Excellencies, Ladies and Gentlemen
It is my great honor and pleasure today to participate in the ASEAN-Korea CEO Summit. First of all, allow me to express my sincere thanks to Mr. Kyung Shik Sohn, Chairman of the Korea Chamber of Commerce and Industry, for organizing this important summit and inviting me to deliver the keynote address concerning the “Economic and Social Development through the Promotion of Trade and Investment” during this globally challenging time.
There is concern and uncertainty in the world economic prospects over the past months while the negative impacts of the global financial crisis have been aggravating. In the advanced economies, consumer and business confidences have dropped to levels that we have never seen before, and general economic activities have also drastically decreased. The combination of financial crisis and shrinking demands in the advanced economies is having negative impacts on ASEAN and ROK economies which could cause significant negative impacts on growth.
Indeed, each country has actively taken bold measures in order to reverse short-term impacts from the crisis including measures to strengthen management and restore confidence in financial sector as well as measures to promote growth and protect social welfare of the people. In my view, in addition to our efforts at the national level, the promotion of regional economic integration will enlarge the scale of our regional market and enhance regional trade and investment, which is an important factor in reducing the excessive dependence on outside markets and increasing our competitiveness in attracting investment to our region. Indeed, the success in these efforts will only be possible when we, governments, private sector and development partners concerned, speed up our cooperation and expand its coverage to be more comprehensive by focusing on policy coordination, laws, regulations and procedures related to business, trade and investment; building institutional capacity and human resources; investing in building linkages of physical infrastructures; and removing trade barriers in particular eliminating the development gaps in ASEAN in order to strengthen our competitiveness as a big regional economic block.
I would like to take this opportunity to raise some of the key issues related to Cambodia’s current socio-economic developments and our vision for future. In addition, I will elaborate on what I believe as the comparative advantage for investing in Cambodia.
The Royal Government of Cambodia has been implementing serious reforms in all sectors, including Public Financial Management Reform, Financial Sector Development, Private Sector Development and Governance Reform including land management reform, administrative reform and legal and judicial reforms aimed at improving business and investment climate through trade facilitation, promotion of the private sector participation in physical infrastructure and development of small and medium enterprises (SMEs). The Royal Government has strived to achieve all these reforms in an environment of political stability and peace in the country, which is the most important pre-condition for Cambodia to move forward in its efforts to improve standards of living of the people, to respect for human rights and dignity, to strengthen democracy and to achieve sustainable development.
Having achieved steady growth and successes over the past several years, Cambodia is now confident that we are on an important path toward a bright future, full of optimism and hopes. Indeed, the economic growth has been robust, averaging at 9.4 percent during the last decade with the record high of 13.3 percent in 2005. The economic growth also reached 10.8 percent and 10.2 percent in 2006 and 2007 respectively. Despite the global economic downturn, the Cambodia’s economy could grow by 7% in 2008, which is still a good rate compared with neighboring countries in the region.
In 2009, while the global economy continues to be under difficult condition, Cambodia’s economic growth will decrease further. However, the Royal Government is determined to achieve positive economic growth. The inflation, which increased to more than 20% by the mid of 2008, has fallen at year end. It is estimated that inflation will decrease to a single digit in 2009. Cambodia’s banking system remains strong in general, well capitalized and highly liquid. Bank deposits and loans continued to grow in 2008 reflecting public confidence in the banking system. Our international reserves position has been favorable and was doubled during the last two and a half years only, from USD1 billion in 2006 to USD2 billion in 2008, which is equal to 3 months of total imported goods and services for domestic consumption.
In the difficult situation resulting from the financial crisis and global economic downturn, the Royal Government has taken systematic and well-sequenced measures in order to ensure macro-economic stability and strong financial sector as well as to stimulate growth through fiscal measures, trade facilitation and investment. The Royal Government has also focused on further strengthening the social safety net for the people. In this sense, the Royal Government warmly welcomes the private sector who wishes to seize the opportunities in this difficult circumstance to share “Win-Win” situation with us to tackle our challenges together in the short term and to strengthen the foundation and sustainability of regional growth in the long term through their investment and business activities.
Cambodia is a country with great and unexploited potential. The potential in agriculture, both agro-industry and agro-processing, is tremendous with fertile land and favorable climate. At the same time, Cambodia is still in needs of a number of infrastructures such as transport system, telecommunication, electricity and irrigation system.
The Royal Government clearly understands that agriculture is the key sector to enhance and expand the base for economic growth and to reduce the vulnerability due to external instability and crisis through utilizing more on the vast potential of our domestic economy. Indeed, agriculture sector will provide rapid and positive impacts, through government’s efforts, on improving the livelihood of people especially in rural areas where 80 percent of the total population live.
