PRIME Minister Hun Sen said yesterday that developing industrial capacity was necessary for sustainable economic growth and would also help the Kingdom avoid “the middle-income trap”.
“There is an urgent need for Cambodia to modernise its economy, through promoting the development of the industrial sector in order to achieve a sustainable growth,” stated the premiere at the opening of the fourth Cambodian Economic Forum, held at the Peace Palace in Phnom Penh yesterday.
Development, he said, would help the Kingdom avoid a “trap” which had prevented a number of countries from moving beyond middle-income status due to a lack of capacity.
But the prime minister did not detail how Cambodia would achieve its aim, stating: “Indeed, the concept of industrial development policy seems to be broad - as we have not specifically determined the sectors that Cambodia should focus on.”
He highlighted priorities which included: the development of agro-industry and business in the medium term; capacity building of some handicrafts and small industries; discovering new industries which would benefit the Cambodian economy and link it with global and regional production chains.
World Bank’s country manager, Qimiao Fan, recognised the importance of the policy saying that industry had been a “key source of job creation and increasingly services are adding value”.
“Industrial policy, investment in human capital, special economic zones are not the silver bullets for growth and poverty reduction, but they do offer important avenues to unleash growth, create jobs, improve livelihoods, and reduce poverty for the Cambodian people,” he said.
“I am very much looking forward to join the discussion led by Supreme National Economic Council on thinking beyond the crisis and the direction of Cambodia’s future industrial policy.”
He also raised issues for the government to consider, including the role of the private sector in driving growth and advantages of diversity [in target markets].
United Nations Development Programme regional director, Ajay Chhibber, raised macro-economic challenges at the forum. He warned against reliance of garment exports to the United States and the European Union, instead pushing the government to economically diversify.
“While the probability of a double-dip recession may have lessened, US and European demand will likely continue to be constrained for a few years to come, posing difficult medium-term challenges for countries like Cambodia,” he said.
“Cambodia is potentially competitive in several other activity areas beyond garments, but successful diversification will require investments in human capital and infrastructure.”
The main pillars of growth however remain set, the prime minister said. The sectors driving growth are agriculture, garments and tourism, he said.