The Economic Institute of Cambodia said the domestic economy is set to increase by 7 percent this year, the most optimistic projection for 2011 GDP growth yet released.
The Ministry of Economy and Finance, the World Bank and the Asian Development Bank have projected 6 percent GDP growth for 2011, while the International Monetary Fund has pointed to 6.8 percent growth.
The agriculture industry played centre stage at an EIC press conference in Phnom Penh today, announcing its prediction.
The sector was expected to be a main driver of the Kingdom’s economic growth in 2011 after receiving a boost from tax incentives accorded by the European Union to developing countries, according to EIC researcher Khin Pisey.
“Our milled rice exports to European markets cannot compete with Thailand and Vietnam if we don’t receive tax exemption from the EU,” he said during a presentation held in the capital today.
The Kingdom’s rice exports do not pay any duty on entering the European Union, EU Delegation to Cambodia Chargé d’Affaires Rafael Dochao Morono confirmed today.
“This gives Cambodian exporters a significant price advantage in the European market vis-à-vis other rice exporting countries,” he said.
EIC president Sok Harch claimed Europe’s rules saved Cambodian rice exporters some US$228 per tonne, but added concerns that it was scheduled to finish at the end of December.
“We don’t know whether they will renew for us or not,” he said, adding more than 90 percent of milled rice exports from Cambodia went to European Union member countries.
However, Rafael Dochao Morono said that the expiration was an administrative issue, adding that Cambodia could be fully confident that its preferences for rice would continue after 2011.
According to EIC, the agro-industry was set to have a particularly strong year with increases in the numbers of food processing plants and rice mills, but the construction sector was still in a slowdown and tourism revenues were still relatively low, according to Khin Pisey.
“Although the number of foreign tourists has increased substantially, revenues [per tourist] are declining because most tourists are from neighbouring and regional countries – not from western countries,” he added.
However, Minister of Tourism Thong Kong has previously rejected the notion that tourists from Asian countries are outspent by their western counterparts, excepting the cost of flights.
In 2010, the EIC said the garment sector grew 14.5 percent, the agro-industry grew 13.3 percent and tourism 9.3 percent last year, but added these figures were generally set to increase further during 2011. ADDITIONAL REPORTING BY JEREMY MULLINS