– Your Excellencies, Ladies and Gentlemen!
Today I have a great honor and pleasure to be here to make a presentation on “Cambodia as an attractive investment destination”, given its recent strong social and economic development.
I thank the Chamber of Commerce and Industry of Kuwait for organizing this Cambodia-Kuwait Business Luncheon and for giving us an opportunity to meet the members of the Chamber as well as the representatives from capital markets and partner companies to inform them about the great investment opportunities in Cambodia for Kuwaiti investors.
I strongly believe that this luncheon will indeed contribute to further strengthening the growing bilateral friendship and cooperation between our two countries and people, Cambodia and Kuwait.
Here, I would like to take this opportunity to raise some of the key issues involving Cambodia’s current socio-economic developments and our vision for future. In addition, I will elaborate on what, I believe, are the comparative advantage for investing in Cambodia.
Over the past decade, Cambodia achieved peace and political, socio-economic stability which it had never experienced so in its long history. Cambodia has eventually closed the darkest page of its recent history and moved forward toward its bright future.
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, administration and legal and judicial reforms aimed at improving business and investment climate through trade facilitation and increased 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 a favorable condition for the country in its efforts to improve standards of living, to protect human rights and dignity, to build democracy and to achieve sustainable development for its people.
Having achieved steady growth and successes over the past several years, Cambodia is now confident that we are on an important gateway toward a bright future, full of optimism and hopes.
In opening the 21st century, Cambodia is on the road toward sustainable development. Cambodia experienced strong macroeconomic stability and significant improvement in standards of living. Real economic growth was 7% in 2008, lower than previous year that peaked at 13.3% in 2003 and slowed down to 10.8% in 2006 and 10.2% in 2007. Per capita GDP increased from US$247 in 1994 to US$624 in 2008. The Royal Government has carefully managed inflation by maintaining it at low rate for many years. However, in 2008, inflation increased to more than 20% due to pressure from oil price, soaring food prices and depreciation of US dollar during the first quarter. In the second quarter, the pressure was subsided and averaged annual inflation rate is estimated to be 18%, while in 2009 it would reduce further to single digit to around 7%. At the same time, monetary and exchange rate policies have been prudentially implemented to manage inflation and macroeconomic stability. International reserve increased to almost US$2 trillions, which is for 3 months of total imported goods and services for domestic consumption.
This has contributed to reducing poverty incidence from 47% in 1994 to 34% in 2000, and according to the latest estimates, this incidence reduced to 30% in 2007. For this, within this period the poverty incidence has been reduced annually by 1% on average. At the same time, future prospects in oil and gas as well as other mineral exploitation will open another opportunity for economic development for Cambodia to be a new development center in the region.
In medium term, we forecast that Cambodia’s economy will remain robust thanks to the efforts in agriculture sector and the expansion into non-farms sectors. This will contribute to ensuring an average growth of about 7% annually. Political stability, active private sector’s initiatives, stable evolution in reform efforts and ODA support as well as FDI are the key basis for our optimistic forecasts.
Cambodia is a country with great and unexploited potential. Potential in agriculture and agro-industry is tremendous with fertile land and favorable natural condition. Cambodia still needs a number of infrastructures such as transport system, telecommunication, and electricity and irrigation system.
The Royal Government clearly understands that agriculture is the key sector to enhance and expand the basis for economic growth and to reduce the vulnerability due to external instability and crisis. For this, we need to rely more on the 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% of the total population live.
Agriculture policy of the Royal Government aims at improving productivity. Agriculture is the leading sector in enhancing economic growth and in reducing poverty. In this perspective, the Royal Government continues to accord high priority to improving agriculture productivity and diversification, and enhancing agro-businesses. The Royal Government will continue to enhance production capacity over existing lands by shifting its focus on “extension” into a more “comprehensive” or “intensive” development approach in order to increase production, create more jobs, generate more income in rural areas, ensure food security and increase exports of agricultural produces, especially rice export. Cross-cutting interventions across sectors are needed such as techniques, agriculture inputs, research and development, agriculture dissemination, construction and rural infrastructure maintenance, especially irrigation system, credits and micro-finance, market expansion for agriculture produces, establishment of farmer communities and agricultural land management. The Royal Government continues to enhance partnership between smallholder farmers with large-scale farms, agriculture enterprises and between agriculture and social land concessionaires especially in the area of agro-industry plantation such as rubber plantation, in line with strategic development plan of rubber, cashew nut and sugar cane sectors.
At the same time, the Royal Government has also provided land for large scale agriculture and agro-industry projects through economic concessions to private companies. The Royal Government of Cambodia supports large scale investments in agriculture and agro-industry through economic land concession with the main objective of socio-economic development, jobs creation and improved livelihood in rural area by linking development with sustainable environment conservation.
