Excellencies, Ladies and Gentlemen,
It is my honor and great pleasures to attend the closing ceremony of the Annual Conference of the Ministry of Commerce (MoC), organized to take stock the achievements in 2001 and elaborate work plan for 2002. On behalf of the Royal Government of Cambodia and on my own behalf, I would like to express my high appreciation for the achievement made by the MoC for 2001, and I highly commend the MoC for contributing to the implementation of the political platform and reform programs of the Royal Government of Cambodia in all sectors, especially in successfully implementing the poverty alleviation policy of Cambodia.
We have just celebrated the 23rd Anniversary of the Historical Victory Day over the genocidal regime, 7 January 1979-2002, which Cambodian People were liberalized from the Genocide Pol Pot Regime. The Year 2002 is also the 23rd year of the establishment of the Ministry of Commerce, known as the Ministry of Economy and Household in 1979. Since its establishment, the Ministry of Commerce has actively participated in assisting and rescuing the Cambodian people from starvation by supplying food to people, government officials, and armed forces. Some of our officials have made sacrifice for the noble cause of defending the country against the return of the Pol Pot genocidal regime.
In 2001 the momentum of high economic growth has been maintained since 1979 in both the private and public sectors. Despite in 2001 there was the heaviest flood along with negative impact of the global economic developments, the Royal Government of Cambodia (RGC) still achieved its high economic growth of 5.4 per cent. It is worth noting that some external observers and international financial institutions have recognized the good performance in social development and economic reform undertaken by the RGC. The exchange rate is broadly stable and the inflation rate was brought down to a low level. The high growth was accumulated from the high growth of the manufacturing and industrial, construction, and tourism sectors. The manufacturing sector, especially textile and clothing has displayed dynamism and absorbed a large number of people from the agricultural sector. The Ministry of Commerce has played an important role in fulfilling its mission.
In order to encourage more effort and in striving to achieve further development goal, I would recommend the Ministry of Commerce as following:
1. Trade Legal Affairs
In order to properly operate the free market economy in Cambodia, the establishment of the trade legal framework is an urgent task of the MoC. The comprehensive and transparent legal framework is instrumental in ensuring credibility and confidence of investors and business community in doing their business in Cambodia. It also aims to ensure freedom for investors and producers, while creating conditions for fair competition in Cambodia. Under responsibility and proposals of the Ministry of Commerce, 13 draft laws and 8 protocols of the ASEAN agreements are being processed by the Legal Council and the Council of the Ministers of Cambodia, and they will be adopted by the National Assembly in the near future. This suggests that we will have more comprehensive trade laws around 2002-2004. Recently, the National Assembly of Cambodia had just adopted the Law on Trade Names and Unfair Competition, which is the law highly required by the World Trade Organization and United States of America to protect their investors and businessmen who come to invest and to do business in Cambodia. In finalizing all the draft laws needed, I urge the Ministry of Economy and Finance to closely collaborate with the Ministry of Commerce to seek the technical assistance and foreign experts as soon as possible.
