To commemorate the 40th anniversary of the re-introduction of riels in Cambodia, a team of journalists were sent to five provinces to ask the nation’s traders, farmers and others their thoughts and feelings on the national currency outside Phnom Penh.
Over the last forty years, Cambodia has become a vibrant and emerging economy, with its local currency the Khmer riel playing a more prominent role than ever before. A currency that is only circulated through paper notes has been recording ever-increasing levels of circulation in the Kingdom’s rural provinces, major towns and capital city alike.
This increased level of circulation has resulted in wallets, and purses bulging with dozens of notes – ranging from the crisply-minted to the well-used and filthy. But still to many people, the riel is simply small change. Almost all significant transactions are priced – and paid for – in US dollars. For the visitor it starts with the visa fee on arrival at the airport. But it continues everywhere else in the country.
Everyone knows the exchange rate – 4,000 to the dollar – give or take the odd hundred Riel. It’s been that way since at least the start of the century – so people are actually fairly relaxed about taking payments in either currency.
It’s a system that seems to keep everyone happy. And when you look at the history, it’s easy to understand why.
Cambodia didn’t have a currency of any kind in the late 1970s – when the ultra-Maoist Khmer Rouge banned money, and blew up the national bank.
This event resulted in a severe lack of public confidence in the local currency when and the riel was reintroduced and throughout the 1980s. Such the lack of public confidence that the central bank took extreme measures initially and freely distributed notes to promote circulation throughout the decade.
The revived currency plunged when United Nations forces came to Cambodia in the early 90s – bringing bundles of dollars with them. Eventually the riel settled to a rate of 4,000 riel to a dollar – and a clear role as second fiddle.
The Wall Street Journal published an editorial 10 years ago, making the case for the newly opened Cambodia Stock Exchange to trade in US dollars for its corporate bonds, as an opportunity to embrace full dollarisation. It would, said the paper, attract more foreign investors – who wouldn’t need to worry about currency fluctuations hitting their profits, the way they have in neighbouring Vietnam. But there’s a powerful pro-riel lobby in the government and the National Bank. And they see the Cambodian Stock Exchange as, perhaps, the final opportunity for the riel to make it as an independent currency.
It could all be enormously confusing – or as simple as paying in one currency and getting your change in another. And it’s not as if Cambodia is short of practice in that.
To get a better understanding of the usage and the challenges in the semi urban and rural areas in several provinces revealed some starting facts as follows.
A survey conducted across the five provinces of Kampot, Takeo, Battambang, Kampong Cham and Prey Veng found that 90 percent of Cambodians preferred using riels in their respective provinces for their daily expenses. When asked why, the majority of those surveyed responded said that they are Cambodians, living in Cambodia, so they should use their national currency.
The survey also outlined that in the provinces riels were most popular for day-to-day expenses and purchasing goods at the market, US dollars the most when transacting high-value items such as household appliances, agriculture equipment and motorbikes. Thai baht and Vietnamese dong remained popular for use in provinces that bordered Thailand and Vietnam when trading goods imported from Thailand and Vietnam or exporting products directly to these neighbouring countries.
Moeut Oeu, a housewife in Battambang, said she uses riels for her day-to-day expenses at the market and for small-goods purchases, but she uses US dollars for high-value transactions because riels can be hard to wrap and count in large amounts.
“I use riel notes when buying food and other small things at the market, or for miscellaneous expenses at home or general expenses but will swap to US dollars when I buy high-value items such as motorbikes or jewelry for example,” the housewife said.
Heng Chenda, a farmer in Battambang, said that for trading agriculture products such as rice and corn the Thai baht currency is mostly used.
“We sell our products to traders in Thai baht because the products are imported and exported from Thailand. Accepting Thai baht is easy so we don’t have to worry about losing any money on the exchange rate,” the farmer said.
Un Samoeun, a construction material and equipment seller in Samaki Market in Kampot, said that she accepts all kinds of currencies at her stall, adding that because her business is involved with construction materials, customers prefer using US dollars for her high-value items.
