Ladies and Gentlemen:
I am delighted to be in Melbourne to address this distinguished audience. I would like to take this opportunity to thank the ANZ Bank, Asialink and the Phnom Penh Chamber of Commerce for organizing this business forum.
My visit to Australia comes at an important time in the development and growth of Cambodia’s relations both with ASEAN and Australia.
Cambodia-Australia relationships dated back many years. We have recently celebrated the 50th anniversary of the diplomatic relations between our two countries. Australia made significant contribution to the settlement of the Cambodian issue. General John Sanderson, who was Commander of UNTAC forces, is well known in Cambodia.
Overall, the Royal Cambodian Government is very pleased with the continuing solid development of the political and economic relationship with Australia. The Australian Government is a good partner with Cambodia in its endeavours to achieve economic security and sustainable economic growth. This partnership has at its core a shared purpose to nurture and sustain prosperity and economic development.
Cambodia has gone through a sweeping change not only in political and security, but also in economic and social landscape. This stable safe and secure environment is an essential precondition to Cambodia realizing its economic and social potential in a peaceful and prosperous nation.
Cambodia has achieved remarkable macroeconomic stability and economic progress, with robust economic growth in average of 8.2 percent per annum during 1994-2005. In 2005, economic growth peaked 13.5 percent. Per capital income has almost doubled from US$247 in 1994 to US$ 448 in 2005. Inflation was low. The exchange rate has been broadly stable. Poverty was brought down from 47 percent in 1994 to 35 percent in 2004. The country’s international reserves increased by 10 times from a low level of US$100 million in 1994 to more than US$ 1 billion in 2006.
I wish to stress that the internal conflict in some parts of Cambodia was only concluded as recently as 1998, which makes the achievement of peace, stability and development, especially poverty reduction, outcomes over the past decade even more remarkable, and underlines the importance of continuing stability and peace building as the basis for development, investment and private sector opportunity.
Cambodia’s economic outlook is good. We will make utmost efforts to ensure double digit growth for the next five years to come. This growth in large part will reflect strong agricultural performance, a robust tourism sector, the expansion of construction activities and continued increase in garment exports.
Oil and gas will open up new economic opportunity of moving Cambodia to a new development plateau. We are committed to use these resources responsibly for social and economic development in order to achieve the Millennium Development Goals (MDGs) and ensure sustainable development.
The Overseas Development Assistance, including Australian aid, has provided the foundation for equitable social and economic development. Official development assistance has reinforced ongoing national efforts to develop social, economic and physical infrastructures. Australian aid to Cambodia focused on increased productivity and incomes of the rural poor; reduce vulnerability of the poor; strengthen rule of law.
I am pleased to note that Australian aid has been instrumental in increasing productivity of agriculture and income of rural Cambodia and building up the national capacity for agricultural research. As a result, rice productivity increased from 1 ton to 2 ton per hectare during the 1990s. For example, the 4-year AusAID-funded Agriculture Quality Improvement Project (AQIP) resulted in a 20-percent increase in rice productivity. I am convinced that in the future we will reach 3 ton per hectare. This will have considerable impact on the rural livelihood.
Cambodia is committed to improve aid coordination and utilization for agricultural development, infrastructure and long term institution building, especially human resource capacity development. Longer term commitments and institutional partnerships between government agencies, research and educational institutions and the private sector are very crucial, if real capacity is to be built over the long term. In this regard, we warmly welcome the recent launch of the Australian Leadership Award that will really benefit the younger generation of Cambodians.
Trade has been the main source of economic growth in Cambodia. Cambodia’s garment exports increased by more than 100 times during the last decade and reached USD 2.2 billion in 2005. Employment in garment and textile has been a major stabilizing force for the population and the economy in recent years, amounting to 280,000 skilled and semi-skilled, especially female workers. Overall the manufacturing sector created jobs for almost half a million workers and has indirectly improved the wellbeing of their families and relatives.
Moreover, Cambodia has made sensational strides in integrating Cambodia into international community. Cambodia’s membership in ASEAN and the WTO and other regional initiatives provide great opportunity to reform the investment and foreign trade regime by focusing on the liberalization and decentralization of decision making process, reducing the bureaucratic red tapes, removing impediments to investments, implementing reform programs and initiating the modernization of structure and management system of the national economy and upgrade its competitiveness.
