Opening Address at the 2012 Cambodia Outlook Conference:
A Partnership of CDRI and ANZ Royal Bank
“Cambodia’s Priorities for Inclusive growth, Regional Integration and ASEAN Leadership”
Phnom Penh, February 16, 2012
Excellencies, Ladies and Gentlemen
It is my great pleasure today to preside over the opening of the 2012 Cambodia Outlook Conference on the very timely and updated theme of ”Cambodia’s Priorities for Inclusive Growth, Regional Integration and ASEAN Leadership”. This
is the sixth occasion on which I have had the pleasure of delivering
the opening keynote address, and I would like to again congratulate CDRI
and ANZ Royal Bank on their initiative in hosting this important annual
conference, which brings
together officials from the Royal Government, and senior
representatives of the private sector, the research community, civil
society and international development partners to consider Cambodia’s
achievements and the challenges we face, and how we can work together to
meet those challenges for the benefit of our nation.
This morning I would like to address the three
related aspects of the conference theme – first the current state of
the Cambodian economy and our socio-economic development, and why
inclusive growth is so important to the government, the private sector
and Cambodian communities, especially the young, the poor and the
vulnerable; second, why regional integration, in our Greater Mekong
Sub-region, in ASEAN and in the broader East Asian region is critical to
achieving our growth and development aspirations; and finally, what
Cambodia hopes to achieve as we assume the Chair of ASEAN for 2012 – for
Cambodia and for our region.
Cambodia
last held the Chair of ASEAN a decade ago, in 2002. As we assume this
great honour and responsibility again in 2012, we do so in a very
different world, in a very different region, and in a very different
Cambodia. Overall, Cambodia and our region have been changed
dramatically. Our Asian region is now at the centre of the global
economy, with East Asia, and ASEAN at its core, the main driver of
growth and economic prosperity. For instance, Cambodia experienced very
high growth, which is a fundamental instrument for socio-economic
development and poverty reduction, after the setback of the global
financial crisis and economic downturn of 2008-9. This would result from
sound macro-economic management.
As
Cambodia assumes the Chair of ASEAN we are well placed to step up to
meet the responsibilities of global and regional citizenship. We
enthusiastically accept these responsibilities in both the chairing of
ASEAN at a regional level, and in our quest to achieve a non-permanent
seat on the Security Council of the United Nations at a global level.
Cambodia
has made a strong and sustained recovery from the crisis, with a return
to annual GDP growth of almost 7 per cent. Growth for 2011 has recently
been revised upward from 6.4% to 6.9% of GDP. The future outlook for
Cambodia is positive – the economy is projected to grow between 6% and
7% annually over the medium term. It is expected that Cambodia will
benefit from future global investment and credit flows which will
favours Asia due to the weakening of demand in the other parts of the
world. The growth of the traditional US and EU markets could remain
below its earlier trend at least for some time. With the growing
regional cooperation and integration and faster growth of the Asian
economies, Asian markets could offer more prospects of export and income
growth to Cambodia. Thus, we have to diversify Cambodia’s economic
structure to focus not only on serving the US and EU markets, but also
Asian market.
International
price for both oil and non-oil commodities continue to rise in 2011,
partly in response to strong global demand and the situation in the
Middle East, but also due to supply shocks for selected commodities.
Despite that, in 2011, Cambodia’s inflation has maintained an annual
average at around 5.5%. However, in the coming years, we need to
carefully watch the inflation as rapid rise of regional inflationary
pressures coupled with the hike in food and oil prices could have an
adverse spillover into our domestic economy disturbing macroeconomic
stability
Real sectors of Cambodian economy are on the strong path of recovery. Agriculture,
which has maintained sound growth even during the crisis, in 2011 grew
at around 3.3% slightly lower than 4% in 2010. Asia's demand for
agricultural products is set to grow rapidly. This would result with the
prevailing high prices of food and persisting food security concerns.
