Logo of Phnom Penh Post newspaper Phnom Penh Post - World Bank: Challenges facing the Kingdom

World Bank: Challenges facing the Kingdom

Content image - Phnom Penh Post
Condos constructions in front of Australia Embassy in Cambodia. Hean Rangsey

World Bank: Challenges facing the Kingdom

Cambodia’s economy currently faces challenges including credit growth in the construction and real estate sectors, rising indebtedness and the possible withdrawal of the EU’s Everything But Arms (EBA) agreement, said the World Bank Group’s latest forecast report on the Asia-Pacific economies.

The report, released on Thursday, said total outstanding loans from banks and microfinance institutions in Cambodia exceed 100 per cent of gross domestic product, as the potential withdrawal of EBA and a sharp slow-down in the Chinese economy look set to dampen the Kingdom’s growth prospects.

“Strengthening oversight capacity and crisis preparedness in the financial sector is an important first step.

“The large foreign inflows that Cambodia has experienced over the past several years may not be sustained, especially in a context of increased global uncertainty and a slowdown in China,” it said.

The World Bank said the Kingdom must improve its external competitiveness to maintain moderate growth.

“It is an imperative to improve the country’s external competitiveness through increased productivity in the presence of rising minimum wages,” the report said.

The government recently introduced measures to facilitate trade by lowering logistics costs and support businesses by reducing the number of public holidays.

World Bank Lead Economist for East Asia and the Pacific Andrew Mason told reporters via a video press conference on Thursday that the bank is closely monitoring the Cambodian economy, with specific attention given to the potential effects of EBA withdrawal.

“I think 40 per cent of Cambodia’s exports go to the EU under the EBA agreement, so withdrawal will have a significant short-term impact on our exports there,” he said.

World Bank senior economist for Cambodia Sodeth Ly told reporters after the video conference that the Kingdom stands to benefit from Sino-US trade war tensions.

“As a result of Sino-US trade war tensions, first of all, we see new factories coming to Cambodia. Secondly, we have seen a growing number of factories producing travel goods in response to the US’ inclusion of Cambodia in its Generalised System of Preferences,” he said.

China is still the leading source of foreign direct investment in Cambodia, reaching $3.594 billion last year, Minister of Commerce Pan Sorasak has previously said.

The Cambodian economy is projected to grow at seven per cent this year, the World Bank said.

MOST VIEWED

  • Website advises travellers to stay clear of Angkor Wat

    An Australian website has advised travellers to avoid Angkor Wat during their trip to Southeast Asia because the ancient temple is showing signs of rapid erosion and faced water management issues. In a recent article entitled Best places to go in 2020: 12 destinations you should avoid

  • First deportees of the year touch down in Cambodia

    Twenty-five Cambodian-Americans landed in Phnom Penh on Wednesday, marking the first such deportations of the year. “On Wednesday, US law enforcement authorities deported 25 Cambodian nationals that immigration judges determined had no legal basis to remain in the US,” said Arend Zwartjes, spokesperson for the US

  • Passenger taxi boat ridership sinks despite free services

    Passenger taxi boat traffic has dropped by about five per cent compared to the same period last year, despite the government providing free service for garment workers until next year, Phnom Penh Autonomous Bus Transportation Authority director Ean Sokhim said on Monday. In 2018, the Phnom

  • Kingdom drafting new law to strengthen immigration

    The Ministry of Interior on Tuesday said it had formed a working group to draft amendments to the Law on Immigration. Its secretary of state Sok Phal told The Post that the amendments will strengthen the management of immigrants in line with the current situation.

  • Qatar Airways to connect Doha and Siem Reap town

    Qatar Airways Company QCSC has announced a new route connecting Qatar’s capital Doha with Siem Reap, a move hailed by local officials as a significant step to boost tourist numbers. A Qatar Airways representative, speaking at the Kuwait Aviation Show, announced on Thursday that

  • Jica seeks to turn PP, towns into smart cities

    Japanese International Cooperation Agency (Jica) representatives have sought support from Siem Reap’s Apsara National Authority (ANA) to transform the ancient capital into a smart city. The call was made in February last year after the government approved three cities to join the Asean Smart