Excellencies, Members of the Royal Government,
Excellencies, Ladies and Gentlemen, and All Participants!
Today, I am honored and delighted to attend this important gathering to launch and disseminate the“Cambodia Industrial Development Policy 2015-2025”(IDP), jointly organized by the Council for the Development of Cambodia (CDC) and the Supreme National Economic Council (SNEC). I would like to join Kitti Sedha Pundit Keat Chhon, Permanent Deputy Prime Minister, to extend our warm welcome and profound appreciation to all of you for your participation in this event.
I highly appreciate the Supreme National Economic Council for its initiative and efforts to produce this IDP document. I would like also to extend my gratitude to all relevant ministries, institutions and development partners for their cooperation and active participation in the formulation of this policy that makes it more comprehensive and responsive to the present and future development needs of Cambodia.
This launching of IDP connotes the urgency and the necessity of having a proactive growth strategy that responds to the need of Cambodian people in the context of changing geopolitical landscape, regional integration and connectivity and demographic dividend.
The adoption of this policy is indeed motivated by the necessity to embark on a “new growth strategy” that responds to the structural transformation of domestic economy and the changing regional and global economic architecture, including: First, the favorable geopolitical spillovers in terms of linking Cambodian economy and its industry to the region especially within the frameworks of ASEAN Economic Community and regional economic liberalization; Second, the potential role of industrial sector in promoting growth and creating new jobs in the context of an open economy; Third, the critical role of industrial sector as a policy tool to enhance the performance of core economic sectors, like agriculture and services, that will further contribute to boosting economic growth; and Fourth, the importance of the industrial sector as a focus for initiating both structural reforms and governance reforms of key national economic institutions that aim at boosting long-term productivity.
It is true that the IDP will serve as a guidance to further promote industrial development through economic diversification, strengthening competitiveness and enhancing productivity. Therefore, there is no doubt that this policy will become a critical tool to achieve the development objectives as set out in the Rectangular Strategy for Growth, Employment, Equity and Efficiency. In addition, the implementation of this policy also indicates an evolution and new progress in Cambodia’s development.
For more than two decades, we have maintained firm political and macroeconomic stability while achieving remarkable progress in all sectors spanning from political, economic to social developments. At the same time, from one to another legislature of the national assembly, the state of political affairs in Cambodia has been matured for the better, thus creating more favorable condition for the exercise of democracy and achieving sustainable and inclusive high economic growth. Based on these development fundamentals and structural economic transformation, we have managed to liberate millions of Cambodian people from abject poverty and its trap, thus giving hope and confidence about future to every individual citizens and families and the whole nation as they are enjoying the unprecedented prosperity. This does not only reflect that Cambodia is moving in the right direction in restoring, constructing and developing the nation, in the wake of genocidal regime and war-torn situation, but also illustrates the reverent efforts of the Royal Government—as a saying goes that “dare to be duty bound, dare to be responsible”–for the cause of the country development.
On economic spectrum, Cambodia has harnessed the vast potential arising from agriculture, industry and service and has made remarkable progress. For instance, Cambodia economy has grown on average of 7.7% per annum over the last two decades and the living standards and well-being of Cambodian people have been improved significantly. Moreover, the key drivers of economic growth such as rice, garment and tourism sector have reached their highest potential of growth. Therefore, we have to further diversify the current economic frontiers into other areas and also to explore new drivers of economic growth.
In general, we found that Cambodia’s industrial sector remains weak as reflected by its simple and narrow-based structure. It is highly concentrated in apparel, construction and food processing industries, and mostly family-based with limited competitive advantages to access international markets. Furthermore, it is also a labour-intensive industry with simple production process and value chain that generates low value addition and mostly focuses on semi-final products. Thus, in moving up to the next stage of socio-economic development especially achieving an upper middle-income status while transforming industry from labor intensive to skill based one, Cambodia needs to intensify its effort to promote industrial development by making full use of all the potentials and capitalizing on the prevailing opportunities which are now very conducive to the development of this sector. Thus, we are fully convinced that the industrial sector has more potential to become a new and most dynamic engine for further driving Cambodia’s economic growth.