Price of raw materials for industrial use, for instance rubber, also
expected to increase along with the increased trend of oil prices. The
changing economic environment and its implications for food supply will
likely also increase demand for agricultural products. Taking all this
factors into account, the agricultural sector projected to maintain good
performance in 2012 and in medium term. Agricultural product exports,
including rice exports, are expected to increase owing to high priority
has been given to this sector by the Royal Government.
Industry
grew by 14.3% in 2011 as compared to negative growth of -9.5% in 2009
and positive growth of 13.6% in 2010. Main subsector, which underpins
the growth in the industry sector, is the garment exports, which
increased by 20.2% in 2011. Industry sector expected to grow robustly in
2012 as the textile exports projected to rise further as the result of
the EU’s “Everything But Arms” initiatives, where Cambodian garment
exports, as from 1st of January 2011, will be subject to 0% of customs
duties (compared to 12% previously).
The services
sector expanded to 5% of GDP in 2011, supported by good performance in
the tourism sector. Tourists' arrival into Cambodia increased by 15% in
2011 and reached around 2.88 million. In 2012, service projected to grow
at around 5.7%. The government plans to develop a comprehensive tourism
policy to transform the tourism industry to a high value added sector
with linkages to the domestic economy.
Overall,
the Cambodian economy is performing well. But we cannot afford to be
complacent. The global economic and financial situation remains
precarious, with particular concerns about the European debt crisis and
the health of the European and US economies, both major trading partners
for Cambodia. We must look to ourselves and to our region to strengthen
and diversify our economy, to broaden our markets, and to deepen
regional economic integration to protect ourselves from vulnerability to
future external shocks.
The
lessons of the GFC and its aftermath showed us the way forward if we
are to achieve our aspirations overt the next decade – the maintenance
of political and economic stability, the achievement of strong inclusive
growth of at least 7% per annum, economic diversification to drive
sustainable socio-economic development, further poverty reduction of 1%
per annum, a GDP per capita of more than USD 1,000 by 2013 with the
achievement of lower middle income country status, and graduation from
aid-dependency,. To achieve these goals, Cambodia must focus on the
following policy priorities:
-
The
further development of the agriculture sector, including production and
export promotion, and agri-business, both for rice and other crops;
-
The expansion of industrial manufacturing;
-
The diversification of export products and regional markets;
-
The attraction of high quality trade-oriented investment; and
-
Human resource development to address the mis-match between skills and labour market demands.
Our
primary goal is for a more diversified economic regime, through the
strengthening of key export-oriented sectors such as agriculture and
rural development, light manufacturing, private sector development,
tourism, construction, energy and infrastructure, intra-regional trade
and investment, and success as a major rice exporter to markets in Asia,
Africa and the Middle East, along with the export of other crops, and
associated food processing industries. Last month I stressed to a
meeting of Cambodia’s diplomatic corps that I now see them as ‘Economic
Ambassadors’ for Cambodia, working with us to create opportunities for
quality trade and investment for Cambodia to support our national
development goals.
We
have to understand that why inclusive growth is so important for
Cambodia. Inclusive growth means growth that is broadly based, across
sectors, and with benefits for investors and businesses - large, medium
and small enterprises, benefits flowing to large sections of the country
labour force, benefits for both men and women, for the young, for the
poor and vulnerable, and benefits to the government in terms of revenue
collection to contribute to social development goals in poverty
reduction and the delivery of health, education and social protection
services.
The
most critical factors in achieving inclusive growth for Cambodia will
be – to strengthen our focus on agricultural development to improve
livelihoods in rural Cambodia; to encourage the dynamism and
productivity of our private sector, particularly small and medium
enterprise, and associated foreign and domestic investment to support
economic diversification; to create good jobs for our young population,
and provide skills for young people merging into the labour market
through enterprise and innovative public-private partnership based
vocational education and training to bridge the gap we currently face
between labour market needs and what we can supply.
