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Cambodia’s developmental gains ‘fragile’ and future ‘uncertain’, OECD finds

Children attend class at a school in Phnom Penh. Experts highlight the need to improve the country’s education system in a recent review of Cambodia’s social protection system.
Children attend class at a school in Phnom Penh. Experts highlight the need to improve the country’s education system in a recent review of Cambodia’s social protection system. Vireak Mai

Cambodia’s developmental gains ‘fragile’ and future ‘uncertain’, OECD finds

Cambodia’s development gains – which include reductions in poverty and the expansion of the garment industry – are “fragile”, and the country’s long-term prospects are “uncertain”, according to a review published this week of the Kingdom’s social protection system.

The review was carried out by the Organisation for Economic Cooperation Development and was released on Monday.

With an annual average GDP growth rate of 7.8 percent between 2000 and 2015, the country’s poverty rate fell from more than 60 percent in 2000 to 13.5 percent in 2015. Nonetheless, several challenges lie ahead, the OECD finds. Cambodia is one of the world’s least developed countries, with a large proportion of its population still close to poverty, the review says.

The garment industry, which has played a major role in the country’s growth, faces threats from a global shift in manufacturing, while agriculture could face challenges in coming years due to the effects of climate change.

“Moreover, Cambodia’s long-term prospects are uncertain: its demographics will become much less favourable and climate change threatens to have a major effect,” the review reads. “The economy needs to diversify if current growth rates are to continue.”

Miguel Chanco, lead analyst at the Economist Intelligence Unit, agreed that Cambodia’s socioeconomic gains are fragile, given that it wouldn’t take much for a significant portion of the population to fall back into official poverty if the economy is hit by “exogenous and domestic shock”.

“Crucially, given how narrow Cambodia’s economy is, it remains highly vulnerable to shocks,” he said.

Chanco stressed that one of the main ways the country can reduce its dependence on garment exports and agriculture is for the government to invest more heavily in the country’s education system.

“Doing so would help cement the country’s socioeconomic gains,” he said. The Education Ministry’s budget has increased every year since 2014, with a 24 percent rise proposed in next year’s budget.

Federico Barreras, a project manager for Open Institute, also said the solution lies in education. “Cambodia needs to focus on strengthening the education system – from primary to tertiary education – providing 21st-century skills to its younger generations, so they can be prepared to be competitive in the near future,” he said.

Government spokesman Phay Siphan said “everything is challenging”, but he remained optimistic that the country would continue to develop in a way that benefits its citizens.

“We allocated [more] funds to education, health and social [affairs]” in the 2018 national budget, he said. “Those are three important sectors.”

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