Top 10 Economic News of Cambodia in 2007

According to Xinhua, the major local Chinese-language newspaper highlighted the Top 10 Economic News of Cambodia in 2007 and outlined the robust pulse of the kingdom's economic vibration.

On top of the chart was the signing of the single visa agreement between Cambodia and Thailand on Dec. 17, which allowed foreign tourists from a third country to visit the two countries with a single visa and thus promoted more foreign tourists to visit both countries.

Second, Cambodia re-opened its Sihanoukville International airport on Jan. 15, after more than 20 years of hiatus, in order to perfect its air traffic network and attract more travelers to the seaport city.


Third, the kingdom started to construct its National Road No. 8on March 15, which, upon its completion, will improve the country's road network and provide more choices for its outgoing people.

Fourth, the National Assembly on Dec. 3 approved the government accounts settlement for 2005, which had 89.2 million U.S. dollars in surplus and confirmed its successful economic reform.


Fifth, the Special Economic Zone of Sihanoukville began to be constructed in 2007 with the participation of Chinese investors. The project aimed to provide full-scale business service for export-oriented factories and companies.

Sixth, real estate prices in Phnom Penh surged drastically in 2007, as it inhabitants increased by 3.2 percent on annual basis and foreign investment rushed in to share the country's foreseeable economic boom in the near future.

Seventh, Cambodian has become the sixth largest garment exporter in the world. The industry created job opportunities for about 0.5 million Cambodians and generated some 0.3 billion U.S. dollars of monthly payment for the employees.

Eighth, maiden direct flight between Europe and Cambodia was made on Dec. 7, which would bring more tourists to the kingdom.

Ninth, agricultural exports flourished in 2007, as palm oil, peanuts, rice, pepper and other rural products became ever more popular in the international markets.

Finally, luxury real estate project the Longqing Resort in Kandal province was demolished on July 31, as it expanded its land illegally and in effect constituted menace to the safety of the capital city.

Earlier in November, the Asia Development Bank put Cambodia's economic growth rate for the current year at 9.5 percent and nine percent in 2008, while the Cambodian government gave a conservative estimation of seven percent both in 2007 and 2008.

In addition, the latest World Bank East Asia and Pacific Update said in November that despite slight decline, Cambodia's economic outlook for 2008 will remain strong overall, with its growth rate dropping from 9.5 percent in 2007 to 7.5 percent in 2008.

According to official figures, the economic growth rate of the kingdom in the past three years averaged 11 percent, by which the government said that macro-economic stability has been realized out of decades of war and turmoil.

Cambodia Economic Growth and Rich-Poor Disparity

Although Cambodia has achieved a high economic growth and macroeconomic stability in this decade, the gap between the rich and the poor in urban and rural areas is remaining high or even getting wider and wider. To reduce this gap and inequality, the Government of Cambodia has undertaken various reforms in the economic and financial sector such as Public Financial Management Reform Program, Financial Sector Development Strategy 2006-2015, and strengthening the partnership with the develoment partners on harmonization, alignment and result.

In my opinion, by drawing lessons from overseas, Cambodia should enhance and give priority to reform of its taxation system, social security and more support for rural areas to adjust income disparity. The government should focus on policies that lift the incomes of the poor, such as improving rural access to health, education and social protection. More investment in rural infrastructure could also boost productivity in farming and increase job opportunities for the poor. In addition, other measures should also be taken such as building a framework for helping the poor and those unemployed.

In the report "Sharing Growth:Equity and Development in Cambodia", World Bank suggests a number of policies priorities for Cambodia to narrow the gap and inequality:

1.There is a need for continued effort in economic reform and improvement of investment climate. Maintaining the economy’s openness and global outlook will be the best strategy for continued growth and sustained poverty reduction.

2. Priority in land policy should be to accelerate and intensify systemic titling, extending it throughout the country, including to remote, more conflict-prone areas. Land policies within the agricultural strategy should give priority consideration to household farming, including by redistributing idle plantation land to landless poor households.

3. More needs to be invested in building and then maintaining basic infrastructure to connect up remoter parts of the country to economic opportunities and improved social services. Rural roads clearly have a significant impact in equalizing geographical inequalities. There is also a pressing need for increased investment in improved water supply and sanitation in rural areas: the rural-urban gap in access to these facilities remains extremely wide.

Here you can read the full World Bank Report: "Sharing Growth: Equity and Development in Cambodia":

http://siteresources.worldbank.org/INTCAMBODIA/Resources/293755-1181597206916/Full-Report-E&D.pdf

Japan and Cambodia Investment Agreement

Even Japan is the Cambodia's largest donor, Japan is not ranked among Cambodia's top ten foreign investment countries. According to the official statistics of Japan-ASEAN Center, in 2006 Cambodia attracted US$ 2.33 billion of agreement-bound foreign direct investment (S. Korea US$1,010m; China US$717m, Russia US$277m, Thailand US$100m; USA US$32m; Taiwan US$47m; Belgium US$33m; Vietnam US$31m; Malaysia US$28m; Singapore US$11m; Cananda US$5m; Hong Kong US$4m, UK US$3.5; and JAPAN US$2m.)

However, since the official visit of Prime Minister Hun Sen to Japan in June 2007 and an investment protection agreement was signed by the two countries' leaders, more and more Japanese investment projects such as bank, hotel resort, mansion construction, trade company and island development have increased gradually in Cambodia. I believe the Japan's investment will additionally bolster the domestic capital, productivity, trade, employment and skills, technology diffusion and knowledge transfer which are crucial to Cambodia's further economic growth.

Please click the URL below to read the Agrrement Between Japan and The Kingdom of Cambodia for the Liberalization, Promotion and Protection of Investment:

http://www.kh.emb-japan.go.jp/political/nikokukan/invest-agree.pdf

New Year's Eve at the Royal Embassy of Cambodia

Last evening I really had a wonderful New Year's Eve Party at the Royal Embassy of Cambodia in Japan together with the Embassy's officers, Cambodian students as well as eminent guests invited by H.E. Pou Sothirak, including Professor Yukio Imagawa (former Japanese Ambassador to Cambodia, is now a professor at Kanto Gakuen University); Ms. Sumiko Imagawa (Vice-president of Japan Team of Young Human Power); Dr. Vong Sam Ang (Director, Investment Division of Asean-Japan Center); Dr. Sorpong Peou (Professor of Sophia University), etc.

It is my first time to become aware of the wonderful activities of Japan Team of Young Human Power (JHP) after talking with Ms. Sumiko. So far, JHP has been building and renovating 199 schools in Cambodia and offers educational support and other voluteer-based activities. (http://www.jhp.or.jp/refer/construction03.htm)

As you may know, a long period of civil war had left Cambodia with lack of schools, and more seriously, the children rarely go to school as they have to work to support their family espcially 67% of them are engaging in farming. So I believe all of these donations will strongly contribute to the bright future of Cambodian children.