Cambodia warmly welcomed Australia’s closer engagement with ASEAN and the prospects of the conclusion of the ASEAN-Australia New Zealand Free Trade Area (AANZFTA). Australia’s participation in the East Asian Summit has become a significant milestone in ASEAN-Australia relationship. We are looking forward to Australia’s further participation in the economic and geo-strategic architecture of East Asia. Likewise we are looking for Asutralia’s support for Cambodia’s membership in APEC. I am convinced that these developments will be for the benefit of the region and Southeast Asia in particular.
Similarly, Cambodia is committed to deepen reforms in order to further facilitate businesses in our country. To tackle the issues faced by the private sector, the RGC has established since 1999 a dialogue mechanism, called the Government-Private Sector Forum, held twice a year under my chairmanship. In this regard, I would like to take this opportunity to thank AusAID for supporting the coordination bureau of this forum. An enabling environment for business is a pre-condition for long term development. In this regard, on-going efforts are focused on the following:
Firstly, promoting trade facilitation by removing overlapped and unnecessary approvals; implementing single administrative document; introducing risk management strategy to consolidate and rationalize all inspection requirements of the different control agencies; harmonizing registration for VAT, income tax and company registration; implementing a national award to promote good corporate citizenship and governance in the private sector; and introducing ICT to establish a single window for import-export process.
Secondly, creating a manufacturing base in regions outside Phnom Penh, as well as ensuring stronger economic linkages between the cities and the rest of the country. For that reason, the RGC has promoted the establishment of Special Economic Zones in provinces bordering Thailand and Vietnam, such as Koh Kong, Poipet, Bavet, Phnom Den, as well as near Phnom Penh and Sihanoukville, aimed at attracting more investment in the country. Beside the advantage of the geography, the zones will provide a one stop service for all import and export procedures. Administrative formalities and inspections will be reduced to a minimum level, thus allowing firms to save time and money. The SEZs provide complete infrastructure, including road, power plants, water-treatment plants, vocational training, bank, posts and telecom, etc. For that reason, SEZs will allow Cambodia to broaden its growth base.
Thirdly, continue to strengthen the tourism infrastructure and ensure backward linkages between tourism and agriculture. Our strategy is to create a green belt or agricultural development centers surrounding all major tourist sites to achieve a pro-poor tourism development. Attention has been given to upgrading tourism infrastructures, such as the development and improvement of airports in Phnom Penh, Siem Reap, Sihanoukville, Rattanakiri, Koh Kong and other provincial towns.
We whole-heartedly welcome Australia’s investments in Cambodia. Existing Australian investors include small and medium enterprises and, of course, some of the larger businesses such as BHP and ANZ Bank. I am glad that we have signed an agreement with BHP on the bauxite exploration and production.
The ANZ Bank has introduced to Cambodia the advanced banking technology of the 21st century. ANZ Royal is a good example of how this sort of Cambodia-Australia partnership can work well, with mutual respect and regard for the value of what each party brings to the relationship.
During this visit, we would like to explore additional opportunities for investments and cooperation. It has also provided a timely opportunity to review progress in trade, economic and development cooperation and consider proposals to expand and diversify the existing trade and economic relationship. A relationship to which Cambodia wishes to reaffirm its long term commitment.
The Cambodian Government accords priority to expanding trade and investment relations, especially in agriculture and agro-business, infrastructure, power/energy/resources, oil and gas, tourism and services areas. There is also much greater scope for cooperation and exchange on cultural heritage and environmental protection. The Cambodian government welcomes the private sector participation in infrastructure projects.
In this regard, we welcome the opportunities for partnerships with the Australian business community in Cambodia’s economic diversification, for example in agricultural development and agribusiness as an engine of economic growth and development, and of course oil and gas exploitation and energy generation, and associated support industries.
Moreover, Cambodia’s location as part of the Greater Mekong sub-region, which consists of Cambodia, China, Laos, Myanmar, Vietnam and Thailand, with integrated production, distribution and consumption systems, will provide major opportunities for the Australian business community to be present in this vast region.
The above key areas in which Australia has much world standard expertise and technology to offer. The Cambodian Government will provide strong support to Australian companies doing business in Cambodia. To this end, our two governments have just signed a MOU on Investment Cooperation, which will provide additional guarantee to protect Australian companies operating in Cambodia.
There is a big Cambodian community in Melbourne. Indeed, the Cambodian community is a strong and continuing asset to the bilateral relationship. Lasting economic development requires a concerted effort by governments, business and the community. By working together, Australia and Cambodia are aiming to ensure that this opportunity will be utilized to achieve continued and stronger economic growth in Cambodia. And I would like to propose a toast for your good health and for continuing cooperation and prosperity between our two nations and peoples.