PM tells officials to keep prices stable and fight bureaucracy
PRIME Minister Hun Sen has called for the government to reduce its trade deficit by increasing exports in a speech at the launch Thursday of the new Ministry of Commerce building in Phnom Penh.
Following a year in which Cambodia saw an 18.2 percent drop in exports, the prime minister said that all departments of government could help improve the deficit, which fell 14 percent last year due in part to the economic crisis.
“I am calling for you to concentrate on enhancing supply and export capacity, and to reduce trade deficits,” he told about 1,000 gathered government officials at the event. “By helping to facilitate trade, through keeping prices stable and reducing bureaucracy, we can ease the export process.”
Cambodia’s deficit fell to US$1.589 billion last year from $1.848 billion in 2008 as imports on everything from raw textiles to construction materials fell as growth stuttered to halt – although the GDP figure is yet to be published for 2009, international organisations including the World Bank and International Monetary Fund were forecasting a small contraction in GDP.
Although the deficit value fell last year, imports were 30 percent greater than exports in 2009, compared with a 29 percent difference in 2008 as the gap continued to widen in the wrong direction.
For instance, Cambodia imported $1.58 billion in goods from Thailand, but exported just $77.73 million in return, meaning that Thai shipments counted for 95 percent of total bilateral trade with the Kingdom.
With Vietnam the disparity was little better at 83 percent, according to figures supplied by the Vietnamese Embassy in Phnom Penh.
Hun Sen acknowledged this huge trade gap Thursday, also highlighting Cambodia’s rising exports. Overall, however, the decline in exports outstripped the fall in imports last year – shipments to the Kingdom fell 17 percent, according to official figures.
With Vietnam in particular increasingly investing in agri-processing plants in Cambodia, the government could expect for this gap to close in the longer term, but more immediately the trade deficit looks set to widen, according to an International Monetary Fund report in December.
“As the recovery starts to kick in, the deficit is projected to widen to more than 11 percent of GDP in 2010, owing principally to sluggish exports trailing rising imports and oil prices,” it said.
Hun Sen called on small and medium-sized businesses to produce high-quality goods that could also tap into domestic demand.