the use of formal documentation. They simply put more trust on their words rather than an actual and reliable piece of paper. Which means that those debtors who fail to keep up with repayments will be less trusted during the aftermath of the pandemic. Those people might not be able to do businesses with others anymore. It’s a very difficult time to discern who has been financially affected by the pandemic and to what extent.