2. Pro-Poor Trade StrategyThe poverty of Cambodian People cannot be alleviated with in a short period of time. The current statistics has shown that the people of Cambodia who live below the poverty line are respectively 39% and 35.9% in 1993 and 1999 of the total population. 90% of the poor are living in the rural areas and depend on the agricultural production. Therefore, the all development plan and policy should be concentrated in the rural areas. In order to develop the agricultural sector, we have to train farmers the production method and new technology, product management, and marketing network. The Ministry of Commerce and the Ministry of Agriculture, Forestry, and Fishery is a couple in developing the agriculture sector and should cooperate with the Chamber of Commerce, Business Association, and Non Governmental Organizations to formulate the National Program for market development as following:- Establishing agriculture equipment and seed supplied association;- Establishing production and processing association- Establishing buyer and exporter association- Establishing the pilot testing development zones for promoting the production and marketing network. This program should cover the following areas:* Providing education and training services on agricultural technique;* Providing marketing information and services;* Providing rural credit to the farmers;* Assisting farmers in market access for their products;* Establishing the producer and farmer association.- Accessing to the domestic and foreign markets for paddy, rice, and other agriculture products. – Establishing whole sale markets and open market in the outskirt of the city and at the main border gates- Diversifying more types of agriculture production, encourage people to produce other crops and animal husbandry in the plateau areas, encouraging the policy of One Village One Product to people by assuring the market access for these products.- Establishing the industrial zones or industrial parks and export processing zones.- Promoting the handicraft manufacture, small and medium enterprises to produce the import substitution products.- Eliminating and dismantling the illegal check points and smuggling activities, which have resulted in the loss of competitive advantages for domestic products, but also the loss of revenue. Market access is the main factor to promote production growth and the growth in agricultural sectors will not promote export unless increasing labor to be able to participate in the process of quality improvement of goods and products to meet market requirements. Marketing and market information are also important to support producers, businessman and investors. Although trade preferences under MFN and GSP scheme provide opportunity to create job and employment in garment industry but such a scheme has not yet brought the development in the agro-industry sector.The strategy for poverty alleviation needs to deeply consider the facilitation in trade strategy. Flexibility in trade policy to gain comparative advantage towards competitiveness is considered as the current objectives and future goal. The Government is promoting the expansion of exports diversity of domestic products. The Government is encouraging to create markets in villages, communes, wholesaling markets, markets along the borders, international markets and overseas markets for its products.
Have efficiently implemented the export promotion policy (more than $US1billion exported from Cambodia since 2000), is participating in the poverty alleviation in Cambodia. With more than $US1 billions export, international communities, particularly the donor communities such as WTO, ITC, IMF, WB, UNTACD UNDP have decided to select Cambodia as a pilot country in implementing the trade strategy for pro-poor trade sector strategy among the three LDCs-Cambodia, Madagascar and Mauritania.
3. Three pillars of trade strategy for poverty alleviation The analysis of the sub-sectors mentioned above has indicated that the formation of trade strategy to support the pro-poor trade sector strategy relying on three pillars:
- The change of the policy balance from targeting the market access and macroeconomic reform in trade to focusing on the supply-side capacity;Taking into account the productivity of exporting enterprises and exporting sector;
- Taking into account the geographical production areas and decentralision of trade in Cambodia.
The consideration on the market access and the macroeconomic environment for trade is regarded as the creation of the country’s comparative advantage that is a significant condition to the successful economic integration into the world economies but it is not enough yet. The development process in many countries shows that the transfer from exporting potential to actual exporting business cannot automatically occur. It is because of the absence of the supply capacity resulted from other micro-economic impacts on the establishment and the expansion of exporting business and competitive export products. Therefore, it is necessary to move from the concentration on comparative advantage to the competitiveness of enterprises.
