Ladies and Gentlemen
It is a great honor and pleasure for me to address this conference on Cambodia: Investment Trade and Infrastructure. On behalf of the Royal Government of Cambodia and on my own behalf, I would like to congratulate and express my sincere gratitude to Dataconsult for initiating and organizing this important conference and by the way promoting the cooperation between the RGC and the Private Sector. Indeed, the contribution from the participants in terms of time and knowledge in this conference is precious and valuable. Not only current issues will be discussed but participant’s inputs and views will contribute to the shaping of future directions in a genuine spirit of partnership and close cooperation between the RGC, the Private Sector and Civil Society.
During the last ten years, Cambodia has gone through a sweeping change not only in political but also in economic and social landscape. The country has achieved successfully its transition from a centrally planned economy to a market economy, from a one-party regime to a democratic and liberal multi-party regime, from political instability and a war torn country to a peaceful country. To restore and rehabilitate an economy ravaged by the war, a close partnership between the RGC, the Private Sector and the Civil Society has been established with the generous assistance of our international development partners, through the continuous consultations and dialogues of the various reforms technical working groups.
At today’s gathering, I wish to take this opportunity to brief you on some important aspects of the current social and economic developments in Cambodia and our long-term visions and plans for the future. At the same time, it is my intention to give you a glimpse on what I believe as the advantages for investing in Cambodia.
At the outset, may I brief you on some fruitful results of the efforts deployed by the Royal Government of Cambodia (RGC) during the past years.
Cambodia has recently enjoyed unprecedented peace and stability – politically, socially and economically. Cambodia has definitely turned a somber page of its history and moved towards a brighter future. Indeed, we have closed a bitter chapter of our history characterized by turmoil, turbulence and tragedy. This achievement was not a spontaneous one, it is a result of a strong determination and hard work.
With strong political will, meticulous preparation and serious endeavours, the RGC has achieved encouraging results in the implementation of the “Triangle Strategy” and is pursuing its efforts to implement the Rectangular Strategy put forwards by myself as the Prime Minister of the Royal Government of Cambodia for this third term of office. This strategy succeeded to get over the political games, clean up the internal and external political environment and create conditions to put the country on the path of reforms. Through these reforms the government hopes to ensure a favourable environment, which stimulates economic activities in the country and instil the confidence of the international community and foreign investors in Cambodia.
We have taken long strides forward to remove impediments and difficulties, which hinder this inter-twinned reform process. With the implementation of these systemic reform programs, in 2004, real GDP amounts to 7,7%. The inflation rate was kept at 3,9%. The exchange rate was fairly stable ranging around 4000 Riels per USD. The international reserves covers 3 months of imports. Our tourism arrivals are increasing exponentially – a further testimony to our internal security situation as well.
With economic and financial recovery underway in the region and given the favorable domestic political and security developments, coupled with the firm determination in implementing the government’s reform programs, we are optimistic about the prospect of economic development in Cambodia. GDP growth is expected to be at 6,7 percent in 2005 and 6 percent in the years afterwards. Inflation will be kept under the 5-percent benchmark.
Having achieved stable growth for a number of years successively and successfully, Cambodia has gained confidence and is now poised on an important threshold in its journey into the future. Cambodians have reached a crucial platform and look to their future with optimism and hope. The choices we make and the steps we take now will determine whether we have used this moment of opportunity and made a positive contribution in the next decade of development.
Poverty level in Cambodia have registered a significant decline since 1993. Such decline has occurred mainly through widespread sustainable economic growth. The latest survey figures highlight the areas of still lingering poverty needing focused attention and targeted action to reach Cambodia Millennium Development Goals (CMDGs) in reducing poverty. It is time now that resources begin to be properly directed and effectively used to maximise benefits for the disadvantaged and the deprived to lift them into the mainstream.
