With the government’s long-awaited Industrial Development Policy released last month, Cambodia’s economy has been set a pathway towards diversification and sophisticated industries. The Post’s Ananth Baliga sat down with Mey Kalyan, Senior Advisor to the Supreme National Economic Council and a contributor to the new policy, to discuss the government’s economic vision and how the industrial policy will be implemented.
What is the thinking behind new policy like this?
First of all we look at the context and then after context we think about the vision. After the vision we are thinking about the strategies, and after that the policy – what needs to be done.
Cambodia is developing well so far for 20 years and then over time we have to shift gears, like a car. So it is about the growth and value added.
And also, it is very timely for us to think about this because agriculture growth has plateaued.
So they have to boost another engine of growth which is industries and manufacturing.
But a lot has happened already. But it is better to streamline it and organise it in a better way, so that it could be developed further.
Cambodia is one of the poorest countries in ASEAN. From a GNI point of view we are at the bottom. So we still need more development. We need to lift our living standard.
For growth it is agriculture, services and industry. But industry is so far about garment only. Garments are only low margin. So industry provides a sustained, balanced growth. Technology and innovation are in industry.
During the launch Prime Minister Hun Sen did say that garments and rice have reached peak growth. Is there a sense of urgency, maybe panic, to ramp up other sectors?
I think it is a sense of urgency, but not panic. We have to preempt the issue. We could see the growth of agriculture slow down and then growth of other sectors also start to growth down.
That is why we need to boost another engine for growth. If you look at economic development in Cambodia, after we gained independence we got a government, we joined the WTO then we started with garments.
But now we have to shift to value added. But we could not say much because our labour productivity is low. But in any countries you look at the history of development of industry.
You start from garment factories because this is the kind of social evolution from the agriculture sector and into the industrial sector.
In order to move into these high-value and skilled industries, what specific sectors can Cambodia get into given its current circumstances?
This is a good question, but difficult to answer. But generally, people are talking about agriculture processing. They are talking about small and medium enterprises.
It is okay – but what we are going to do needs to be defined. What I see realistically happening is something to do with electronics, something to do with spare parts like Minebea is doing.
We don’t know which one to target but we need to facilitate an environment for investors to come in.
We have designed in the policy to have an advisory council. This is important. We are bureaucrats we don’t know which businesses will make money.
So we made a council that consists of three partners. The government is one.
Another one is the private sector. We need a really clever, big corporation kind of CEOs. Who can fly in a couple of times a year to come for a meeting and suggest what kind of direction we should take.
The private sector is very dynamic and mobile. And the third party is academics and researchers who can give us ideas.
How do you see the Council for the Development of Cambodia (CDC) dealing with multiple line ministries and the different laws and parkas that each of them individually have?
To me, my concern is not the policy. It is about implementation. Who will do that? If you look around we have good ideas but I think only the CDC in terms of structure has the status and reach to do all this.
But as the PM said clearly we need to strengthen the CDC for this. So many problems, so many hiccups, so many negotiations will take place.
But I think we have to boost the CDC so that it can handle all these issues, and give it staff with all the required capabilities.
Now, of course there is a lot of coordination and discussion with line ministries. But this is a normal process.
I don’t think there is any silver bullet to answer this question. Any country or institution will face these coordination problems but I believe this is a “learning-by-doing” process.
This story has been edited for length and clairty