Logo of Phnom Penh Post newspaper Phnom Penh Post - Economic outlook positive, ease of doing business still lagging: ADB

Economic outlook positive, ease of doing business still lagging: ADB

Workers prepare clothing for export at a garment factory in Phnom Penh in 2013.
Workers prepare clothing for export at a garment factory in Phnom Penh in 2013. Pha Lina

Economic outlook positive, ease of doing business still lagging: ADB

Cambodia’s economic outlook remains positive and the economy is forecast to grow at a robust 7 percent this year and next year, according to a report released by the Asian Development Bank (ADB) on Wednesday.

Growth in exports, strong foreign direct investment, growing tourist arrivals and increasing domestic demand should promote strong growth for the next two years, according to the bank’s Asian Development Outlook report.

Potential risks to the Kingdom’s growth remain, however, including the upcoming national elections in July, as well as the persistent difficulty of doing business in the country.

“Rising wages require that other costs of doing business be cut to maintain competitiveness with peer economies,” the report says. “Great potential exists in simplifying cumbersome business procedures.”

The report also calls for an improvement to the judicial system, which “is not seen as effective in resolving commercial disputes”.

Seang Thay, a spokesman at the Commerce Ministry, said yesterday the ADB’s outlook reflected the positive improvement of Cambodia’s economy. He also agreed with the need for further reforms to maintain competitiveness.

“We acknowledge that we need to try more to improve the procedure to provide easiness for business to do business in our country,” he said.

He encouraged patience, noting that the government would get better over time and keep improving.

Jan Hansen, the ADB’s senior country economist, reiterated the call for judicial reforms during the report’s presentation yesterday.

“What I think would be important is the establishing of commercial court,” he said. “The capacity building of judges and the commercial court would also help a lot to improve.”

Asked about a commercial court on Wednesday, Thay said that while it was an important step, further discussion with “relevant stakeholders” needed to take place. He also said that the National Commercial Arbitration Centre already existed for commercial disputes.

The spokesman declined to release any timeframe for possible implementation of a commercial court.

The ADB’s report also noted that garment and footwear exports were likely to slow in the future, but predicted that would be offset by strong growth in emerging industries, such as electrical parts and automobile components.

Higher demand for imports is set to increase the country’s trade deficit, however the bank expects increased tourism to bring in enough revenue to cushion the rise.

Meanwhile, higher foreign direct investments and official concessionary loans from abroad should be more than adequate to finance the current account deficit, even building up foreign reserves to about $10 billion by the end of the year.

MOST VIEWED

  • Tourists urged not to skip trip

    The Ministry of Tourism has called on international tourists not to cancel trips to Cambodia, but urged them to adhere to several dos and don’ts when arriving in the Kingdom during the Covid-19 pandemic. The ministry released an eight-point instruction manual on Wednesday published

  • The taxman cometh – Cambodia’s capital gains tax casts the net on individual taxpayers

    In a country where only limited personal income tax existed, the new taxation law beginning January 1, 2021, will make taxpayers out of Cambodians, whether they are ready for it or not About two years ago, a little known amendment was made to Article 7 of the Law

  • Cambodian-American gets Star Trek treatment

    Kevin Ung, a Cambodian-American whose family escaped genocide during the Khmer Rouge’s reign of terror, was recently selected from thousands of applicants to participate in the Television Academy Foundation’s inaugural 2020 Star Trek Command Training Programme, a course intended to give hands-on filmmaking experience

  • Cambodia seeks to be transport hub

    Cambodia is working on several fronts to modernise its transport infrastructure and services, concentrating on opening new international gates to relieve and balance traffic congestion at its borders, Minister of Public Works and Transport Sun Chanthol said on Thursday. This is part of the Kingdom’

  • PM: West unfair to Cambodia

    Prime Minister Hun Sen released a message celebrating the International Day of Peace on Monday, saying that some major powers and western countries had been systemically cooperating to put political pressure on Cambodia as they did in the 1970s and 1980s. Hun Sen said pressuring

  • First ‘mobile kitchen’ in Cambodia enters service

    A catering company recently rolled out Cambodia’s first “mobile kitchen” – a $50,000 container capable of serving up to 200 people at a time. The kitchen is the brainchild of Seng Hok Heng Catering Services. At 4.4m-high, 6.8m-long and 2.4m-wide (expandable to 6.8m), the kitchen is equipped