Consolidating and building on the achievements of the past, the Royal Government is committed to achieving the human development oriented CMDGs by 2015 through a Rectangular Strategy for Growth, Employment, Equity and Efficiency for well-orchestrated attention to, as well as investment and growth in, priority sectors. Social and economic growth should be equitable, and opportunities and benefits affordable and accessible to all, without discrimination, and in all parts of the country.
Building on the favorable situation mentioned earlier, which was achieved under difficult circumstances, and the shared goals agreed upon at the national level, the Royal Government’s most important agenda is rapid alleviation of poverty and accelerating economic progress. The main elements of the government’s strategy are as follows:
First, consolidation of peace, stability and social order by taking concrete steps to strengthen the rule of law, uphold human rights, promote democracy with the view to establishing favorable polical and security environment for sustainable development over the long term.
Second, investment promotion and facilitation through and mobilization of foreign aid and attraction of foreign direct investment (FDI). Cambodia needs massive influx of investments during the next few years to generate economic energy and accelerate the take-off. Therefore, the RGC has made tremendous efforts to attract foreign direct investments and is working on improving the investment climate with the view to ensuring adequate conditions for sustainability and prosperity for the country and its people.
Third, Domestic resource mobilization through actions taken to implement policies aimed at stimulating private savings by developing the financial sector and strengthening the banking system, and carry out budget and fiscal reforms, aimed at increasing domestic revenue and rationalizing and programming public expenditure.
Fourth, Shifting investment outlays to priority sectors and improving the productivity of agriculture in order to build a solid foundation for economic growth. Infrastructure and essential supporting facilities, such as roads, irrigation, water supply, electrical power and telecommunications will play a crucial role and constitute sine qua non conditions in these endeavors and to ensure the broadening of the growth base of the national economy.
Fifth, Building institutional capacity and strengthening good governance is key to the concept of sustainable development with equity. This is also linked to the establishment of the rule of law, administrative reforms, the promotion of transparency and accountability and the combat against corruption, which will have direct impact on the promotion of investment and business activities and trickling-down of economic growth to all strata of the society.
Sixth, Integration of the Cambodian economy into the region and the world with the aim to increase the economies of scale by expanding the markets, improve factor mobility and reduce the prices of imported and exported products. In this sense, Cambodia’s participation in globalization and regional economic integration will increase the attractiveness of Cambodia to investors, promote higher factor productivity, create and develop comparative advantages of the nation, through the participation in international competition and specialization.
Seventh, Social and human resource development: The experience of a number of developing countries shows that investments in human capital, especially investments in education, vocational training, job creation and health, is key to ensuring economic take-off and reducing poverty. The RGC has deployed considerable efforts in increasing investments in these areas, through both the budget and foreign aid mobilization. We warmly welcome the participation of the private sector in this important task, especially in the development of the education and health sectors.
Eighth, Promoting sustainable use of natural resources and environmental management for the benefits of the current and future generations.
Ninth, Maintaining and strengthening partnership with the donor community, NGOs, the private sector and the civil society, as this represents significant sources of financial and intellectual capital for Cambodia’s moving towards progress.
From my earlier comments you can see that the RGC has attached great importance to private investment for the development and poverty alleviation in Cambodia. Recognizing the crucial role of the private sector in this regard, attention has been given by the RGC to remove the obstacles and impediments to investment in Cambodia. I have made extensive comments, on many occasions both inside and outside of Cambodia, in respect of the efforts deployed by the government to attract and facilitate private investments in Cambodia. However, I understand that some of you might not be aware of these important points. Therefore, may I recall them as follows:
First, as I mentioned earlier, it is the RGC’s top priority to ensure and promote social environment for peace, security and stability in all parts of the country.
