ADB president Takehiko Nakao yesterday met with Cambodia’s prime minister Samdech Hun Sen and other ministers to discuss the Southeast Asian country’s development strategy.
Following the meeting, Nakao said steady progress had been made on the government’s PFM Reform Program, which is being supported by the bank. This had seen both improved budget credibility and financial accountability, he said, and had strengthened linkages between the budget and government schemes.
ADB also said it was ready to support ongoing decentralisation of public functions to outlying regions to enhance service delivery. With PFM improvements in place, the bank also called on the country to enact further reforms to diversify the country’s income stream.
Economic growth averaged a yearly rate of 6.5% between 2007 and 2014, and the ADB predicts expansion of 7.3% in 2015 as a result of well-managed inflation, a stable exchange rate and sustained competitiveness.
But it said the economy was vulnerable to external price and demand shocks due to its dependence on sectors such as clothing and garments, which accounted for 71% of exports in 2013.
‘Cambodia is among the world’s fastest-growing economies,’ Nakao said. ‘It has rapidly reduced poverty from nearly 50% of the population in 2007 to just 19% in 2012, although many people have moved only slightly above the poverty line and remain vulnerable.’
Among proposed reforms to further growth, the government was urged to improve the business climate to attract foreign capital and expertise that would accelerate the economy’s diversification from a reliance on clothing and garments, which accounted for 71% of exports in 2013.
The ADB also called for stable supplies of electricity to be established, and at a lower cost as it is currently among the region’s highest. Additionally, the country should improve access to finance for smaller enterprises that would enhance the private sector growth.
The bank is also committed in upgrading inadequate infrastructure services such as the country’s rural road network that are in poor condition, inhibiting the movement of people and goods within Cambodia and onto neighbouring countries. It also said it would support the country in helping to improve the quality of education through targeted skills development at post-basic education level.