4. Continuing the process of economic integration into region and world economies for market access.The Royal Government will continue integrating Cambodia’s economy into the regional and global economies to gain market access for Cambodia’s products. On April 02, 2001 I signed a Decision No.15 SSR on the establishment of a negotiation team for Cambodia’s accession into WTO of which H.E. Mr. CHAM PRASIDH is appointed as the leader. Cambodia’s delegation started the first round of negotiation for accession from 08 to 28 May 2001 in Geneva, Switzerland. After examining the report on the outcome of the negotiation process and in order to facilitate and accelerate the documentation submitted to the WTO secretariat, I signed another Decision No. 54 SSR dated 29 August 2001, on the establishment of a negotiation team for Cambodia’s accession into WTO, composed of 100 members from 27 different ministries. The main duty for the team members is to regularly attend every meeting scheduled by the leader to share and file up the views and comments on related documents in order to timely respond to WTO secretariat. During the formal visit to Cambodia of H.E. Mr. MIKE MOORE, Director General of WTO, at the end of November 2001 in Phnom Penh, Cambodia submitted the relevant documents to WTO secretariat and was informed that Cambodia could start the second round of accession negotiation in mid February 2002. I decided to appoint H.E. Mr. CHAM PRASIDH, the Minister of Commerce to lead the Cambodia’s delegation leaving for Geneva, Switzerland from 07 to 17 February 2002 for this mission.The Ministry of Commerce has to continue strengthening and expanding the cooperation on trade with other countries, particularly to extend the validity of the textile agreement with US, Canada and EU and seeking new trade agreements with the Republic of Turkey, the Republic of Korea, Argentina, Pakistan and Ukraine. At the present, most goods exported under MFN and GSP scheme are only the textile products and footwear. Currently, Cambodia is unable to export the agricultural products or agricultural processed products, though under the above preferential systems, the developed countries have opened their markets for the import of more than 6,000 items produced in Cambodia to those countries with low tariff rates or without tariff and this is the substantial potential for Cambodia.
For the trade cooperation in sub-region, the Royal Government issues a policy to establish the markets along the Cambodia-Vietnam and Cambodia-Thailand borders to improve the living standard of the people over there through the exchange of goods in form of small business.
5. Cambodia-Thailand Economic Cooperation During the visit to Cambodia of H.E. CHUON LEEKPAI, Prime Minister of Thailand H.E. CHUON LEEKPAI and myself agreed that the economic cooperation between the two countries is the most important and urgent to develop the potential of the two countries. From this, a bilateral agreement named Agreement on Economic Cooperation between the Royal Government of Cambodia and the Royal Government of Thailand was signed by the Ministers of Foreign Affairs of the two countries On June 2001. Meanwhile, a joint committee on Cambodia-Thailand economic cooperation was established under the sub-decree No.101ANR dated 01 October 2001 of which H.E. Mr. CHAM PRASIDH, the Minister of Commerce, is the chairman.This Committee finished its third report of Study on Action Plan on 12 December 2001. The report would be submitted to the heads of both governments for approval and the Action Plan would be jointly implemented commencing from 2002 to 2020. Ministries who are the members of the Committee are required to establish their own respective Working Groups in order to participate in the implementation of the Action Plan to develop the common areas. Nine provinces of Cambodia: Preah Vihear, Siem Reap, Uddar Meanchey, Banttey Meanchey, Battambang, Pailin, Pursat, Koh Kong and Kampong Som will also prepare to join the Action Plan.The main purpose of the economic cooperation between Cambodia and Thailand is to jointly develop the economies in the areas of trade, investment, industries, processing industries and tourism by using the common potentials of both sides…etc. Geographically, the Action Plan includes the total land area of 133,000 Km2 in which 55% is in Cambodia side and 45% is in Thailand side. People who are now living in this area is 10 millions of which Cambodian people is approximately 3 millions.Currently, Thailand and other countries in Asia have lost their GSP Status completely or partly on various products granted by European Union and the United State. To maintain their competitiveness and markets, Thailand and other Asian countries may cooperate with us by moving their factories to be installed in our export processing zones, which will be established by the Committee. This kind of cooperation will benefit both sides because the produced items will be recognized that they originate from Cambodia where the country is receiving GSP Status from the European Union and United States. On the other hand, Cambodia may produce its agricultural materials for the factories’ need or participate as labour to work in the established export processing zones which enable them to earn their incomes for their living.
Export processing zone development is the main priority for economic cooperation between Cambodia and Thailand. We hope that the export processing zones may attract a lot of investors from Thai companies and companies from other countries. The Committee has selected two priority places, namely Koh Kong and Poy Pet for initial preparation of the export processing zones in near future. Subsequently, other preparations will be extended to Pailin and Komreing.
