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Real economic debate missing in this campaign

Dear Editor,

Political parties vying for parliamentary seats in the upcoming election rarely talk about their plans for the economy — just when it is absolutely crucial to do so.

For a country that experienced war and genocide during large parts of the 20th century, Cambodia has certainly achieved remarkable growth over the past two decades.

Phnom Penh’s rapidly changing skyline illuminates the night sky last week.
Phnom Penh’s rapidly changing skyline illuminates the night sky last week. SCOTT HOWES

Gross domestic product increased almost six-fold between the first democratically held election in 1993 and the current one.

In per capita terms, an average Cambodian today earns more than four times what he did 20 years ago.

As a result, Cambodia is set to join the rank of middle-income countries — albeit at the lower end — later this year.

But Cambodia’s next stage of development is rife with perils.

While much of our past growth was underwritten by tax incentives, inexpensive labour and abundant natural resources, the contributions from the garment and mining sectors will not last. Rising labour costs and increasingly contentious industrial relations mean that some investors will leave in search of cheaper destinations.

Furthermore, in a world well-served by modern transportation and telecommunication links, Cambodians and Cambodian businesses will have to contend with counterparts far beyond our borders in search — and in defence — of jobs and markets.

It is perhaps too early to talk about the middle-income trap. But Cambodia’s future growth risks becoming directionless, inequitable and unsustainable in the absence of serious reforms and strategic investments in some important areas.

Take education, for example. The effort to rebuild the education system after the fall of the Khmer Rouge has yielded admirable results in terms of physical infrastructure and enrolment and literacy rates.

But fundamental problems persist. While curriculums are frequently updated, the underlying pedagogy is not.

The four-hour school days are shorter than those in neighbouring countries, and the introduction of student-centred learning has not been particularly successful.

In tertiary education, the main focus of many universities seems to be the number of degrees granted rather than equipping students with practical skills in response to job market demands.

And due to low salaries and benefits, the teaching profession struggles to attract and retain young, capable and passionate graduates who instead opt for better-paying jobs in the private sector.

Fundamental education reforms are long overdue. Now that access to physical assets such as schools and textbooks is no longer a major issue, the emphasis must be on improving the quality of education to ensure that the next generation of Cambodians are ready for a global economy that is less labour-intensive and more knowledge-driven.

The environment is another area deserving much more attention than it currently receives. According to the Food and Agriculture Organisation, Cambodia’s primary rainforest cover has declined steeply from over 70 per cent of total forest area in 1970 to just three per cent in 2007, making the rate of deforestation in Cambodia among the fastest in the world.

The scramble for mining rights and economic land concessions has also contributed to the rapid depletion of valuable nonrenewable resources.

Putting Cambodia’s growth back on a sustainable path requires a complete re-evaluation of the impacts these large-scale commercial activities have on the environment and the livelihood of the rural poor.

Last but not least, Cambodia depends to a considerable extent on foreign assistance to fund its annual budget. On the one hand, foreign aid helps fill the funding gap for social services such as health and education.

On the other, having ready access to aid money reduces the incentives to strengthen domestic revenue collection through a broader base of taxation and more effective enforcement measures.

This is neither an ideal nor tenable long-term arrangement. Cambodia needs a plan for an orderly medium-term exit from aid.

A self-funded budget is critical because it is a sustainable source of financing for physical and social infrastructure, as well as a mark of fiscal responsibility.

These reforms are an important first step towards building a solid foundation for the future.

Reforms are never easy, but recent events offer some cause for optimism. Not too long ago, visitors flying into Phnom Penh at night were greeted by a city mostly enveloped in pitch darkness.

But the Phnom Penh skyline has undergone drastic change, with luxury apartments and high-rise buildings going up at dizzying speed.

This is a sign that, while we have endured much hardship, we have also made significant progress.

At the same time, it is important to remember that the ultimate measures of a country’s development are not the scale or height of its buildings, but the quality of life and well-being of its citizens.

These can only be achieved through pragmatic efforts backed by genuine political will.

You Sokunpanha holds a master’s degree in public policy degree from the University of Michigan and currently works in banking in Phnom Penh.



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