The FINANCIAL — Cambodia can sustain its strong track record in economic growth and poverty reduction, and achieve more inclusive growth by focusing on key priority areas, says a new World Bank report.
The report, the Systematic Country Diagnostic (SCD), strives to identify key challenges and opportunities for sustainable growth and poverty reduction in Cambodia.
As Cambodia gradually moves to lower middle-income country, it may expect a decline in preferential trade treatment and donor financing. Low prices for agricultural commodities prices along with rising salaries will require increasing productivity and value addition to remain competitive. Improving competitiveness may also benefit from relaxation of business regulations; in 2017, Cambodia ranked 180 out of 189 countries in terms of starting a business. Sustained investment in public services will be crucial, to ensure better education outcomes – completion rates at the lower-secondary school was only 43 percent in 2013 – and reduce malnutrition, which impacts one third of Cambodia’s children.
“Cambodia has worked hard to help lift our people out of poverty, and we are committed to delivering more inclusive growth across the country. We remain committed to openness in trade and investment, and thank the international community for its continued support and belief in a strong and prosperous Cambodia,” said H.E. Hem Vanndy, Under Secretary of State of the Ministry of Economy and Finance.
The first Systematic Country Diagnostic (SCD) for Cambodia highlighted three priority areas for maintaining strong growth. Cambodia’s economy grew at an average rate of 7.6 percent from 1994 to 2015 – amongst the world’s highest, ranking sixth in the world in terms of economic growth, resulting in the poverty rate declining significantly from 47.8 percent in 2007 to 13.5 percent in 2014. The priorities outlined in the Report, entitled Cambodia Sustaining Strong Growth for the Benefit of All, are:
Enhancing export competitiveness and economic diversification to sustain strong growth and create more and better jobs, by reducing the costs of doing business and boosting public and private investments;
Building human capital by investing in early childhood development, boosting secondary and higher education, and protecting households from shocks;
Ensuring a more sustainable growth pattern by investing in Cambodia’s natural capital, and promoting sustainable and inclusive cities while strengthening climate resilience.
Cutting across these priority areas is improving service delivery through reforms in public administration and financial management.
“Over the past two decades, Cambodia’s achievements in economic growth and improved living standard of its people have been remarkable. Challenges lie ahead, as the country aspires to have a more competitive economy, increase productivity, build strong and effective institutions and expand opportunities for all Cambodians,” said Inguna Dobraja, World Bank Country Manager for Cambodia. “The World Bank Group will continue to support Cambodia’s efforts to maintain inclusive economic growth and reduce poverty.”
The Systematic Country Diagnostic, undertaken in many of the World Bank’s 189 member countries in preparation of a Country Partnership Framework, strives to identify key challenges and opportunities for sustainable growth and poverty reduction. In Cambodia, the report was prepared in consultation with nearly 400 stakeholders from elected officials, national and local government, the private sector, development partners and civil society organizations, through nine consultation meetings in four different regions across Cambodia.