Second, the RGC has developed and strengthened the legal framework, regulations and institutional capacity conducive to private investment and business activities in Cambodia. I wish to stress that with my personal involvement, the Council for the Development of Cambodia (CDC) has endeavored to improve its performance by strengthening the “one-stop service” mechanism in order to facilitate the implementation of investment projects in the country. Moreover, I have initiated the Government-Private Sector Forum, since December 1999. This forum, chaired by myself, is an open channel of dialogues between the private sector and the government in order to explore measures and solutions to facilitate and promote investments in Cambodia. We have agreed that this forum will become a permanent mechanism and will meet once every six months.
The 9th meeting of this forum was held recently on 14 October 2005. Moreover, to follow up the implementation of the decisions and resolutions adopted by the forum, seven sectoral working groups comprising members of the RGC and representatives of the Private Sector were established. The WG have met regularly every month to address issues faced by the Private Sector.
We have endeavored to accelerate the trade facilitation and investment climate reform program including the establishment of Special Economic Zones, the implementation of a risk management strategy for the inspection of goods and the implementation of the Single Window for Import-Export administrative formalities. My colleagues from the CDC will further elaborate on those efforts.
Third, the priority is given by the RGC to increase public investment, through the mobilization of foreign assistance and domestic savings. At the same time, attention is accorded by the government to encourage private investments, especially “Build-Operate-Transfer (BOT)” projects, and investments in physical and social infrastructures as well as public utilities, such as electricity, water supply and telecommunications. Our ultimate objectives are to put in place an efficient infrastructure network that links our domestic markets and provide physical access to the outside world in order to facilitate, promote and expand economic activities and investment in all sectors.
Fourth, the RGC is well aware of the needs of the investors for a proper legal framework to protect their investments. Thus, we are accelerating our judiciary and legal reform and Land management reform programs which have made encouraging progress.
Fifth, Cambodia has access to various international markets. Cambodia has obtained the “Generalized System of Preferences (GSP)” and the “Most Favored Nation (MFN)” status from its major trading partners, including the European Union, the USA, Japan, Canada and Australia.
Sixth, As a member of ASEAN, Cambodia is participating in various ASEAN’s economic initiatives. Moreover, Cambodia has actively participated in a number of regional and sub-regional initiatives, such as the Greater Mekong Sub-Region (GMS) the ACMECS and the Triangle Development Cooperation. Another important priority in the agenda of the RGC is to fulfill its obligations as a new member of the World Trade Organization (WTO) in order to reap the benefits of its accession.
Cambodia has some important comparative advantages and is endowed with significant potentials in agriculture, agro-industry, labor-intensive industry, processing industry, tourism and in some other production activities and services, due to its endowment in land, soil, climate, natural resources, cheap labor, historical heritages and the beautiful scenery of its beaches, rivers, lakes and forests. These potentials are awaiting investment and sustainable development.
Given these potentials and the need to establish a solid foundation for economic growth and ensure Cambodia’s long-term comparative advantages, the RGC has accorded priorities to the development of the following six sectors:
1. Agriculture and Agro-Industries by giving priority to agriculture irrigation;
2. Transportation and telecommunications infrastructures;
3. Energy and electricity;
4. Labor-intensive and export industries;
5. Tourism; and
6. Human resources development.
I spent some time briefing you on the overall situation in Cambodia, as well as the government policy, strategy and measures with regard to economic reforms and private investment. As I mentioned earlier, our country is endowed with potentials in a number of areas, which await your investments in all sectors. Cambodia needs financial resources to increase production and create employment, as well as technology, knowledge and know-how to upgrade its capacity and improve productivity. I wish to invite you to join us through your concrete contributions to prepare Cambodia for a brighter future. As a Government, we will ensure to all foreign investors a favorable environment conducive to investments, especially peace, security and political stability, as well as macroeconomic stability, an efficient legal and institutional framework, transparency, accountability and predictability.
In light of the above mentioned perspectives, I believe that the conference will draw inspiration from them and will exchange views to strengthen the Government-Private Sector Cooperation aiming at promoting economic development and prosperity in Cambodia.In conclusion, I wish you all fruitful and successful discussion during the conference. Thank you for your attention.