Helping a nation on the move

Viewing Cambodia as a fast growing economy in Southeast Asia, the Asian Development Bank (ADB) is willing to play an active role as investment facilitator for the country, Arjun Goswami, country director of ADB in Cambodia, said in a recent interview.

Cambodia has made outstanding achievements in the last 5 to 10 years in terms of growth, poverty reduction, creation of jobs and anti-corruption measures, he said, noting that economic growth rate in 2006 was 10.8 percent, after being over 13 percent in 2005.

"We just published the Asia Development Outlook update, which shows fairly robust growth going forward, perhaps not double-digit but still robust growth for this country. Macroeconomic management has been good, and has been accompanied by a taming of inflation. It has also been accompanied by a surge in private sector credit, so the demand side of the economy has been responding," Goswami noted.

He pointed out that agriculture and information technology are Cambodia's high-potential sectors.

"I think one area clearly is agricultural productivity. I think the potential for information technology in this country is also significant. There is a hunger for information and communication technology (ICT). There are also other mineral resources which are a potential for this country, though these have to be balanced with issues of environmental protection," the ADB country director said.

Poverty Reduction

Cambodia has made definite progress in poverty reduction, although some challenges still remain, said Goswami.

"If you took the figures from about 1994 to 2005, you would see that there has been a reduction in poverty from around 47 percent to somewhere around 35 percent, as a national average. But rural poverty continues to be a worry. I think that is still deep - around 40 percent. Agriculture and rural development should be a way to contain urban/rural inequalities and to ensure that growth is fairly distributed, and really tackle that challenge of rural poverty. I believe that the country is committed to trying to do that."

Employment is another important issue for the country, Goswami noted.

An average of 300,000 young Cambodians come annually into the rural labor market. Providing them with employment requires diversified growth. There is the need to set up small and medium-sized enterprises, and to help accelerate their business dynamics as a means of helping create jobs and opportunities. This is extremely important in order to make sure that this labor force has productive opportunities, he explained.

ADB's role in Cambodia

Goswami said ADB has been a long-term development partner of Cambodia.

"We've been supporting infrastructure development in many ways: we've done a lot of work in roads; we have some projected work that we're doing on railways; we've been working in the energy sector for a long time."

Beyond infrastructure, ADB is concerned with the need to build social capital and capacity. A major part of its efforts have gone into education, mainly the building of schools. It has also done quite a lot of work in the health sector.

Outside those immediate social sectors, ADB has considerable engagement in some areas of rural infrastructure, like rural water supply and sanitation.

ADB is also trying to assist the financial sector - like the development of banks and non-bank financial institutions, and ultimately going forward in terms of capital markets. These efforts are based on government strategies. ADB has supported the government in the formulation of these strategies.

"Outside of these sorts of areas, the other major area is private sector growth. Take the financial sector as an example. We are working on a number of reforms, we are trying to promote private sector projection for greater liquidity, for example, toward micro-finance institutions. It's a way in which our public sector and private sector arms are trying to work together," Goswami said.

Foreign investment

Goswami further said one of ADB's important tasks is to help Cambodia draw foreign investment and help overseas investors learn more about the business environment in the country.

There is still a large gap between the level of investment in place and the amount of investment Cambodia needs.

It is still on the development trajectory and so the financial resources that investors bring are important for the country. But apart from capital, equally important are the technical skills and the high standards that they bring.

"When one gets reputable international companies and financial institutions coming into this market, they bring with them their best practice corporate governance standards, their technical standards, and their quality assurance standards. These are all things that spell huge benefits for the Cambodian economy and Cambodia's development. And I think these are welcomed," Goswami said.

"My overall sense is that when foreign investors come here they are welcomed, they are given good access to the government and good access to information and to data."

Speaking on ADB's role as an investment facilitator in Cambodia, the country director said: "Anything we as development partner can do to help spread information, we want to do. We speak often to the various associations and we see these business associations growing in Cambodia. I spoke at one some time ago and there were 60-70 businesses there and that is a sign that this story is really developing. I think what we want is for that message to go further afield."

Signs of change

"People who saw this country five years ago and see it today can see all the palpable signs of change," said Goswami.

He said Cambodia is serious about wanting to promote development and investment in the private sector.

"And it's important that the track record of good macro-economic management and the steps that are being taken with regard to financial management to be broadly understood by the investment community at large," he added.

Also, if one looks at the steps that are being taken in terms of physical infrastructure, much has happened over the last 5 to 10 years, particularly in the area of roads, said Goswami.

"As we know, once that infrastructure comes, along with it comes a great deal of other development. And I think this too is a story that needs to be told, this needs to be publicized, it needs to be brought to peoples' attention."

"I think the very forward-looking attitude of the government in terms of its engagement with its neighboring countries, both in the sub-regional context as well as in the broader multilateral context of WTO-related obligations, is hopefully benchmark setting and should be encouraging for investors looking at this economy.

It is important for the positive achievements, in terms of the economy and in terms of opening up, to reach outside investors so that they have a real opportunity to evaluate those opportunities and decide whether they wish to share in the risks and opportunities that Cambodia provides," Goswami said.

"I believe that, on balance, this country has tremendous opportunities to provide, with opportunities to mitigate the risks that exist. I think that story, in terms of Cambodia being on the move, is one that needs to reach investors in a clearer fashion."

(China Daily 04/10/2008 page28)