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Kingdom must diversify its economy, ADB says

Kingdom must diversify its economy, ADB says

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Stephen Groff, a vice president at the Asian Development Bank, speaks to the Post earlier this week in Phnom Penh.

Asian Development Bank vice president Stephen Groff, who started with the bank in October, sat down with Post reporter May Kunmakara yesterday to discuss the Cambodian economy, its investment environment, as well as the bank’s future in the country.

Cambodia has enjoyed rapid growth over the past decade. How is ADB targeting its grants and loans to ensure more equitable development?

I think when you have an economy that depends on the agricultural sector, there is a need to ensure that we strengthen the linkages between rural and urban areas. Our work also focuses on promoting education so that we can provide better employment opportunities for people living in both rural and urban areas. This is important for the economic growth that we see happening in Cambodia – to be more and more equitable.

Cambodia’s growth has relied on a handful of industries such as tourism, agriculture and garments. Where should investment be targeted to broaden the economic base?

Well, I agree. We need to see much more broadening and deepening of the economy. Much of the economy is largely focused on the agricultural sector and in manufacturing.
But, in the manufacturing sector, we have seen some positive diversification. China and Japan have invested to diversify the manufacturing sector here, which is good for making sure the country is not too dependent on a single area or single sector.

What are the ADB’s forecasts for growth over the next few years for Cambodia? What industries and sectors are the most promising?

For the region as the whole, we are really optimistic. The region had 7.5 per cent economic growth recently. We think this will slow somewhat to 7 per cent next year, depending on Europe's current problems. Similarly, Cambodia had 6.8 per cent growth, and we’re projecting 6.5 percent this year, a slight decrease.

How will Cambodia be impacted by the recent economic troubles in the EU and US?

For any countries where the economy depends largely on exports, diversification is very important. There was a time not too long ago where the main export markets in the world were the EU and the US, which has changed dramatically over the last few decades. And now, there is a lot of trade happening with China and India, so there are a lot more countries in the world's export market to choose from.

Cambodia is going to chair ASEAN this year. How important is this chairmanship for the country?

Well, I think it’s very important for Cambodia and a great opportunity because the country can play an important role in representing the concerns and perspectives of the smaller ASEAN members. There's many shades of challenges and issues ASEAN’s smaller members face, and Cambodia will be looking to play a vital role as spokescountry for the views of all these countries. I also think it is time and a great opportunity for Cambodia to showcase its own very positive movements towards economic growth and poverty reduction, considering the progress that the country has made over the last decade.

Will ADB be involved in helping Cambodia?

We are supporting through SNEC [Supreme National Economic Council]. And we are providing some advice as well. But the focus should still be on the government’s decision.

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