Concerning tourism, 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, seashore and offshore islands. Tourism continues to blossom contributing to the development of the service sector. Tourism sector in Cambodia is so attractive for investment thanks to the diversity of historical and cultural heritages, natural cultural parks such as forests, lakes, seashores and beautiful and attractive landscapes. Tourist arrivals have increased from 170,000 in 1993 to more than 2 millions in 2008. Indeed, the great potential of tourism sector will play the key role in linking production and services in hotel and hospitality sector with demand for other goods.
In addition to the potential of these sectors, Cambodia membership in ASEAN, WTO and AFTA and Trade Agreement with China, EU and the US as well as other development initiatives in the region have provided market access to most countries around the world. Many agreements had not been exploited to their potential leaving lots of investment opportunities for investors to explore and make investments.
The Royal Government has committed to working together with private sector to address the challenges in order to improve investment climate that would benefit all local and international businesses. Especially, the promotion of trade facilitation would induce private sector to play a key role in driving growth, which is critical for the survival of Cambodia.
So far the Royal Government has focused on improving governance which is a necessary condition to promote private investments. Governance reforms are the core of Rectangular Strategy. These reforms are firmly moving forward including the reforms of legal systems and public administration. In this context, the Royal Government is now finalizing the Corruption Law to be aligned with international standards.
The Royal Government is trying to remove obstacles to private sector development by focusing on improving investment climate including improvements in legislations, regulations and administrative procedures. The Royal Government is fully aware that institutions and good policy are very important for sustainable economic growth. Thus our effort is to focus on strengthening legal frameworks to support sustainable economic development.
With key achievements briefly mentioned earlier, the Royal Government has been committed to implementing in-depth reform to improve domestic business environment. As I indicated, the Royal Government considers the favorable business environment as an important precondition for long term development. Thus, our continued commitments will be on the following priorities:
First-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. Trade facilitation reform will focus on:
1. Reducing inspection process by rationalizing the role and responsibility of government agencies involving in regulating export and import activities.
2. Establishing a “One Stop Service” for international trade activities, and
3. Implementing Customs System Improvement Program by introducing automation and single document process for administrative purposes in managing import-export activities.
Second- Establishing production bases in provinces, cities and outskirts of Phnom Penh and ensuring economic links among them and with rest of the country. For this purpose, the Royal Government has established some special economic zones (SEZs) along the borders with Thailand and Vietnam including those in Koh Kong, Poipet, Phnom Den, and in the surrounding areas of Phnom Penh and Preah Sihanouk Province with purpose to attract more investments into Cambodia. In addition to geographical advantages, the “One Stop Service” procedure, which has been put in place at each location, is simple, easy to use and saving time. Moreover, the SEZs offer investors superior and complete infrastructure and facilities, such as road network, factory buildings, electricity, clean water, water treatment plant, skill training, banking service, postal service and telecommunication.
Third-Further strengthening tourism sector and ensuring the linkages between tourism and agriculture which is important for upgrading the livelihood of people. In fact, a key component of the Royal Government’s strategy is to establish green belt zone or agricultural development zone surrounding tourist destinations, a pro-poor tourism development. In this light, in order to facilitate and attract private investments, the Royal Government have paid great attention on improving key tourism infrastructure such as road network and airports in Phnom Penh, Siem Reap, Sihanoukville, Ratanakiri, Koh Kong and in other places. The Royal Government is channeling more investments to build agricultural infrastructure and provide facilities to the development of green zones surrounding key tourist sites.
Indeed, in our development philosophy, market principles are the core while private sector is the growth driver 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 would like to invite Kuwait Government and 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.
The singing of agreements on flight service and tourism cooperation and the Memorandum on Steung Sen Irrigation Development Project between Kuwait and Cambodia is a historic event in the relations between Cambodia and Kuwait. This is a new commitment of the Royal Government of Cambodia to promote investments and to strengthen economic ties between Cambodia and Kuwait. These agreements will create favorable investment climate for Kuwait investors to invest in agriculture, tourism and oil and gas sector in Cambodia.
– Excellencies, Ladies, Gentlemen!
Sustainable economic development requires a joint effort by the government and private sector. In this regard, Cambodia and Kuwait have been working together to ensure that opportunities are excelled and used for the robust economic growth and the benefits of both parties. Thus, I strongly hope that strengthening our cooperation will bring about prosperity to both countries and their people.
With optimism, I wish Your Excellencies, Ladies and Gentlemen, good health, success and happiness. I wish that the friendship, solidarity and cooperation between our countries and people (Cambodia and Kuwait) will grow, broaden and deepen for the prosperity of all of us.