Prime Minister Hun Sen said the Council of Ministers would review and pass the Industrial Development Policy 2015-2025 today, setting out a roadmap that aims to boost investment and broaden the Kingdom’s manufacturing base.
Speaking at the 2015 Cambodia Outlook Conference in Phnom Penh yesterday, Hun Sen said the policy would diversify the economy, decreasing its dependence on traditional sectors, like garments, tourism and agriculture, and directing foreign direct investment towards agro-businesses, handicrafts and light manufacturing.
“I would want to say that [today] the cabinet will discuss to approve the industry policy. So members of the government must prepare to discuss it tomorrow, because doing only agriculture alone is not enough,” the PM said. “In advanced economies, the share of agriculture [for economy growth] is low, whereas industry and the service sector are high contributors. Now, [for Cambodia] the share of industry is still low compared to agriculture. So, we need to try further,” he said.
The policy framework will consist of four pillars: attracting FDI to boost industrial development in the domestic private sector; modernising small- and medium-sized enterprises (SMEs) and linking them to multinationals; a regulatory framework that aims to enhance competitiveness; and policy creation on human resource development coupled with infrastructure and services improvements.
The Council for the Development of Cambodia is expected to oversee the implementation of the policy.
Mey Kalyan, a senior adviser on the Supreme National Economic Council, said that a single institution with “authority and capacity”, like the CDC, was needed to take this policy ahead.
“Without the policy, we go without direction. Our growth will be determined by chance. We want to grow with a clear structure,” he added.
Sandra D’Amico, managing director at HR Inc and a panelist at the conference, said that having a policy is just a starting point, if the government does not work on the supporting infrastructure, regulation and much needed human resources.
“If we don’t have clarity in terms of the laws to regulate and we don’t enforce our law, it does not matter what IDP we have, we won’t be able to diversify, attract investment and start the new industries that we need,” she said
D’Amico said that the transition towards increased industrial development should not undermine a traditional sector, like garment manufacturing, which has contributed a 10.9 per cent share of last year’s GDP.
“Cambodia can be a hub, but we need to define a hub of what in terms of industry? Finance, trade and logistic, innovation, education or logistic,” she went on to say.
Son Chhay, the deputy chairman of the National Assembly’s Banking and Finance Commission, said strengthening public institutions and eliminating corruption was critical to implementing the policy.
“Public institutions need to provide better services and guarantee a fair business environment. Strengthen public and private sector relation, reduce corruption and under table money, and investors will come,” he said.
He added that an SME policy was needed to increase local production and therefore reduce the trade deficit.
“SMEs are not receiving enough support so far. There should be policies to help and support local SMEs to boost the growth. Cambodia currently exports only 10 per cent of its total imports,” he said.
The government estimates growth of around 7 per cent in 2015, spearheaded by 9.7 per cent growth in the industry sector, 6.6 per cent in the service sector and 4.3 per cent in the agriculture sector.
Growth in the industry sector was attributed to the slight rebound of the garment sector and the continued growth in the energy and construction sectors.