6. Product Quality Control and Inspection Products circulated in the markets as well as products exported and imported need to be controlled and inspected on their quality and quantity. Good work has been done by the CAMCONTROL Department in the past few years. We have noticed substantial reduction of bad and infected quality products into our country. Therefore, CAMCONTROL Department has to strengthen more tightly to control the import and export of goods and suppress the smuggling of the infected goods, bad quality and goods with expired date, which may affect the consumers’ health. In addition, measures should be introduced to prevent trademarks infringement by using ban of import, watchdog measure and suppression of the fake goods circulated in the markets, required by the Law on Trademarks and Unfair Competition, which was recently adopted by the National Assembly.
After Cambodia acceded the ASEAN, harmonization of standard and product quality under the ASEAN Framework has been considered in order to have a common standard and mutual recognition to assess conformity of the products. It requires the Ministry of Commerce and the relevant Ministries to conduct training for officials and formulate a uniformed policy on standard.
7. Human Resources DevelopmentThe Ministry of Commerce has done a good job in this area. Referring to the report, the Ministry of Commerce has conducted many training courses for its officials in the areas of English, Japanese, accounting, free market economy, commercial law, computer, product quality, intellectual property and courses related to the ASEAN and WTO affairs….etc. As clearly indicated, the Ministry of Commerce always focuses on human resources development. As a result, the Ministry of Commerce has had numerous qualified officials to perform its tasks.
Meanwhile, I would like to appreciate other jobs done by the Ministry of Commerce in the year 2000 and its guidelines for the year 2001, requiring the provincial departments to conduct the training courses as mentioned above for their staff, staff from relevant provincial authorities, students, businessmen, farmers and staff of the NGOs with free of charge.
8. Administrative Reform and Implementation of Decentralization Policy. In order to put into practice good governance, the Ministry of Commerce has defined the year 2002 as the year of decentralization and reduction of the administrative procedures. On 25 January 2001, I issued the Declaration No. 07 ANK on Establishment of Working Groups for various sectors to discuss with private sectors and H.E. CHAM Prasidh, Minister of Commerce, was appointed chairman of Working Group on Production and Processing for Export. This Working Group is tasked to discuss and exchange ideas with private sectors in order to identify the problem areas and streamline administrative procedures in issuing the certificates of rule of origin (C/O), (C/I), company registration procedures aiming to encourage and attract more new investors. In order to really streamline procedures, I signed the Sub-Decree No. 70 ANK dated 27 July 2001 on the appointment of H.E. CHAM Prasidh, Minister of Commerce as Vice Chairman of CDC in charge of private investment. Moreover, at the second Government-Private Sector Forum held at Inter-Continental Hotel on 6 August 2001, H.E. CHAM Prasidh as Minister of Commerce and the Vice Chairman of CDC decided to streamline the stages of inspection for the import of raw materials, machineries, export of goods from 4 stages to 2 stages. In this regard, I wish to reiterate that the Ministry and the relevant institutions completely eliminate bribes in issuance export and import procedures because it badly impacts on national economic development and it causes traders and manufacturers lost competition in the world market.
I wish also to express my appreciation for reforming the income quota management system by allowing for payment in cross-check that led to the reduction of money circulation, ensuring the fast payment, and stabilize the exchange rate. As part of the decentralization exercise, it is better to allow the provincial or the municipal Trade Department to process the registration application for companies based in its area, since once established, farmer associations, production communities, and companies in the province are not able to come to Phnom Penh for their registration. Moreover, to establish an office HQ, the companies must be also registered in the provincial Trade Department with the approval of the local authority.
