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Competitiveness ranking slips

A food vender walks past derelict train carriages near the Phnom Penh train station in Daun Penh district
A food vender walks past derelict train carriages near the Phnom Penh train station in Daun Penh district. A report from the World Economic Forum says that improved infrastructure and transport would enhance Cambodia’s competitiveness. Hong Menea

Competitiveness ranking slips

A lack of innovation has contributed to Cambodia dropping seven spots on the World Economic Forum’s 2014-15 Global Competitiveness Report (GCR), which was released on Wednesday.

The Kingdom ranked 95th out of 144 countries, down from 88th in the previous report, according to the GCR. Apart from Myanmar, Cambodia was the lowest ranked country in the region, with Singapore, Malaysia, Thailand and Indonesia all in the top 50.

The annual study takes into account scores from 12 separate areas, including infrastructure, health and primary education, financial market development, business sophistication, and innovation.

Labour-market efficiency, which takes into account labour relations as well as pay and productivity, among other measures, was the only area of competitiveness for Cambodia ranked inside the top 80 countries, with a standing of 29th. Innovation and business sophistication were classed as the country’s least attractive areas, ranking 116th and 111th respectively.

However, not everyone agreed with the assessment.

“I don’t think we are less competitive, it is just because we did the survey at not a right time,” In Channy, president and CEO of Acleda Bank, said, referring to the WEF’s data collection period, which came during Cambodia’s political deadlock and strikes.

“If the survey was done now, I think Cambodia would be ranked higher because in reality our investment environment and competitiveness is strong, even stronger than some of our neighbouring countries.”

In addition to the overall ranking, the WEF cited corruption, access to financing and inadequate supply of infrastructure as key barriers to doing business.

Despite Cambodia’s labour-market efficiency holding a better standing than other areas, Van Sou Ieng, president of the Cambodian Federation of Employers and Business Association (CAMFEBA), said that the country’s high density of labour unions was among key factors impacting Cambodia’s business climate.

“We can see an improvement in anti-corruption, we have seen some improvement in financial markets, and we can see the improvements in public services,” he said. “But we do not see improvements in the justice system. We have seen even less with labour relations and the number of labour unions, which cause strikes and do not obey the laws.”

Despite the fall in the rankings, Hiroshi Suzuki, chief economist at Business Research Institute for Cambodia, said the WEF’s report would have a limited impact on the investors’ views of Cambodia.

“So far, Cambodia has enjoyed good performance in attracting foreign direct investment by having lower labour costs. That said, reform and improving the quality of human resources in Cambodia is essential for the continuous growth and competitiveness of the economy in future,” he said.

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