“For my high-value construction materials, I regularly receive $50 and $100 banknotes. However, for lower value purchases, they are mostly paid in riels,” Un said. “I would say that 30 percent of transactions are in riels and 70 percent in US dollars. I regularly receive banknotes for 5,000, 10,000 and 50,000, however, the 100,000 is very rarely seen,” Un added.
Another reason for the changing preference of riels over US dollars is the ever-changing market rate between the two currencies and the common complaint that riels are worth slightly more on the exchange rate than dollars – approximately 50 riels for every $1 more.
Tieng Lin, a 43-year-old crab seller in Kampot, said that she used both riels and US dollars.
“I prefer riels because I don’t have to calculate the ever-changing interest rate when customers want their change. Also, many customers want me to swap 4,000 riels to $1 for their change, meaning I lose around 50 riels every time I accept $1 dollar. I know it’s not a lot but it does add up,” the crab seller said.
However, the most common complaint when speaking to the various traders in all provinces was about the quality and consistency of the banknotes. Many urged the central bank to address the issues of inconsistent size and colour and the physical quality of the notes that can tear easily and age fast, especially when wet.
According to a shop owner in Battambang, riels age much faster than other foreign currencies such as the baht and the US dollar.
“I love using Khmer riels because I am Cambodian. But I want to see our notes to be strong and consistent for use,” he said.
“If possible, I want to ask the government to publish notes that are of high quality and last for a long time. I have seen some of the newly-published banknotes ageing too fast, especially if they get wet,” the shop owner said.
Larch Vit, a 53-year-old tuktuk driver from Takeo, said that he accepts payments in both US dollars and riels. However, he does have a problem with the quality of the riel notes he sometimes has to accept.
“The most common riel notes we use are 500, 1,000 and 5,000 banknotes, with the highest being 20,000 and 50,000 notes. The quality of our notes here are not too bad, but when wet they become very bad. Especially, when comparing the notes with the Vietnamese dong, our notes are not very strong, he said.
“I am Khmer so I want to use my own currency. However, if the customer demands change in US dollars, I have to keep them happy,” the driver said.
However, some in the survey said the banknotes have very similar colours, features and sizes that can be confusing at first, meaning those with bad eyesight must carefully look at each note before accepting it, resulting in market transactions taking a long time.
Huot Sitha a 30-year-old mobile phone seller in Takeo, suggests that the government should print good quality banknotes that do not tear easily when wet and also review the colour of the money and its size because some banknote colours are similar and are easily confused.
Sok Lin a 43-year-old street shop retailer in Kampong Cham, said that if the government wanted more and more payments made in riels then they need to help people learn more about the currency and how to identify real and fake banknotes.
“I have personal experience with being given a fake 10,000 riel banknote. This gave me a lesson and I have now learnt how to identify fake notes. However, even real notes can be hard to distinguish because of similar colours and formats, like the 5,000 and 10,000 riel notes,” Sok said.
The survey found that many liked the banknote features of ancient temples, newly-built achievements such as monuments, bridges, those with portraits of the late king’s father, the Queen Mother and His Majesty the King. With people mostly thinking that the Kingdom’s banknotes looked attractive.
However, Hem Nak a shop owner in Prey Veng, said that she doesn’t understand why all these new banknotes have to be changed and urged the government to keep them the same as before.
“I don’t understand why the government needs to print all newly designed banknotes. It means we have to get used to all these different notes again,” she said.
While Cambodia is still a long way from full de-dollarisation of its economy what our survey found clear is that the popularity and trust of Khmer riels are strong, especially outside the Kingdom’s capital.
Seth Sonin, a grade 10 student at Chrey High School in Battambang, said she’d be happy to see more riels being used in her province and wants to learn more about the national currency.
“I don’t know much about the Khmer riel currency and its history, but I am excited to see the notes being used more widely in my village. Although some people still use Thai baht and US dollars, the riel is becoming more and more popular,” Seth said.
“I hope to learn more about my national currency in our school programme,” the student said as she was sitting with her friends during the school lunch break.
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