Moreover, I strongly believe that Cambodia can find new opportunities in the area of this industrial development through exploiting the benefits of hefty investment on Road, Water, Electricity and Human Resource done so far, especially the potential of new young generation who have better knowledge, more capability and industrious attitude in works and participation in promoting development. To master its owned destiny within the 21st century, Cambodia has to make stronger efforts, while being flexible but firm, to advance and foster Cambodia’s development.
Realizing the significance and benign circumstances of the industrial sector, the Royal Government has prepared and introduced this “Industrial Development Policy 2015-2025” to guide the development of industrial sector in Cambodia, providing a roadmap and common framework for all of us to take actions with coordination as guided by common goals and clear responsibility. This will contribute to maintaining sustainable and inclusive high economic growth. Furthermore, the Royal Government introduced this policy with the aim of diversifying the economy, enhancing competition and promoting productivity, by focusing on three targets: First, to increase the share of industrial sector and manufacturing in GDP; Second, to diversify the export goods beyond garments while promoting the export of processed agricultural products; and Third, to support the development of small and medium enterprises (SMEs).
Furthermore, the Royal Government is also of the view that the development of Cambodia’s industrial sector is confronted with five key obstacles: First, the lack of coordination and effective decision-making at all levels especially the key supports related to the supply of electricity, infrastructure and logistics, human resource and skills as well as other supporting infrastructures; Second, the development of basic technical knowledge and skills that is crucial to transform an unskilled labor-force into a skilled labor force capable of absorbing new and high value technical and technological skills; Third, the inadequate development of necessary industrial infrastructure, especially as related to insufficient coordination in physical infrastructure investment such as supply of electricity, clean water, telecommunication, sewage system and provision of public service; Fourth,the limited development of financial market that hinders the capacity to finance industrial projects including through public and private financing arrangements; and Fifth,the issues related to the labor market and industrial relations that is key to labor market stability and adequate supply of labor, the increase in productivity and better livelihood for the workers.
Against these backgrounds, I would like to underline the priority targets for 2018 comprising four core activities, which require special attention to address the above-mentioned issues:
1). Prepare and implement a plan to reduce electricity tariffs for industrial and commercial purposes including strengthening reliability and expanding coverage of electricity supply.
2). Develop and implement a master plan for transport and logistic system development with the aim of creating an integrated and highly effective multi-model transport and logistic system, focusing on connecting the major economic poles and the three economic corridors – Phnom Penh–Sihanoukville, Phnom Penh–Bavet and Phnom Penh–Poipet –to become key national economic corridors through the construction of international standard highways and establishment of an effective logistic system.
3). Further strengthen labor market mechanisms and skills training development to ensure stability of the labor supply, increase productivity and improve living standard of workers by promoting skills training programs, strengthen the mechanism for setting minimum wage and enhancing harmony in industrial relations based on the principles of positive union and the kindness of employers towards their employees. This can be done through existing mechanisms, including the Labor Advisory Committee and the Cambodia Productivity Committee.
4). Develop and transform Sihanouk Province into a modeled multi-purposed Special Economic Zone, following the concept of special administrative region. Under this concept, a master plan, legal and regulatory framework and other administrative arrangements will be designed and developed, providing full authority and jurisdiction for mobilizing resources, talents, investments and businesses to develop the province to become an economic pole and industrial, trade and tourist hub in line with sustainable and environmentally sound development concepts, and to be recognized as an ASEAN Green Industrial and Metropolitan City in the future.