We
must also continue to work with the private sector to improve the
business environment, using our anti-corruption legislation and the
Anti-Corruption Commission to demonstrate to the nation, to investors
and to the international community that we take anti-corruption measures
seriously, and to improve the hard and soft infrastructure that is
needed for efficient business transactions. We are committed to working
to improve the management of economic land concessions to better promote
productive investment and land use that benefits investors, local
business and local communities.
The
recent adoption of the government’s National Social Protection Strategy
for the Poor and Vulnerable for 2011-15 will also contribute to
ensuring that the benefits of growth and development flow to the poor
and vulnerable through the provision of social protection and social
safety net measures, and a continued effort to move people out of
poverty through local community development, job creation and livelihood
enhancement, and access to health, nutrition and education services for
poor households.
Fundamental
to meeting the challenges of economic diversification and inclusive
growth will be the creation of productive jobs for our young population
and the skills they need to succeed in those jobs. Much is already being
done in the Technical and Vocational Education and Training sector in
Cambodia that should be acknowledged and supported, in both state and
private higher education and TVET institutions. I welcome the fact that
some development agencies have recently made strengthening higher
education and TVET a priority in their Cambodia country strategies in
partnership with the government.
However,
we must take measures to promote the quality and relevance of TVET to
ensure that it is responsive to industry needs. Much of the most
effective and high quality TVET is now being delivered within
enterprises in particular sectors, for example finance and light
manufacturing, with too little cooperation or sharing of models between
the public and private sector. I encourage the public and private sector
to work together to develop innovative approaches to public-private
partnerships in TVET that draw on the experiences of successful local
enterprise or sectoral models. We owe this to the many young Cambodians
who each year enter the labour force and their aspirations for the
future. Therefore, we have to work closer together for the future
development of our nation.
The
integration of Cambodia’s economy into our region will also be critical
to our success. Cambodia’s strategic location in an increasingly
integrated and ‘connected’ Greater Mekong Sub-region, in ASEAN and in
our proximity to China, the world’s second largest economic power and
the world’s largest market for agricultural surpluses is a major asset -
for private sector development and investment, inclusive growth,
socio-economic development and poverty reduction.
The
Cambodian government has demonstrated its strong commitment to the
realization of an ASEAN Economic Community by 2015. We have worked hard,
through our maintenance of an open economy, and our compliance with WTO
accession requirements and specific AEC requirements, to maximize our
preparedness for AEC 2015. On the latest ‘AEC Scorecard’ Cambodia has
achieved more than 70 per cent of the key deliverables required under
the AEC, ranked third behind Singapore and Malaysia. We are currently
also making progress in the computerization of cross-border trade and
customs transactions to achieve further compliance but work still needs
to be done in strengthening the institutional capacity of agencies
responsible for the administration and good governance of cross-border
trade, transport and people flows.
These
efforts will better position Cambodia to reap the benefits of
sub-regional and regional integration, while remaining an open economy
seeking international opportunities for trade and investment both within
and beyond our region. Within this view, as Chair of ASEAN we must lead
by example and demonstrate, through our commitment to ASEAN Economic
Community 2015 and deeper ASEAN and East Asian regional integration,
that we accept both the opportunities and responsibilities that are
involved, by showing that we have nothing to fear from openness and
competition as we strengthen and diversity our economy and build our
nation.
As
we begin this year as ASEAN Chair may I express my congratulations and
gratitude to the President of Indonesia and his team for their fine
leadership of ASEAN in 2011. Much was achieved under their stewardship.
What
is my vision for ASEAN and our priorities as Chair in 2012? Through our
efforts this year, I would like to see an ASEAN that is stronger and
empowered to work more effectively at both the regional and global
levels, with a stronger commitment by its members, and better resources,
with bigger roles for the ASEAN Secretary-General and the Secretariat
as well as continuity between chairmanships. I believe ASEAN should be
playing a more active role in the international issues and I will be
stressing this message when I address the G20 summit in Los Cabos,
Mexico on behalf of ASEAN in June.
