Kingdom of Cambodia

Nation Religion King

Address by

Sr. Minister KEAT CHHON,
Minister of Economy and Finance

At the

2nd Asia Economic Forum on
“Bridging Development Gaps in East Asia: Vision, Strategic Direction and Plan for Action”
 

Phnom Penh, 25 April 2006

Plenary Session I: Leadership and Strategic Vision for Development in East Asia

1. It is my honor to be with you today to talk briefly about “Leadership and Strategic Vision for Development in East Asia.” This topic is pertinent to both developed and developing nations in East Asia, as we are linked by market forces and the current process of globalization.

2. Cambodia should be part of the “Making Globalization a success for all” by abiding fully to the rule of the game. We have to seize the opportunities and to overcome the challenges posed by the process of globalization. We are part with other ASEAN countries to help to address the global imbalances linked to current account. As ASEAN Finance Ministers discussed in Siem Reap early this month in 10th AFMM, the surplus countries of East Asia have to spend more in our region to enhance regional physical infrastructure: transport, irrigation, energy, ICT. In recent past Cambodia has already benefited a lot from Japan, China, and Korea in financing the development of its infrastructure. We are very thankful to them. But in my sense these countries can do more for individual country in our region as well as our region as the whole, let the deficit countries in term of current account adjust themselves as advised by IMFC on 22 April 2006. In deed, they are sufficiently strong to find the way out with a soft landing, which should be beneficial for all. This appeal for more substantial financing of the infrastructure addressed to the surplus countries of East Asia does not mean a more sacrifice from them. In fact, it is an appeal to share a win-win situation.

3. My plea for more infrastructure investment in Cambodia is part of Rectangular Strategy. Its impact on poverty reduction is obvious: 1USD spent for the road generates more than 3USD. In Malaysia every household is only 5km away from the Hospital/Health center. In Cambodia, we are working to widen the base of our growth by diversifying our economics, namely by improving the agricultural productivity and adding more value added to our agricultural sector, we can succeed only by firstly intensifying the irrigation facilities building.

4. We are working hard to improve the investment climate and to ensure the public-private partnership in particular the private participation in infrastructure. In term of overall development of the private sector, we score some successes with our initiatives in trade facilitation: Risk management, Single Administrative Documents, leading to the Single Window. Our private sector becomes the real partner of the government for the process of concentration. But we have to do more to make them, part of them, everyone of them, the stakeholders for the development of Cambodia. For that they have to grasp the rule of the game of the dynamics of stakeholders system, where there should be area of cooperation and segment of competition. They have to abide by the rule of “Co-opetition” if I may use the concept set forward by Prof. Adam M. Brandenburger and Prof. Barry J. Nalebuff. Beyond this they have to pay due taxes to the government.

5. As new member of WTO, we wish the successful outcome to the Doha Round. The sooner the better for us. The international trade plays a crucial role in maintaining high growth rate in Cambodia, thus becoming a fundamental factor in poverty reduction. More importantly, we have moved beyond trade liberalization to integrate the Cambodia economy into the region and the world.

6. During the opening of 10th ASEAN Finance Ministers’ Meeting on April 5, 2006, Prime Minister Samdech HUN SEN stressed that a well integrated and smoothly functioning regional financial system is sine qua non for achieving the ASEAN Economic Community (AEC). Cambodia is part of ASEAN Finance Integration. Presently, we have to overcome many difficulties to implement our “Vision and Plan of Action for the development of the financial sector” leading to the establishment of the capital market. Not only big firms but also SMEs, which presently face difficulties in financing will have to benefit from this financial sector development.

7. We are aware that the development of our financial sector can succeed only when we succeed to strengthen our fiscal position and to continue to maintain our macroeconomic stability. In Cambodia the first year of our Public Finance Management System Reform is full of hope. With all stakeholders’ commitment and devotion, we are confident to secure by 2015 an international standard for our Public Finance with a budget program for running the country.

8. For Cambodia, tourism has played a crucial role in poverty reduction. As other developing countries, we should leverage on tourism to promote sustainable economic development. We have embarked on various initiatives to link major tourism destinations and to build both hard and soft infrastructures for a sustainable and harmonious tourism development.

9. Both regional and sub-regional initiatives have been instrumental for reducing development gaps in East Asia. At the sub-regional level, Cambodia has been engaged in the ACMECS cooperation with Myanmar, Laos, Thailand and Vietnam to promote sub-regional cooperation. At the ASEAN level, we support the Initiative for ASEAN Integration (IAI) to bridge the development gaps between newer and older ASEAN members. Moreover, Cambodia has been supportive of the ASEAN+3 cooperation, including the establishment of the ASEAN-China Free Trade Area, the ASEAN-Japan and ASEAN-Republic of Korea Closer Economic Partnership.

10. Cambodia has voiced strong support for the ADB’s new Initiative for Regional Cooperation and Integration with a vision of an integrated, poverty-free, prosperous and peaceful Asia-Pacific and its four inter-related pillars: (i) regional/sub-regional economic cooperation program; (ii) trade and investment cooperation and integration (iii) monetary and financial cooperation and integration; and (iv) provision of regional public goods. Moreover, we continue to strongly support the ADB’s GMS programs, which are critical to poverty reduction in the region.

11. We are conscious that ODA continues to play an important role in poverty reduction. Cambodia has been at the forefront of building the Partnership and Harmonization in line with the OECD/DAC initiative. We have not yet been fully in the driver’s seat, as donorship is still strong in practice, driven by other agenda, especially in the area of superstructure such as democracy and human rights. We have drawn the attention of our development partners about the need to ensure harmonious interaction between the infrastructure and superstructure. Indeed, we cannot establish a strong superstructure on weak pillars, i.e. weak infrastructures. The developed nations need to share more pieces of the economic pie, instead of just offering morsels of aid to maintain our survival.

12. We need to work hard towards raising the economic and social conditions of our people so that they can live a secure, peaceful, and dignified life. We are optimistic about our future since Cambodia is part of the growth and vibrancy of the economies of ASEAN grouping where our +3 partners may do more for the win-win situation.
 

Thank you !