In this perspective, the Royal Government continues to accord high priority in improving productivity and diversifying the agriculture as well as promoting agro-businesses. The Royal Government continues to enhance partnership between smallholder farmers with large-scale farms and agriculture enterprises and between economic land concessionaires and social land concessionaires especially in the areas of agro-industry plantation such as rubber plantation, in line with strategic development plan of rubber, cashew nut and sugar cane.
At the same time, the Royal Government has also provided land for large scale agriculture and agro-industry projects through economic land concessions to private companies. The Royal Government of Cambodia supports large scale investments in agriculture and agro-industry through economic land concessions, in which the main objectives are socio-economic development, jobs creation and improvement in living standards in rural areas by linking development with sustainable environment conservation.
In the tourism sector, Cambodia is fortunate to inherit great historical and cultural heritages especially Angkor Wat Temple and a beautiful natural environment along the mountain ranges, forests, lakes, seashores and offshore islands. Tourism continues to grow and significantly contribute to the development of the service sector. The diversity of historical and cultural heritages, natural and cultural parks such as forests, lakes, seashores and attractive landscapes has turned the tourism into an attractive sector for investment in Cambodia. Indeed, the great potential of tourism sector will play the key role in linking production of goods with demands from hotels, restaurants and other modern markets. Cambodia is indeed very pleased with the constant leading numbers of Korean tourists visiting Cambodia over the past few years.
At the same time, the promising future from the commercialization of oil, gas and other mineral resources has opened up new economic opportunities and hopes for Cambodia to become a new development zone in the region. These factors highlighted the opportunity to achieve high and sustainable economic growth in the medium and long terms as well as to promote fast economic diversification.
In addition to the potential of these sectors, Cambodia membership in ASEAN, WTO, AFTA, Trade Agreement with China, EU and the US as well as other development initiatives in the region have provided investors with market accesses to most countries around the world. Many agreements have not been utilized to their potential leaving lots of investment opportunities for investors to explore and make investments.
The Royal Government is committed to working together with the private sector to address challenges in order to improve investment climate that would benefit both local and foreign investors, particularly the promotion of trade facilitation, which could turn the private sector to be the driving force for growth, which is the “life or death” factor for Cambodia.
In this spirit , the Royal Government has focused on improving governance which is a necessary condition to promote private investments. The Royal Government has taken measures to remove obstacles to private sector development by focusing on improving investment climate including improvement of laws, regulations and administrative procedures.
With key achievements briefly mentioned earlier, the Royal Government has committed to continue implementing in-depth reforms to improve domestic business environment. In this sense, the Royal Government will continue focusing on trade facilitation aimed at reducing costs in doing business especially the costs related to export and import operations.
At the same time, the Royal Government will continue its focus on establishing production bases in provinces and cities outside of Phnom Penh and ensuring economic linkages among these provinces and cities with the rest of the country. For this purpose, the Royal Government has established a number of special economic zones (SEZs) along the borders with Thailand and Vietnam including those in Koh Kong, Poipet, Phnom Den, surrounding areas of Phnom Penh and Preah Sihanouk province with the purpose to attract more investments into Cambodia. In addition to geographical advantages, the Royal Government has implemented the “Single Window” mechanism at each location in order to facilitate import-export procedures and save time. Moreover, the SEZs offer investors superior and complete infrastructure and facilities, such as road network, factory buildings, electricity supply, clean water, water treatment plant, skill training, banking services, postal services and telecommunication, etc.
Furthermore, strengthening tourism sector infrastructure and ensuring the linkages between tourism and agriculture is an important for upgrading the livelihood of people. In fact, a key component of this Royal Government’s strategy is to establish green belt zone or agricultural development zone surrounding tourist sites in order to achieve a pro-poor tourism development. In this light, in order to facilitate and attract private investments, the Royal Government has paid great attention on improving key tourism infrastructure such as road network and airports in Phnom Penh, Siem Reap, Sihanoukville, Koh Kong and other provinces. The Royal Government has channeled more fund to build agricultural infrastructure network and provide facilities to the development of green zones surrounding key tourist sites.
Indeed, in our development philosophy, which has market system economy as the foundation, the private sector is considered as the driving force for growth and the most important partner of the government, who is a development strategist. In this regard, we strongly hope that the priorities mentioned earlier will further open new economic opportunities for Cambodia’s sustainable and equitable development.
I am very pleased with the increase of Korean investment flows into Cambodia over the past decade to a number of important sectors such as real estate development sector and financial and banking sector. Yet, I would like to invite Korean investors to explore opportunity for cooperation and investment in Cambodia, namely in three key areas, agriculture, tourism and oil/gas, where Cambodia has the comparative advantage. Cambodia is also willing to cooperate with ASEAN and ROK to invest in alternative sources of energy such as bio-fuels, hydroelectric power and other energy sources.
Finally, I hope that our meeting today illustrates the long term vision and the importance of investment and business development in each country, as well as in our region. I encourage our businessmen and investors to seize all investment opportunities provided by our region in order to contribute to the efforts of building a safe and prosperous East Asia community.