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Bad news beats no news

Bad news beats no news

CAMBODIA recorded mixed results recently in terms of improving the quality and quantity of economic information available to investors.

Prime Minister Hun Sen’s endorsement on Friday of a sub-decree that would lead to the pooling of information on the labour market represented a significant move to help investors learn more about the country’s employment situation.

But earlier in the week a business delegation complained the government had not done enough to promote the Kingdom’s largest export industry, garments.

The head of the delegation, Korea Federation of Textile Industries team manager Gue-bae Yeoum, noted that South Korean companies “are too scared to invest here” due to a lack of information.

But although South Korean companies have recently complained, recent examples show the Kingdom has made progress in supplying the private sector with reliable economic information.

Cambodia saw garment exports to other relatively small markets expand last year, suggesting promotion was effective. In the first half of last year, when the garment downturn was at its worst, the Kingdom saw clothing exports to Japan nearly double year on year to US$9.6 million on the back of a major industry effort to link up with new markets to compensate for losses in countries such as the United States. Clearly Japanese firms have gained confidence in terms of doing business with Cambodia’s garment sector.

Still, the Kingdom has a long way to go in terms of keeping the business community fully informed. On Saturday, the prime minister again insisted that Cambodia had achieved GDP growth last year during a speech at the Asialink Conversations in Phnom Penh. It’s a line that correlates with the official government position that the economy grew 0.1 percent, but contradicts the International Monetary Fund and Economist Intelligence Unit, among others, which say the country went into recession last year, contracting between 1.5 percent and 2.5 percent.

Anecdotal and statistical evidence suggests that all major industries in the economy – garments, tourism and property – went into decline in 2009, with agriculture the only significant exception.

It therefore remains largely unclear whether the country experienced macroeconomic growth last year or not, let alone to what degree.
In regards to GDP statistics, the likes of Singapore and

China release data quickly on a quarterly basis. This allows firms to make decisions on whether to invest, when to do so, and perhaps even how much based on projections of general economic activity. Similarly, existing investors get a rapid snapshot of where the economy stands and where it is heading.

Ultimately, when it comes to business information, even bad news is better than no news. With up-to-date, reliable and regular economic data available, Cambodia would become less of a risky frontier market. The country could become an investment destination offering stable, predictable growth, which would allow companies to react quickly to market conditions.

Of course, collecting and publishing timely and comprehensive economic data takes time and financial resources. It also requires a certain degree of political will, especially when the news is not good.

For a government that has overseen something of an economic miracle over the past decade, fuller disclosure should therefore provoke few fears.

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