A shortage of skilled workers would continue to hinder Cambodia’s economic progress, the Asian Development Bank said yesterday in an annual report, with experts claiming an increasing number of international companies struggle to find capable staff.

The bank’s economic projections for the Kingdom did not surprise.

The Asian Development Outlook, ADB’s annual report on the region, estimated 6.5 per cent and 7 per cent year-on-year growth for gross domestic product in 2012 and 2013, respectively, down from 6.8 per cent last year.

ADB’s GDP growth forecast matched Cambodia’s Ministry of Economy and Finance, International Monetary Fund and World Bank projections for 2012, and was slightly more optimistic for next year.

Industrial growth was expected to fall nearly 18 per cent compared to last year.

A troubled European market could constrain garment and footwear manufacturing to 11.4 per cent year-on-year growth, the report said, although ADB representatives at a press conference yesterday in Phnom Penh said the euro zone crisis and its threats to the region would ease next year.

Inflation would steady at about five per cent for the next few years, provided there was not a dramatic increase in oil prices or high levels of domestic financing.

Most worrying was the sustained gap in human resources, as well as a growing disparity between Cambodia’s newly rich and historically poor, which mirrored the overall trend in Asia.

The country’s manufacturing story was one of quick growth in exports but slow response in terms of human capital investment, industry insiders said yesterday.

Low efficiency and pinched access to managerial talent increased the cost of doing business in Cambodia, Mona Tep, director of the Society of Human Resource Management and Productivity, said yesterday.

Workers on Cambodia’s factory floors were rated this year at a 35 per cent to 45 per cent efficiency level, a regional low, she said.

A lack of direction in the workplace, coupled with inadequate education, had caused the trend.

As few as 25 per cent of Cambodia’s managers were Cambodian, Mona Tep estimated, requiring companies to import costly management staff.

The last official report, completed in 2008, put the figure at 20 per cent.

“The industry grew so fast but we didn’t have time to cultivate the middle managers and workers. Twelve years later, we still don’t have these skills,” she said.

“China is losing manufacturing jobs and we have a choice of [what companies] we want. The question is: Can we deliver?”

The value of garment exports has grown 185 per cent since 2001, hitting US$3.3 billion last year, according to data from the Garment Manufacturers Association in Cambodia.

The low level of human capital was threatening Cambodia’s ability to continue to attract manufacturing investment, Peter Brimble, deputy country director at ADB’s Cambodia mission, said at the press conference yesterday.

Recent diversification away from garments, such as the arrival of Japanese ball-bearing manufacturer Minebea last year, could be short-lived without more skilled workers.

“Minebea is trying to recruit 3,000 workers this year, and they seem to imply it might be a challenge. If it is indeed a challenge, then the next company looking to come here won’t come,” Brimble said.

Kengo Katsuki, Minebea Cambodia’s vice-president and chief operating officer, said finding skilled staff was a challenge, but the company believed it could adequately train workers.

“Although it’s not so easy to find a skillful employee, we will manage to bring them up by doing the training and education in our company,” he said in an email yesterday.

Minebea trained its Cambodian workers at factories in Thailand, an option not all international investors had, Brimble said.

Minebea’s 31 managerial staff had been brought in from Japan, Thailand, Malaysia and China, Katsuki added.

Cambodia’s skill shortage had worsened in the past few years as rising wages lifted manufacturers up the value-added chain, the ADB’s re port said.

Employers reported that 73 per cent of university graduates did not have suitable skills, according to the report. The figure was 62 per cent for those who had vocational training.

One-third of employers “found it difficult to train or upgrade their workforce”.

The bank’s recommendations for Cambodia began with better early-childhood nutrition and primary and secondary education.

Government, business and development partners should help those with an incomplete education find work, and schools and industries should be brought closer, it said.

“This is not something that happens overnight,” Ken Loo, secretary-general of the Garment Manufacturing Association in Cambodia, said.

The government should establish more vocational schools and institutes for those seriously looking to improve themselves and find jobs in  manufacturing, he said.

There were more than 50,000 factory jobs open in the Kingdom, he added.

To contact the reporter on this story: Don Weinland at [email protected]