Resource information
This issue of the Cambodia economic
update covers the following selected issues: 1) making the
most of the Cambodian rise sector; and 2) creating
opportunities for firms as reflected in findings from the
investment climate assessment. For FY2014 economic growth
held up well despite domestic uncertainty and instability in
neighboring countries. Real growth is estimated to reach 7.2
percent, driven by the garment, construction, and services
sectors. Overall macroeconomic management has been good with
fiscal consolidation underpinned by improved revenue
administration. In 2015 with the expectation of renewed
confidence and the return of political stability after
ending a yearlong political deadlock in July 2014, bolstered
by a strengthening global economy, Cambodia's real
growth rate is expected to reach 7.5 percent, similar to
that of 2013. The downside risks to the projected robust
growth are a potential recurrence of labor unrest, natural
disasters, especially the possibility of heavy floods, as
well as regional political uncertainty. Concerning rice
production, growth decelerated in 2013 highlighting the
importance of revitalizing the rice sector so it becomes
once again a key engine of GDP growth. While the milled-rice
export market is steadily expanding and increasing the
number of destination markets, the milling and transport
costs of Cambodian rice make it loose the competitiveness it
has at farm gate prices. The Royal Government of Cambodia
(RGC) has set a very legitimate target of one million tons
of milled rice exports that matters tremendously for poverty
reduction and shared prosperity. Concerning the investment
climate assessment findings, RGC's new five-year
Rectangular Strategy III continues to prioritize improving
the business environment to help diversify and increase
value-added in production. The current period of robust
growth represents an opportunity to make improvements to the
business environment that will attract long-term investors.
Proposed next steps in reforming the business environment
include: a) addressing the high cost of electricity; b)
automating government processes; c) encouraging new
investment, particularly in special economic zones; d)
continuing improvements to trade facilitation; e) completing
the draft Competition Law; f) designing and implementing a
system of incentives for business registration; and g)
focusing on implementation and enforcement.