The introduction of this policy document is an easy step. However, there remain much more difficulties and challenges ahead of us during implementation. In this spirit,I would like to take this opportunity to emphasize once more and again that, in implementing the policy, it is important that we all should vigorously act and implement it together in a proactive, active and interactive manner. It means that each ministry or institution should consider and be aware of what they can contribute to develop this sector?What activities they need to carry out and how best they could cooperate with other institutions?Unless we could enhance cooperation and coordination while being more focused, we could not succeed in making progress on implementation. Therefore,the Council for the Development of Cambodia, who is mandated with full power and tasked with necessary functions to implement the plan to address the pertinent challenges, must play a key leading role in implementing the tasks. Nevertheless, the issues concern many stakeholders requiring joint efforts among all relevant actors.
In this spirit and in making further contribution to the implementation of IDP to be more active, effective, efficient, and successful, I would like to make some recommendations as the following:
First, The Council for the Development of Cambodia should further strengthen its institutional and technical capacity, especially the human resource and enhanced effectiveness of its management system.
Second, this industrial policy is the ownership of all ministries-institutions of the Royal Government. Hence, it should be implemented in a spirit of joined responsibility, but with clear-cut division of works as set out in the attached appendix, in which each ministry/institution should contribute to the cause of reducing obstacles to or promoting implementation to achieve rapid progress either in developing regulatory framework, human resource development and skill training, or in resource allocation. On the other hand, though some ministries or institutions may not find their names in this policy, but they should consider what activities they could participate and support?
Third, at the sub-national level, it is important to start developing frameworks and be prepared to attract industrial development to their regions, especially capacity building and knowledge in administering and managing security, safety, social order, industrial relations, and impacts on the livelihood of their citizens. At the same time, the exchange of experiences among sub-national authorities either at national or international levels is one of the key priorities.
Fourth, the private sector should further strengthen its capacity to be an effective dialogue partner with the Royal Government on the development of national economy. The private sector should behave in a way of“not being scare of paying taxes but being happy to pay them”,though they should be more active in demanding the Royal Government to invest in raising productivity, supporting infrastructure, providing better public services and ensuring favorable environment to support long-term private sector growth.
Fifth, the relevant ministries and institutions should further promote and strengthen cooperation with development partners in order to mobilize financial and technical resources for industrial sector development.
Sixth, the enhanced awareness of the public and youth on industrial development for them to be well prepared and take full benefits from such development. It is important because the knowledge would bring about changes in mindset which is critical for active participation and contribution toward achieving a successful outcomes of this industrial development policy.
Seventh, we all should take this policy paper as a living document for all of us to work together in achieving our common development objective of transforming Cambodia into an upper-middle-income country by 2030 and the developed country by 2050.
Once again, I would like to reaffirm that, although the Council for the Development of Cambodia is tasked with this heavy responsibility, but under the political leadership of Kitti Sedha Pundit Keat Chhon, Permanent Deputy Prime Minister, and the technical leadership of H.E Sok Chenda Sophea, Minister Attached to the Prime Minister, including supports provided by all relevant ministries and institutions as well as our partners, I am fully convinced that we will definitely succeed in realizing the visions as put forward today.
Taking this opportunity, on behalf of the Royal Government and myself, I would like to congratulate and appreciate the Supreme National Economic Council (SNEC) under the leadership of H.E Dr. AUN Pornmoniroth and all the relevant ministries and institutions who have been collaborating with SNEC in preparing this very important policy. I would like also to express our thanks to all the development partners who have contributed and supported this undertaking, including especially Korea Development Institute (under the Knowledge Sharing Program-KSP), Japan International Cooperation Agency, Asian Development Bank and the Work Bank. I am very happy and proud about this“Industrial Development Policy”which is an initiative and hard work of Cambodian Experts.
Finally, in launching and disseminating this IDP, I wish you all great success! May our determination and strong sense of ownership, responsibility, joint efforts and contribution including all the good cooperation we have so far keep growing even stronger that will result in fruitful outcomes, ensuring the successful implementation of this policy!
Thank you for your attention!
