Kingdom of Cambodia
Nation Religion King
BACKGROUND PAPER
by
Sr. Minister KEAT CHHON,
Minister of Economy and Finance
Royal Government of Cambodia
for the
7th ASEM Finance Ministers Meeting
8-9 April 2006, Vienna, Austria
1. Cambodian delegation is most honoured to represent the Royal Government
of Cambodia in this 7th ASEM Finance Ministers Meeting. We would like to
express our sincere gratitude to H.E. Karl-Heinz Grasser, Federal Minister
of Finance of Austria, and the Government of Austria for its kind invitation
and its warm hospitality extended to our delegation.
2. We all in ASEM recognize that the issues of global imbalance and risks to
sustainable global growth are very critical now, posing the challenges for
us all, both developed and developing countries in our two continents.
3. We noted that global economy has been strong in 2005 with Asia and the
United States continuing to be the engines of growth, while EU and Japan
growing more slowly. We also noted that the possible sudden adjustment of
global imbalance still poses a tremendous threat to our regions, and the
less developed economies would be the most severely affected from this
adjustment. Therefore, we shall be steadfast in resolving the issue through
a gradual shift of domestic demand from current account deficit countries to
surplus countries, and other pragmatic approaches that our individual
countries can afford. We are sure we share our common target of having
stable and sustained global economic growth that worth for us to pay at some
appropriate cost. At the 10th ASEAN Finance Ministers Meeting in Siem Reap
on 4-5 April 2006, we decided to establish a task force to study linkages
and establishment of infrastructure funds to help booth spending and
investment among Asian countries (the surplus countries) in order to reduce
global imbalance or current account deficit.
4. We view stable global economy and world aggregate demands are so
important to sustain our economic growth in Cambodia, as our economic
structure presently relies on two major driving forces: garments and
tourism. The slowdown in global aggregate demand will hurt Cambodia exports
in some extend and if slow global activities retard world economic growth,
it would affect our tourism sector. Thus, we shall agree on our common
response to the global imbalances and risks so that they are addressed
strategically in the shared interest of our continents.
5. External risks to sustainable growth constitute one of the major
difficulties to sustainable development of low-income and developing
countries like Cambodia. Just take unstable and high oil price as an
example. As many economist pointed out we have left the “low-cost energy”
era. For supply side, stock of oil is non-renewable resources and the world
has yet discovered any good alternative. For demand side, the demand is huge
and necessary and we can only increase efficiency of oil consumption.
Cambodia is an oil importer. Increases in oil price affect both economic and
political sensitivity. Fuel prices have far reaching implications as they
affect all population from all walks of life in the country. Everyone,
including the poor, has to pay for the fuel when traveling, or buying, or
selling goods and services that need fuel directly and indirectly as
production inputs. It is a big challenge for economic development and a
major factor that drags development progress and slows down poverty
reduction efforts. The increase in oil price will not only hurt Cambodia but
also exacerbate world poverty and might turn the world into chaos.
6. On the road of growth and poverty reduction, Cambodia is facing
tremendous challenges. The Royal Government has exerted its utmost efforts
and is determined to overcome all these constraints. As a result, the
following positive development can be observed:
§ The economic diversification through the development of agriculture,
agro-business and investment in irrigation has delivered results reflecting
in higher agriculture growth.
§ In recent years, we have made sustained efforts to bring together all
stakeholders and harmonized their activities in every sector under the
government-led sector wide strategies, and the works have also begun to
deliver results.
§ The government has now embarked on an ambitious but feasible program of
public financial management (PFM) reform, talking some of the pressing
binding constraints on improving service delivery.
§ Similarly, the government is committed to reforming the institutions and
procedures for trade facilitation including single administrative documents,
risks management, and one-stop-service operation, creating an environment
that facilitates business and investment.
§ Cambodian NGOs are becoming increasingly capable and sophisticated as
contributors to national development, both as partners in service delivery
and as institutions for channelling ideas to policy makers.
§ “Cooperation Community” is now working on harmonization and realignment of
their programmes to meet Cambodia’s needs, while facilitating Cambodian
ownership over her own development and reform efforts.
§ Finally, the government has now in its disposal the National Strategic
Development Plan, which lays out an integrated strategic approach to
achieving the MDGs.
7. The recent political developments underline our robust optimism in the
continuing socio-economic progress of Cambodia. The achievements were
possible thank to the strong confidence and commitment of the government to
its development partners including the private sector, International
cooperation community and NGOs. The participatory approach that the
government has adopted has proven to be a winning approach, which we will
continue to pursue in the future.
8. We in Cambodia have committed ourselves to a sustainable growth path.
Thus we would join other ASEM Finance Ministers in reiterating our
commitment to implement appropriate macroeconomic and structural reforms in
order to sustain our regions’ economic growth against the persistent high
oil price and global imbalance.
9. As a Least Developed Country in WTO and the new member in ASEM, we face
challenges in capturing the global opportunity amid the potential risks of
global imbalance. This requires the country not only to free our borders but
also to undertake the critical, yet painful reforms that, in the long run,
will translate trade to jobs and poverty reduction.
10. We request the ASEM, particularly the non regional members of ADB to
strongly support the ADB new Regional Cooperation and Integration Strategy
focusing on cross border infrastructure, money and finance, trade and
investment, and regional public goods such as health, education and
environment. By doing that ASEM will contribute to build the synergy of
complementing global and regional initiatives.
Thank you !