Cambodia: Industry, markets, investment keys to economic recovery
PHNOM PENH - Robust economic diversification, greater investment in human capital, and promoting inclusive growth to narrow the rural-urban wealth gap can help Cambodia improve its resilience against future economic distress, according to Ajay Chhibber, UN Assistant Secretary-General and UNDP Assistant Administrator and Regional Director for Asia and the Pacific.
He made his remarks at the 4th Cambodia Economic Forum (CEF) this week, during a three-day trip to the country to deepen the partnership between the Royal Government of Cambodia and UNDP in working to reduce poverty in the country.
“The global financial crisis marked a watershed moment for Cambodia. It threatened the reversal, not just of growth and development, but of a process of structural transformation that had offered enormous potential for Cambodia to accelerate its development efforts,” Mr. Chhibber said.
He described as “impressive” Cambodia’s progress in bringing down poverty rate to 30 percent in 2007 from some 47 percent in 1994. But he also stressed that, while achieving this gain, it is equally crucial for Cambodia to ensure that people who have come out of poverty do not fall back into it. This can to be done through intervention of social safety net in the form, for example, of cash transfer and fee exemptions in public health and education services.
“Cambodia’s medium-term economic strategy should be focused on policies and interventions that support inclusive growth, like investing and improving services in the rural economy where most of Cambodia’s poor live and where investment can have the greatest human development impact,” Mr. Chhibber said.
In his speech to the CEF, a high-level dialogue to influence policy direction for future development, he noted that Cambodia’s impressive growth – which was on average 9 percent per annum before the onset of the global recession – has contributed to significant reduction of poverty.
But the recession hit hard on the Cambodian economy, which has so far been powered mainly by garment exports, tourism, and construction sectors. Diversifying beyond these traditional sectors will go a long way to improve the country’s competitiveness and resilience against “adverse exogenous shocks” in the future.
“If the crisis has brought one proposition to global attention, it is this: resilient growth is as important as high growth,” he said. “Resilience comes from greater inclusion, be it of citizens, of groups, of workers or of regions, in the process by which growth is generated,” he added.
“The quicker you can diversify the better. We hope that there will be no more crises, but it is better to be prepared because one never knows what will come out of future direction of the global economy,” he said.
Mr. Chhibber also encouraged Cambodia to expand intra-regional trade to reduce reliance on U.S. and E.U. markets where recovery will be slow to take hold. He said the shifting of economic gravity to Asia, led by growths in China and India, represents a good potential for Cambodia to tap into for its own growth. “This is happening right at Cambodia’s doorstep, and Cambodia should take advantage of this enormous dynamism presented by the growths in China, India, and other parts of Asia,” he said.
One of the outstanding topics of discussions with government officials was a new South-South initiative, which could see UNDP, Cambodia, and China working in a trilateral partnership to pilot development projects that will benefit the people of Cambodia. This followed an agreement UNDP Administrator Helen Clark and China’s Prime Minister Wen Jiabao made at the MDG Summit in New York last year.
Also discussed were key elements of the new UNDP country programme for 2011-2015, which aligns with the Government’s National Strategic Development Plan. An important feature is support to the Government’s 10-year strategy to clear the country of all mines to release land for productive use.
Mr. Chhibber met with Prime Minister Samdech Hun Sen; H.E. Ing Kantha Phavi, Minister of Women’s Affairs; H.E. Aun Porn Moniroth, Minister attached to the Prime Minister, Chairman of the Supreme National Economic Council (SNEC) and Secretary of State of Ministry of Finance; and H.E. Chhieng Yannara, Minister attached to the Prime Minister; other high level officials, development partners; and the UN Country Team in Cambodia.
Ker Munthit, UNDP Cambodia
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