I
want to ensure that we maximize the achievement of an ASEAN Economic
Community in 2015 and associated political-security and socio-cultural
community, making our theme of “ASEAN: One Community, One Destiny”
a reality, and ensuring that the peoples of ASEAN, especially its
younger generation, understand and appreciate the value of our unique
approach to regionalism and regional integration, and the strength it
brings us as an influential regional voice in a challenging global
environment.
On
specific priority issues for ASEAN, I want to ensure that, through our
work together in 2012, we build our capacity to sustain growth and
achieve greater prosperity, economic integration, connectivity, and
competitiveness, through the fulfillment of the ASEAN Economic
Community, and by promoting domestic sources of growth and deepening
regional cooperation, particularly through the ASEAN+3 processes, while
remaining open to regional and global economic opportunities.
I
want to achieve a greater role for the private sector in ASEAN
processes and policy making, and better utilisation of the benefits of
ASEAN Free Trade Agreements and bilateral trade and cooperation
relationships.
I
want to strengthen ASEAN as an institution and its resources, through
both intra-ASEAN cooperation, and through resource partnerships with our
regional and international dialogues partners.
I
want to see ASEAN deliver on the ASEAN Charter commitment to alleviate
poverty and narrow the development gap among between ASEAN and its
LDCs (Cambodia, Lao PDR and Myanmar) through mutual assistance and
cooperation, as well as reinvigorating domestic demand and boosting
intra-regional trade.
I
want to utilise the ASEAN Regional Forum, ASEAN+3 and East Asian Summit
processes to promote cooperation, peace and security in the region, to
prevent conflicts and resolve tensions, and to respect and safeguard the
interests of both the big and small nations of our region, while at the
same time working together on nuclear non-proliferation,
anti-terrorism, and the prevention of human trafficking.
I
want to work with our ASEAN partners and others in our region to
support our ASEAN member nation Myanmar to achieve its aspirations and
assume its rightful role in ASEAN and our broader region.
Cambodia
is particularly well placed to play this constructive and responsible
leadership role in ASEAN at this time, and through our responsible
regional and international citizenship, to give back some of what we
have received in support from our regional neighbours and the
international community over the past two decades. We have positive and
cooperative relationships – economic, strategic and people to people,
with our ASEAN neighbours, our broader East Asian neighbours, China,
North and South Korea, and Japan, and with other major players in our
region such as the United States and Australia. I believe with our
commitment and hard work this year we will be able to use these good
relationships to strengthen ASEAN and achieve its goals.
And
finally, today I am pleased to announce that, as Chair of ASEAN,
Cambodia will initiate and host an ASEAN Global Dialogue, to be held in
late 2012 following the East Asia Summit. I plan to invite the Heads of
the major multilateral financial and development organisations,
including the IMF, the World Bank, the Asian Development Bank, the
United Nations and the WTO, to meet together to discuss how these
agencies can work more effectively together with us in the ASEAN and
East Asian region to pursue our shared goals of peace, stability,
sustainable development and prosperity. As I said at the outset, in the
past decade the world has changed, our region has changed, and Cambodia
has changed. It is time for a new dialogue to better reflect and respond
to the centrality of the East Asian region, with ASEAN at its core, in
the global economy.
This
is what I aspire to for Cambodia as we chair ASEAN in 2012. I look
forward to working with my friends and colleagues in Cambodia, the
nations of ASEAN, and its regional and global dialogue partners in
achieving these aspirations.
Once
again, I congratulate the organising partners of the 2012 Cambodia
Outlook Conference, ANZ Royal Bank and CDRI, and look forward to
receiving good policy recommendations and ideas for action generated by
the conference.
To
conclude, I now have great pleasure in declaring the 2012 Cambodia
Outlook Conference open on “Cambodia’s Priorities for Inclusive growth,
Regional Integration and ASEAN Leadership” and I wish the conference a
success in exchanging views and dialogue on the future of Cambodia. I
also wish Excellencies, Ladies and Gentlemen a success in your career.
EndItem
