Excellencies, Ladies and Gentlemen
It is my great pleasure today to preside over the opening of the 2014 Cambodia Outlook Conference on the very timely theme of “Cambodia the Next Five Years – Reform and Competitiveness in an Integrated Region”. This is the eighth occasion on which I have had the pleasure of delivering the opening keynote address in this outlook conference. I wish to once again congratulate CDRI and ANZ Royal Bank on their initiative in hosting this important annual conference, which brings together officials from the Royal Government, and senior representatives of the private sector, the research community, non-government organisations, and international development partners to consider Cambodia’s achievements, the challenges we face, and how we can work together to overcome those challenges for the benefit of our nation.
The theme of this year’s conference is timely raised as the Royal Government of the fifth legislature of the national assembly is in its early days of the new five year mandate after the free and fair general election on July 28, 2013. The Royal Government of the Fifth Legislature is committed to in-depth reform for national development, which has been reaffirmed in the Rectangular Strategy-Phase III for Growth, Employment, Equity and Efficiency, and the National Strategic Development Plan for 2014-18. In this policy framework, we have focused on four priority areas: (1) the development of human resources to ensure competitiveness in an increasingly open regional labour market; (2) continued investment in transport infrastructure; (3) continued improvement to trade facilitation and further development of and increasing value added in agriculture; and (4) strengthening governance and the capacity of public institutions.
Therefore, this morning I will address the three related aspects of the conference theme – first, our great efforts will be further strengthened during this mandate on key reforms that will ensure our regional and global economic competitiveness and enhance the business and trade environment; second, development of our human resource, in particular youth, so that they can respond to the job market demand with the creation of quality educational opportunities for a younger generation of Cambodians; and third, cooperation among the government, the private sector and research community will be further enhanced to overcome the challenges and reap new opportunities presented by the achievement of ASEAN Economic Community 2015 and broader regional integration.
Before I go into detail about the three points above, let us remind ourselves of how much has been achieved over the past two decades in working together for sustained peace and stability, sound macro-economic management, high levels of growth, socio-economic development and poverty reduction, and the promotion of an open economy with a business and investment friendly environment. As a result of the concerted efforts, despite the impact of the global financial crisis and associated economic downturn during the year of 2008 and 2009, we managed to overcome all challenges and achieved remarkable economic growth by global and regional standards. In particular, we have achieved average GDP growth of 8 percent per annum over the past 20 years, with average inflation of around 5 percent.
Furthermore, our economic fundamentals continue to look strong. Preliminary growth estimation for 2013 is 7.6 percent, a slight increase compared to 7.3 percent growth in 2012. We project growth of more than 7 percent in 2014 and in the medium term as we improve energy and other physical infrastructure, competitiveness, trade facilitation and the investment environment. This growth projection will elevate Cambodia to lower middle income status in the near future. Inflation is projected to remain low at 3-4 percent in 2014 in spite of the adverse impact on Cambodia caused by high regional inflation and spike in oil and food prices. Our collection of taxation revenue has increased significantly, the latest figures for January 2014 showing a 14.5% increase from the same period last year. The exchange rate is generally stable, with slight appreciate of Cambodian Riel against US dollar. The banking system remains robust with adequate capital and liquidity. Deposits and loans in the banking system continue to grow in 2013, a good sign of stronger public confidence.
The poverty rate has fallen from 53 per cent in 2004 to 20 per cent this year. Going forward, we will further strive to reduce poverty and enhance livelihoods through more inclusive growth, increased public investment in rural infrastructure, efficient and affordable energy generation and distribution, and higher quality education and health care, particularly in rural areas. These all remain high on the government’s reform and national development agenda for the next five years.
We have seen significant growth in rural electrification along with diversification of power sources away from heavy fuel oils, a major increase in paved roads and in the development of our port facilities. We have also achieved a remarkable increase in animal husbandry production, and in the export of rise, rubber and cassava over the past 5 years. As a result, the Cambodian middle class has grown rapidly along with their consumption of consumer goods and services in the nation. We have also achieved great improvements in the access of rural communities to credit, contributing to agricultural diversification and productivity, and improved health, education and livelihood outcomes for Cambodian families.
Foreign direct investment is anticipated to remain strong, particularly driven by the relocation of factory production from China, Thailand and Vietnam, and increasing foreign direct investment from China, Japan and South Korea. Garment production and exports also remain strong. And we continue to receive high levels of invaluable economic and development assistance from our multilateral and bilateral partners in support of key priority areas for our development. This reinforces Cambodia’s prospect of restoring and broadening its economic growth and manufacturing bases.
However, we must remain vigilant to mitigate the possible negative impacts from slowing growth in Europe and China, local extreme weather conditions affecting agricultural production and rural livelihoods, protracted labour disputes in our garment industry that could affect our status as an attractive foreign investment destination, and the vulnerability of the poor to even small fluctuations in growth and income. As we graduate to lower middle income status we will also need to manage the inevitable reduction in development assistance and build a stronger national finance and human resource base to achieve our national goals.
As I have stressed that in recent months the new government with its new cabinet has entered the fifth Legislature with a stronger commitment than ever before to implementing more in-depth and effective reforms. These are urgent tasks that need to be carried out now and in the future.
