Ladies and Gentlemen:
Today, I have a great pleasure to participate with your Excellencies, Ladies and Gentlemen, at the closing of trade stocktaking conference of 2006 performance and setting directions for 2007 to be consistent with the policy of the Royal Government which has undertaken various reforms in all sectors aiming at poverty reduction and sustainable development in Cambodia.
Indeed, this trade stock taking conference is of vital importance to review and assess by all of us the implementation of the Royal Government’s policies within the framework of the Rectangular Strategy which considered trade as a source of growth. The conference organized during these past 3 days has provided us with enough opportunity to generate ideas and useful experiences from the participants coming from relevant ministries, institutions and development partners in order to introduce highly effective programs with clear directions in the implementation and to accomplish series of tasks that have been set out in years to come.
In this spirit, I would like to emphasize that the outcomes that we have achieved are the result of the joint efforts by all relevant ministries and institutions, in particular the Ministry of Commerce (MOC) and I would like to take this opportunity to convey my appreciation to the management and all civil servants of the MOC for their very utmost efforts to attract investors, implement trade facilitation initiatives, in particular negotiating with various developed countries to drop down technical barriers and custom tariffs to open the market access for Cambodia to export its goods.
In July 2006, Cambodia signed with the US on Trade and Investment Framework Agreement (TIFA) which has brought more benefit to promote trading sector to another plateau. Indeed, the TIFA is the success of Cambodia in achieving success on investment and other works with a better climate. At the same time, garment, textiles, footwear and exported goods under the GSP/MFN have increased exponentially from just only $20 million in 1996 to $2,586 million in 2006, it can be translated into 124 times increases within 11 years of the GSP/MFN. Moreover, if we compare the year 2005 with 2006, the number of factories in progress increased from 258 in 2005 to 307 in 2006, number of employees increased from 299,500 to 358,000 and total wage increased from about $20 million per month to $25.7 million per month. Employment creation in the garments, textiles and factories in other sectors formed into a force which ensure stability for the Cambodia people and economy for the last several years and absorbed mainly the women labor forces.
The European Union grants duty-free and Quota-free status to Cambodia. Recently, US and other developed countries pledged to grant duty-free status to Cambodia and other fifty developing countries on some 10,000 export items which are mostly agricultural products. Japan also grants the GSP status to Cambodia on 226 items and China and Korea did the same on 380 and 78 items respectively. In addition, the ASEAN Integration System of Preferences (AISP) has also provided Cambodia with some 630 export items that are mostly agricultural products. Whereas, in mid-February 2006, Thailand has considered to provide, under the AISP, another 80 export items to Cambodia. Vietnam also provided, under the AISP, 40 agriculture items.
At the same time, it should be remarked that political stability, peace and safety are the precondition for Cambodia to achieve its economic and social potentials. Moreover, political stability open the great opportunity for Cambodia in developing its social and economic activities in every walk of Cambodian lives.
As a result, Cambodia achieved macroeconomic stabilities and significant economic progresses in which the average economic growth was 8.4% per annum between 1994-2006 and between 1996-2006 the average growth rate was 9.6% per annum. Besides, since 2004 average economic growth rate reached 11.2% per annum, whereas, in 2005 the growth rate peaked at 13.5% and then maintained its stance at 10.4% in 2006. Inflation rate was low at the rate of 3% on average from 1994-2006. The exchange rate was generally stable. International reserves increased ten times from the lowest level of $100 million in 1994 to $1000 million in 2006.
At the same time, the membership of Cambodia in ASEAN and WTO, together with the GMS cooperation and ACMECS and triangle development zones at sub-regional level provided Cambodia with great opportunities to pursuit its investment and external trade regimes reforms. In fact, during the Sixth WTO Ministerial Conference in Hong Kong in the mid-December 2005, advanced countries pledged to gradually reduce and end export subsidies by 2013 and to reduce tariffs on agricultural items and give concession duty exempt on import.
Starting from 2008 onward, developed countries will provide $15,000 million worth of technical assistances to fifty least developed countries (LDC) to develop their trade sector, human resources and expand the productions to upgrade export capacity. Cambodia has received additional aids through the Fourth Prime Minister Summit of Cambodia, Lao PDR and Vietnam (CLV) on the triangle development zone in December 2006 at Dalat, Vietnam, as well as the Third CLV-Japan Foreign Minister Meeting in January 2007 at Cebu, Philippines.
