Senior government officials led by Prime Minister Hun Sen addressed the
largest-ever gathering of current and potential foreign investors this week and
presented a generally optimistic view of the Kingdom's economic, trade and
investment prospects, including its reform agenda, for the near and medium
The "Cambodia Investment, Trade and Infrastructure conference",
organized by Bangkok-based Dataconsult Ltd was the fourth of its kind to be held
in Phnom Penh in the last decade.
Around 330 participants from throughout
ASEAN and North America registered to attend the conference held at Le Royal,
according to Dataconsult's Chris Bruton, compared with a high of 200 for any of
the previous events.
The two-day conference was kicked off on November 30
with a keynote address by the Prime Minister. Hun Sen said Cambodia had "closed
a bitter chapter of [its] history characterized by turmoil, turbulence and
In summarizing the country's macroeconomic situation, Hun Sen
said that as a result of "systemic reform programs, in 2004, real GDP amounts to
7.7 percent. The inflation rate was kept at 3.9 percent. The exchange rate was
fairly stable ranging around 4,000 riels per US dollar and international
reserves cover three months of imports."
The Prime Minister added that he
expected GDP growth in 2005 to be 6.7 percent and around 6 percent for the rest
of the decade.
"Having achieved stable growth for a number of years
successively and successfully, Cambodia has gained confidence and is now poised
on an important threshold in its journey into the future. Cambodians have
reached a crucial platform and look to their future with optimism and hope," Hun
Minister of Finance and Economy Keat Chhon presented a more
detailed overview of various economic indicators, noting that recent growth had
been propelled by the garment, tourism, telecommunications and construction
Chhon said visitor arrivals in 2004 were 41 percent higher than
in 2003, and that for the first nine months of 2005 the country had received
1,005,000 visitors. He also displayed figures that predicted the visitor arrival
number would be 3,120,000 in the year 2010.
With regard to Foreign Direct
Investment (FDI), an important indicator of international investors' confidence
in an economy, Chhon said that in the first half of 2005 FDI had reached US$445
million, recovering from the previous disastrous five years where total annual
FDI had never topped more than US$160 million per year.
projects have been signed so far this year," said Chhon, "the highest since
"The construction sector contributed 10.4 percent to economic
growth in 2004," Chhon said. "Growth in the construction sector is projected to
remain strong in 2005 at about 11 percent."
Chhon said that in the
short-term there were several factors that could pose problems for the Cambodian
economy. He said that the growth base remained weak in the agricultural sector,
that there was uncertainty in the manufacturing sector due to the rise in petrol
prices as well as threats from terrorists, and that high business transaction
costs were also problematic. He also noted that expected decreases in overseas
development assistance could impact the economy.
Minister of Commerce
Cham Prasidh told the participants that Cambodia's garment exports had continued
to increase and totaled US$1.8 billion for the first 11 months of 2005, a 6
percent increase over 2004.
"It means that we are surviving," said
Prasidh. "The prospects are good for us."
Prasidh said that quotas placed
on Chinese garment exports to the US had helped but that the kingdom's
reputation as a "non-sweatshop" country was also important.
take China and Vietnam five years to build a reputation as a non-sweatshop
country, so we still have some time," said Prasidh.
"There are new
factories coming, and the newcomers are more numerous than those that are
closing their doors," he added.
Minister of Public Works and
Transportation Sun Chanthol said the rehabilitation of the country's national
road system would continue with the help of bilateral and international
He said the rehabilitation of Route 1 from Phnom Penh to Neak
Leoung would start on Dec 6, that ground had been broken on the repair of the
Siem Reap-Poipet road on November 19, that work was under way with Chinese aid
on Route 7 from Kratie to the Lao border. The Thais had also agreed to fix
Routes 67 and 68, with work expected to get under way in 2006.
also said the ministry was looking for a private investor to fund a light rail
system from Phnom Penh to the airport using the existing rail line, as road
traffic had become so congested. As well, he indicated that the government would
consider privatizing other national roads-as has been done with Route 4-as
government funds were insufficient to manage highways once they were
Minister of Justice Ang Vong Vathana touched on the issue of
corruption that has been an on-going bone of contention with investors. He said
"the fight against corruption is of great necessity, especially in the judicial
field." Vathana said the Anti-Corruption Draft Law had "a purpose to combat all
forms, all natures and all levels of corrupt practices through measures to
educate, prevent, and combat corruption together with public participation and
international cooperation." He did not speculate on when the law would be
In addition to the Anti-Corruption Law, Vathana said needed
measures included "streamlining bureaucratic procedures, simplifying and
modernizing the tax system, eliminating excessive regulations and motivating
public servants by giving them a decent level of salaries can help reduce ...
While specific steps taken to achieve these ends were not
presented, Vathana said progress in passing new laws, such as the Law on
Commercial Enterprise, and the Law on Secured Transactions, were critical to an
improved investment climate.
While the Cambodian government is no
different from all governments in their efforts to put on a rosy face when
dealing with foreign investors, this year's conference, in comparison to years
past, had several long-time observers of the Cambodian economy nodding their
heads in approval rather than shaking them in fits of cynicism and disbelief, as
has been witnessed in years gone by.
"There's been a huge improvement
since the last investment conference," said one participant. "It's driven by
WTO. There's a commitment and they're doing it," he added, referring to legal
and governance reforms.
"They [RGC] have a wish list which is realistic,"
said ACLEDA Bank's John Brinsden when asked if the government could meet its
stated reform agenda. "It may take longer [than expected] and a lot of hard
work, but I think it is going to happen."