Going forward, the Royal Government is committed and gives priority to land reform aimed to ensure more effective management of land resources, especially economic and social land concessions, and most importantly, proper management and full utilization of land to achieve socio-economic development goals, promotion of sustainable economic productivity and diversification, security of land ownership and improved livelihoods of rural communities and minimization of environmental degradation and depletion of natural resources. Overall, the Royal Government has focused attention on reform sites aimed to strengthen the investment and business climate in Cambodia. We have put into implementation a number of policy measures aimed to ensure consistency between our business and investment regimes and those of international standards. In addition, the Royal Government will strive to reduce non-tariff barriers to trade, fulfill requirements of the ASEAN Economic Community to facilitate cross-border transport, expand one-stop service, simplify procedures for local businesses and cross-border movement of people, goods and services, eliminate informal fees, invest in human capital and so on. The Royal Government will further strive to facilitate trade, especially regarding the full use of IT in the issuance of customs certificate, export permit etc.
Fighting corruption has become a routine task of the Royal Government. The Anti-Corruption Unit (ACU) has been active in promoting awareness among the public, businesspeople and government officials. A number of cases have been referred to court. This shows that the Royal Government take the anti-corruption campaign very seriously. During this Legislature, fighting corruption will be intensified in order to strengthen good governance and enhance public service delivery. In this spirit, I believe that this effort will result in accelerated socio-economic development.
Over the past three decades, education sector has always been prioritized. The sector has witnessed significant progress. Enrolment rate and completion rate at primary school have increased and universal access to primary education has been almost achieved. However limited access to quality kindergarten and late entry to primary school need to be addressed. In addition, relatively high dropout rate in secondary school remains a grave concern that need to be addressed immediately to ensure youth are well-prepared for technical and vocational education and training to equip them with skills and competencies for job market. Likewise, strengthening education quality is needed as it is the main determinant of Cambodia’s competitiveness in the future. Hence, the Royal Government focuses not only on education reform but also on technical and vocational training. We also need to maintain our attention on maternal and child healthcare and nutrition.
ASEAN Economic Community 2015 will open up our job market to the whole ASEAN region. This can be both challenge and opportunity. Cambodia will be able to benefit from access to skilled labor in key sectors that cannot be supplied domestically. Moreover, we need to ensure that the efforts mentioned above will improve the quality of higher education and technical and vocational training according the market demand to strengthen our competitiveness after the integration. This requires a well-thought-out plan.
It is without doubt that “Cambodian people” are our most valuable resource. They are powerful, united and patient force of rehabilitating the country in the face of post-war destruction. In this regard, one of my greatest achievements is the creation of capable younger generation in spite of shortages in the education sector. I have total faith in the competence of younger generation who are benefiting from current progress of Cambodia and actively taking part in political, economic, business and social activities for better Cambodia in the future. I take great pride in this achievement and the Royal Government of the Fifth Legislature will continue to do its utmost to protect existing progress and promote further progress. We can say that investing in younger generation and answering their needs are crucial than ever before for the success of Cambodia, especially at a time when Asia is becoming more competitive and deeply integrated.
Overall, the future of our economy and the welfare of younger generation will depend on our ability to create young, dynamic and skilled workforce that can adapt to and compete in regional and global labor market. A main priority for the Royal Government of the Fifth Legislature is to address the skill mismatch and gap between the demand of industry and businesses and supply by education and vocational training. In particular, Cambodia is short of both low-skilled and middle-skilled workers for industry. The number of student graduating with degrees in science, technology and engineering is low. This is a major challenge to investment in Cambodia and limits youth employment.
In order to solve all these challenges, the Royal government in collaboration with private sector and development partners will focus on promoting good governance, management, teaching quality and resources in higher education and vocational training. The Royal Government will maintain its attention on inspection and accreditation of higher education quality as well as the promotion of education and technical and vocational training in enterprises and public-private partnership in higher education and technical vocational training with focus on some priority sectors such as science, technology and engineering etc.
I wish to reaffirm that we will work harder, implement interconnected and complementary measures to ensure economic competitiveness, improved productivity, low costs of doing business and investment attractiveness. In this spirit, the Royal Government will prepare the national policy on wages to ensure on good living and working conditions for employees and workers with the view of achieving improved productivity and their welfare. However, this assignment must be well balanced, based on proper data analysis and regional and global economic conditions. Constructive participation of employees, unions, employers in a responsible manner with sincere dialogue is the way forward for achieving good industrial relations, productivity and wage levels that serve the national interest in the long term. On this point, I wish to reiterate that I utterly protect the interest of youth and I do not support activities that gamble or experiment on their future or use them to serve political purposes.
In this regard, I wish to say again that it is now important more than ever before that we all need to work together for peace, stability, development and prosperity of Cambodia for the present and a modern Cambodian society in the future. I look forward to frank and active exchange of views in the conference.
Once again, I wish to thank the co-hosts of this conference: the Cambodia Development Resource Institute and ANZ-Royal Bank for organizing this event and I expect this conference will provide inputs to the development effort of the Royal Government of Cambodia.
Finally, along with the announcement of the opening of the Cambodia Outlook Conference for 2014 with the theme “Cambodia the Next Five Years: Reform and Competitiveness in an Integrated Region, I wish Excellencies, Ladies and Gentlemen the four blessing of Buddhist gems: Longevity, Nobility, Healthiness and Strength./.