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World Bank consults with Cambodia on ‘constitution’

Trade strategy is being drawn up to prioritise aid and support economic growth in developing nations, top economists say

CAMBODIA’S manufacturing sector will naturally gain higher profit margins as it develops, but exporting industries could benefit from easing border restrictions, World Bank trade economist Julian Clarke said Thursday.

World Bank officials met with Cambodian trade and logistics industry stakeholders at Phnom Penh’s InterContinental Hotel as part of its worldwide consultation process to produce its trade “constitution” by the end of the year.

It is intended to help the World Bank prioritise aid assistance to promote international trade, in turn boosting economic growth, particularly in developing nations, according to World Bank senior economist Philip Schuler.

“It’s not something you can just carve out and say we’re going to focus on trade and nothing else,” the Washington-based economist said.

The domestic garment industry is a key sector that could potentially move upscale in Cambodia, resulting in increased profit margins as economic growth progress, Clarke said on the event sidelines.

However, moving to higher value-added production requires expedited border shipments, he said.

“As you get into more fashion-intensive garment production, you require shorter buy lines and just-in-time logistics. With thicker borders, this timeline is delayed,” he said.

Predictability in barriers is a key concern for the private sector, Clarke said. The World Bank encourages government to be as open as possible, and progress in this sector would boost trade in Cambodia, he said.

“Under World Trade Organisation obligations, governments should have transparent enquiry points, and we are working to establish this in the future,” he said.

Challenges with transparency disproportionately hurt small and medium enterprises, as larger firms have more resources to devote to pursuing these concerns, Schuler said.

The eventual trade-strategy document will be fairly broad in scope, as unique concerns affect each nation, according to World Bank lead economist Mathew Verghis.

“We can’t put in a lot of specifics. What has biggest bang for the buck in Cambodia may not have the biggest bang for the buck in Turkey,” he said.
Trade enables economic growth and poverty reduction, he said, but it can also disadvantage groups of people and cause environmental degradation.

“Although we like trade, we still have a lot to learn on what needs to be done.”

Julian Clarke said the report will guide longer-term projects and country-specific actions.

The proposed World Bank’s report is concentrated on five areas of focus for effectively disseminating and promoting trade, including trade competitiveness, trade facilitation and logistics, trade finance, trade cooperation, and trade data and systems.

A draft paper is scheduled for dissemination at the end of the summer, with the full report expected to become available by year’s end.

The World Bank plans to review the report every five to 10 years to keep it current.

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