Indeed, all of the above cooperation has been providing more opportunities for Cambodia to pursuit international investment and trade reform through liberalization and decentralization as well as elimination of investment hindrances. Moreover, these cooperation have pressed further reforms and the modernization of national economic structure and management as well as strengthened its competitiveness against regional and international standard.
As I have made some recommendations before that the efforts to open market for exporting the agricultural and industrial products in Cambodia are the real challenges because all the countries in the world also exerted their most efforts in competing to export their products to the international markets. Therefore, by just depending of the reduction of tariff from advanced countries is not enough. In this sense, while the political decision to support and promote Processing sectors for a sustainable export, the Royal Government has issued immediately the trade facilitation programs during the Eight Government-Private Sector Forum, continuously until the Eleventh forum. We have made a lot of improvement in private sector facilitations.
In connection to the trade facilitations, all institutions have been working closely together to address and actively take serious measures to elimination obstacles to economic growth and institutional building to assure the capacity and competitiveness of Cambodia with neighboring countries and to attract more investments. The trade facilitations includes (1) Organized federal office to reduce the number of days to request for goods inspection, (2) established a single inspection for the Custom and Excise Department and CAMCONTROL, (3)reduced time to issue Certificate of Origin and related documents for export as well as reduced times of inspection and addressed many other works.
Taking this opportunity, in addition to the existing directions that have been set and are in the process of implementation related to economic and trade, I would to propose some recommendations as follows:
First, to appropriately connect farmers to the market by taking advantage from MFN/GSP status, I would like to recommend all relevant institutions especially Ministry of Agriculture, Forestry and Fishery to further cooperate with Ministry of Commerce to guarantee export markets. For example, Cambodia has a huge potential in producing agricultural goods, hence, we should seek for new ideas and strategies to successfully export more by broadly promoting contract farming, forming big farmer association which teach them to correctly apply the fertilizers and use standard seed on similar type of soil for export because, mostly, buyers would buy the agriculture products which are similar and up to thousands of tons or more. Only then we will not have trouble finding markets for agriculture products.
Second, continue the effort of attracting more foreign direct investment in order to create more jobs and to transfer the knowledge and skill to the people of Cambodia, especially investment in agriculture sector and processing industry which are using agricultural raw materials by focusing on strategies to gain benefits from rapid export market expansion in the region, particularly from China through the Early Harvest program of ASEAN and China as well as the strategy to further develop on vast potentials of tourism sector in Cambodia in order to increase trade-tourism arrivals and establish quality labor market.
Obviously, foreign direct investment has played an important role in helping to push Cambodia economy forward and also a source of employment for the people of Cambodia. However, foreign direct investment is highly concentrated in manufacture sector and service in the urban area. Thus, we need to push more investment into agriculture sector as well, especially in agro-processing. Moreover, competing for more foreign direct investment is intense. We need to put more effort in trying to be less dependence on the garment export and enhancing the technology sector and as well as the information technology.
Third, continue to negotiate on reducing tariff and other technical barriers in order to expand the international market through providing more special tax exempt (GSP) for Cambodia to obtain substantial benefit and to fully utilize the Cambodia’s potential from being the member of the WTO and as a poor developing country.
Fourth, continue to deeply and widely integrating the Cambodia’s economy into the region and the rest of the world by considered those priority sectors in the Rectangular Strategy of Royal government of Cambodia in order to move Cambodia’s economic forward under the support of developed countries, especially, the contribution through (AID FOR TRADE) which is an essential factor for attracting more investors, help creating jobs and providing source of income for the people of Cambodia, which finally lead to end result of achieving common objective of poverty reduction for the people.
Fifth, under the situation that we have foreign direct investment companies with such a high quality to manufacture in Cambodia; we should utilize the knowledge appropriately in order to seek for a better formula and elements through minimal usage of the raw materials with high quality and can maintain competitive price advantage on the international market, especially modify manufacture for export under Cambodia special economic zone.
In the end, I would like to take this opportunity to express my appreciation to your Excellencies, Ladies and Gentlemen in all line of ministries and institutions, development partners, NGOs, private sectors and others institution for supporting and moving Cambodia’s trade sector forward to achieve the common objective of poverty reduction and develop our nation following the Royal Government Rectangular Strategy.
Finally, I would like to wish your Excellencies, Ladies and Gentlemen with Five Gems of Buddhist Blessings. May I now declare the closing of the conference!