9- Export Promotion for Cambodian Employment The Ministry of Commerce plays a crucial role in seeking employment for Cambodian people, currently we have almost 220,000 people working garment industry and the investors spend almost $15 millions every month for employment salary. Although 38 factories completely closed, but most of the big factories are enlarging their production networks, for instance, SAM HAN Factory located in TUOL SANGKE, RUSSEI KEO District, currently has almost 10,000 workers. It is important for us to provide vocational training to our workers so that they will be able to replace some 3,000 skilled foreign workers. Every year the Ministry of Commerce (MoC) in cooperation with the Ministry of Labor, Social Affairs, Vocational Training, and Youth Rehabilitation (MOLSAVY), the Ministry of Mine and Energy, and the Garment Manufacturers Association of Cambodia (GMAC) have together solved the disputes between the employees and employers in protecting rights and improve the welfare of the workers, as a results the US has expressed their appreciation to the efforts and granted Cambodia 9% quota reward every year. Recently, HE CHAM PRASIDH represented Cambodian Government and US Ambassador represented the US government have signed an MoU to extend the Bilateral Textile Agreement for the next three years (2004).This agreement increased the quantity of quota in 2001 by 15% for wool and man made fiber, 10% for wool, and 22% for cotton T-shirt. Exports from Cambodia to EU market (Banana, rice and sugar) are completely tax-free. Japan and Canada are considering the exemption for some of Cambodian products. This is critical in ensuring sustainability of the production and exports. This sector in 2001 earned R74 billions Riels ($19 millions) for the national budget, which the government could allocate this money for priority sectors development such as roads, education, and rural development. As I reiterated several times that the year 2002 is the 4th of the second term of office of our government established following the 1998 elections. The MoC also considers this year as the year of decentralization and streamlined procedures. Today, as nationwide commune election campaign get started, I wish to take this opportunity to call on all Cambodians to vote and to choose capable representatives to lead their own commune and sangkat. In fact, in 2002 Cambodia will face new challenges in terms of trade competition, as China become a member of WTO and Vietnam has just gotten NTR (Normal Trade Relation) from the US. And it is not easy for a country like Cambodia to rehabilitate and build up the infrastructures for just only two years of full peace. In 2002 Cambodia will be honored to host the 8th ASEAN Summit, the 1st Summit of Greater Mekong Sub-region (GMS), the 11th Ministerial Meeting of GMS and the 4th Ministerial Meeting on ASEAN-Mekong Basin Development Cooperation (AMBDC) etc. While we have sources limited, we have a lot of work to be done and we have to do it successfully. So in order to achieve our goal, we have to maximize our exports while the imported countries lowered their tariff rate or exempted; prompted integration of Cambodian economy into the region and the globe in order to take advantage from this rare golden opportunities. I firmly believe that the Ministry of Commerce will be able to cope with the tasks, and directions determined by this conference for 2002. I hope that HE CHAM PRASIDH will successfully fulfill his tasks as the Minister of Commerce, as a Vice Chairman of CDC in charge of Private Investment, as the Minister in charge of GMS, as the ASEAN Economic Minister, as the Chairman of the Working Group on Refining Industry for Export, Chairman of the Committee on Directing Intra-ministries, Policy and Strategy for Poverty Alleviation, as the Chairman of the Committee on Facilitating the Intellectual Property Rights, as the Chairman of Quota Management Committee, as the Chairman of the Intra-Ministries Committee on the Facilitating of Quality Management and Services, as the Chairman of the Committee on the Cambodian-Thai Economic Cooperation, as the Chairman of the Committee on Foreign Assistance, and as the Chief Negotiator of WTO and responsibilities as he has done the last few years. The RGC and myself has confident that the MOC will display its commitment in implementing the RGC’s political platform and turn it into reality. The government is committed to pay attention to trade liberalization, free movement of goods within the country, enhancing foreign trade, and Cambodia’s integration into the region and world trade system. This will pull our people from the vicious circle of poverty.
Finally, as I express our appreciation to HE CHAM PRASIDH and MoC officials, I am pleased to grant a 3-percent bonus to the MOC. This money can be used to purchase equipment for the lab and office supply. I wish also to deliver medals to MoC officials in recognition for their achievements. May I wish you all with five gem Buddha’s wishes and declare the conference closed.