Despite the persistently high rates of corruption that are seen widely as a major impediment to doing business, and poor access to quality higher education, Cambodia has moved up a notch in the latest World Economic Forum’s Global Competitiveness Report, released yesterday.
Cambodia now takes the 89th spot in global competitiveness, up one position from last year, according to the annual report, which maps out the major factors in driving productivity across 138 nations. The marginal improvement still leaves the Kingdom as the second-worst country in ASEAN in terms of competitiveness, narrowly beating out Laos, ranked 93rd. Myanmar was excluded from this year’s report after ranking 131st last year.
Bigger and more developed ASEAN economies such as Singapore, Malaysia, Thailand and Indonesia consistently rank within the top 50.
While the WEF report highlighted that the country has, since 2007, performed the best amongst Asian nations in overall ranking improvement based on 12 governmental and economic pillars weighted on a scale of 1 to 7. Cambodia now has a base score of 3.98. Neighbouring countries such as Thailand and Vietnam scored better at 4.64 and 4.31, respectively. Meanwhile, Laos came in at 3.93.
“Despite the positive trend, the challenges are many and significant,” the report read.
Cambodia’s comparative ranking on nearly half of the 12 pillars that form the overall ranking put it over 100. In its poorest-ranked pillar, higher education, the Kingdom ranked 124 out of 138 countries, indicating a continual trend of decline and lack of reform.
“It is estimated that secondary education enrolment is around 50 percent,” the report said. “Ensuring access to quality of education for all should therefore be a policy priority.”
The report noted that of three of the four core areas defined for competitiveness, Cambodia made only marginal gains in public institutions and infrastructure development, down five notches compared to last year. Labour market efficiency was widely in line with the East Asia and Pacific average.
However, Cambodia’s overall ranking has been regularly dragged down over the years by its lack of business sophistication, a lack of capacity to innovate and technology readiness – all of which are based on metrics that assess the quality of individual firms, government institutions and supply-side constraints.
Eric Tavernier, CEO of We Group Ltd, a French firm that operates a garment factory in Sihanoukville, said that Cambodia could increase its competitiveness if it developed local capacities for large-scale production and increased logistics capacity.
“What can Cambodia do?” he asked. “Decrease the cost of logistics, which is very expensive, and build local suppliers for materials and increase the level of skilled management.”
“Cambodia is a competitive country,” he said, however adding that companies need to continually innovate to remain profitable.
The WEF report highlighted that in terms of the difficulty of doing business, corruption took the top spot followed by an inadequately educated workforce underpinned by a lack of access to quality higher education.
Phok Rathak, senior research assistant from the Nuppun Institute for Economic Research – a local research firm that participated in this year’s evaluation – said that the Cambodian government was failing to shore up its higher-education system while students were earning degrees that were not directly applicable to the future job market.
“The government needs to regulate higher-education institutes and make sure they are all updating their curriculums to the highest standards,” he said, adding that there is a current mismatch between individual institutions.
“The government has stopped corruption and cheating in the Grade-12 exam, but they have yet to create a set of standards that unify higher education or properly prepare students,” he said. “Compared to Thailand, we are way behind.”
As for the infrastructure score, he said that he would expect to see only marginal progress due to a lack of urban planning and short-term infrastructure projects that are grossly inadequate.
“Cambodia needs to think about quality infrastructure with a phased urbanisation plan,” he said, adding that Cambodia’s infrastructure development has been far too dependent on foreign sources of funding that build subpar projects.
“In the long term, Cambodia needs to invest its own funds into infrastructure to make sure they are sustainable.”