By Jayant Menon
Cambodia recently made the transition from a low income to a lower middle-income country, according to the World Bank’s rankings. This is good news, but it poses a question: Does Cambodia need to rethink its model of export-driven economic growth, as preferential access for its exports to developed countries is gradually reduced or as aid flows diminish?
Not necessarily, at least for now. But it should start preparing immediately.
Many young Cambodian’s today face a range of challenges when they start their working lives; their lack of experience, skills and capital often mean the work they find is poor quality and low-paid. Research by the International Labour Organization (ILO) in Cambodia confirms that while youth unemployment is low (3.8 percent), this rate disguises the high rates of vulnerable employment or work that is dirty, dangerous and demeaning. In addition, for many women and youth in Cambodia today, sociocultural and family pressures are an additional burden that can restrict or limit the freedom they have to pursue their true aspirations.
Inequality is a contentious issue. It has been described in recent years as “the biggest threat to the world” and “a blemish on Asia’s growth story”, yet its importance continues to be denied by policymakers and commentators who persist in pointing to GDP figures as the universal recognisable hallmark of prudent stewardship. Supporting this position, a popular perspective among economic liberals holds it is equality of opportunity, not income, that matters. Metaphorically speaking, “a rising tide lifts all boats”, even if transient waves of fortune leave some looking up or down at others.
The 30th Asean summit ended with significant steps towards the realisation of a rules-based, people-oriented and people-centred Asean.
Philippines President and this year’s Asean chair Rodrigo Roa Duterte stated, “Asean has a compelling narrative of positive change that we can hold up to the world. Through our distinct Asean way, our region – with all its promise – stands at the centre of the future of the Asia-Pacific region.”
He added that “the peoples of Asean share universal aspirations – that their rights and welfare as a people are protected and promoted.”
On March 13, the National Bank of Cambodia (NBC) announced that it will cap interest rates on microfinance loans at 18 percent per year starting April 1 in order to help growing numbers of Cambodians struggling with over-indebtedness. After this announcement, leaders and experts of the microfinance industry responded that this government intervention is merely a political gesture that will backfire and hurt the rural poor even more.
Citing an economic researcher at the NBC, they argued that many small microfinance institutions (MFIs) will not be able to afford their high operating costs if the government imposes an interest rate cap. These MFIs will be forced to reduce their services and potentially stop providing the rural poor with the small loans that they rely upon for basic needs like health care and food. These borrowers will have no other option but to seek out loans from unregulated local moneylenders, which will further drive them into debt and poverty.
The news this January that two Chinese companies had signed an agreement to build the world’s tallest twin towers in Phnom Penh understandably raised eyebrows in Cambodia and around the region. As with so many grandiose plans, financing will be key for this reported $2.7 billion project in what remains one of Asia’s poorest nations, as measured by per capita gross domestic product.
But even if funding is finalised and construction begins, a critical question remains: How best to balance Asia’s drive to build higher with the need to respect what remains below? Former first lady Michelle Obama famously said at the 2016 Democratic National Convention in Philadelphia, “When they go low, we go high.”
Women make an important contribution to Cambodia’s economic growth. We only need to look around to see women playing a major role in key sectors like agriculture, tourism, commerce and garment manufacturing. Statistics tell the same story: Cambodian women have one of the highest rates of participation in the labour force in the region. But does growth work for women?
Experience from around the world shows that economic growth does not equally benefit women and men. In fact left to themselves markets replicate existing inequalities.
Cambodia is regarded as one of the most successful post-conflict developing countries – transforming from a war-torn country to a liberal market economy with a high degree of economic openness and high economic performance.
In 2016, Cambodia’s total export volume was $9.2 billion – accounting for 46.3 percent of GDP. Total import volume reached $12.8 billion – accounting for 64.2 percent of GDP. These figures clearly demonstrate that Cambodia’s economy is well connected to the global economy.
So maintaining an open and robust international economic system benefits Cambodia.
The Asian Development Bank (ADB) calls Cambodia “Asia’s New Tiger” after two decades of high economic performance with a GDP average growth rate of above seven percent.
The RII assessed ministerial-level reforms at 17 ministries, up from 12 in 2015. The process saw RII staff undertake desk research and consult with ministries’ technical staff, before passing their findings to the advisory group (AG) members. The AG members – experts in the administrative, economic and social sectors – then reviewed and selected the top reforms.
The Asia Foundation established the RII in 2015 to improve public understanding of those reforms considered most likely to improve public services in Cambodia. A list of reforms collected by the RII can be found at www.reforminventory.wikispaces.com.
Thirty-five years have passed since the first official report identifying the disease that is now known as AIDS was published in the United States. In that time, 35 million people have died worldwide from AIDS-related illnesses, including an estimated 115,000 in Cambodia. Despite the toll that the virus has taken here, Cambodia has emerged as a leader in the global efforts to overcome the AIDS epidemic. Today, as the world marks World AIDS Day, we celebrate Cambodia’s success and look forward to the day when this country ends AIDS as a public health threat.
Disclaimer: All views expressed here belong to their respective author and do not represent the views of Enrich Institute