Resurgent Cambodia faced with challenges

With great achievements over the last decade to its credit, the Southeast Asian nation of Cambodia needs to tackle some challenges and grasp new opportunities for its future development, said the World Bank country manager in Cambodia, Nisha Agrawal, as she noted that: "Cambodia has been doing very well during the past decade."

The country has achieved growth rates as high as about seven to eight percent and, in the last three years, there has been double-digit growth, making Cambodia one of the fastest growing countries in the world. This growth has also been translated into benefits for Cambodians. Rapid development has impacted poverty, which has come down from roughly 47 percent to 35 percent.

A need to diversify

However, the World Bank feels diversification of the economy remains the biggest challenge for Cambodia, according to Agrawal.

She said a lot of World Bank assistance to Cambodia is focused on helping it diversify.

The World Bank conducted an investment climate assessment of Cambodia a few years ago, which indicates that the country's economy should diversify from the garment industry into other labor-intensive manufacturing sectors.

Agrawal also pointed out that agriculture is still very vulnerable in Cambodia.

"Most of it is rain-fed. If you get good weather, you get a good crop, and if you don't get good weather, you don't get a good crop," she explained.

"The government is now beginning to focus its attention on rural development, which we think is very positive. So it is investing in rural infrastructure and looking at the marketing chains," Agrawal added.

Abundant opportunities

Cambodia has huge opportunities in the agriculture sector, said Agrawal.

"China, for example, has given Cambodia duty-free access to about 400 agricultural commodities. If they could just develop the links for 20 of them, the whole country could then be booming, as China is such a large market sitting next door. So China provides huge potential for Cambodia to export an array of products and get linked to China's supply chain. This way, Cambodia can provide more of their primary materials and then have them processed either in China or ultimately in Cambodia itself, adding value to those primary products," she elaborated.

Cambodia's abundant resources also bode well for the nation's economy, said Agrawal, as they represent excellent potential for growth.

The garment sector has a large, hard-working labor force. Wages are still low because there is plenty of supply, while infrastructure is improving rapidly.

Cambodia is also rich in natural resources.

"When the private sector is looking at this country, (it is looking) at the natural wealth, the labor, the location. It's a source surrounded by these fast growing countries, which make it attractive to foreign investors," the World Bank country manager said.

Development partners

The World Bank is working together with other development partners to help Cambodia achieve sustainable growth.

The World Bank also highly praises China's role as an important development partner for Cambodia.

"In recent years, China's investment in and development assistance to Cambodia has grown rapidly. It is now the second largest donor and Chinese firms as a group are the largest foreign investors in Cambodia. The World Bank looks forward to working closely with China as well as other development partners in helping Cambodia achieve its overall goals of sustainable growth and poverty reduction," said Ian Porter, the World Bank country director in Cambodia.

Agrawal, on the other hand, drew attention to the huge sum of money China donated to Cambodia last year.

"Out of a total of $690 million pledged by development partners, $90 million was pledged by China. They are now the second-largest donor to this country after Japan, which provides $100 million. The difference is provided by donors such as the World Bank, the Asian Development Bank, Australia and several other countries and organizations, which each contribute $40-$50 million per year," Agrawal said.

China has become very important to Cambodia as both a donor and as one of the largest private investors in the country.

"China is investing in the garment sector very heavily and two of the six new oil contracts belong to the Chinese. Chinese businesses have also been receiving different kinds of land concessions for plantation-style agriculture," Agrawal pointed out.

(China Daily 04/10/2008 page28)