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Economic ranking

Economic ranking

There seems to be a thrust to get the Cambodian private sector to become more competitive, or at least to systematically measure the country's competitiveness, especially in the long run. For the very first time Cambodia's competitiveness index has been formulated and included in both the World Economic Forum's Growth Competitiveness Index (of celebrity economist Jeffrey Sachs) and the Business Competitiveness Index (of economic growth guru Michael E Porter). The plan is to assess Cambodia's competitiveness annually with references to these two indices.

The first assessment for 2005 is not so flattering and unsurprising unless one has spent the last few years stuck in Tora Bora with Osama Bin Laden. The indices released on September 29 at a conference at the Economic Institute of Cambodia (EIC) rank Cambodia at 112 out of 117 countries in Growth Competitiveness, and slightly better at 109 for Business Competitiveness. One of the business heavyweights attending the launch found it irresistible and, with a smile, sarcastically made references to the "top" rankings of Cambodia.

If the glass is half full, then optimists can look forward to a higher ranking next year and thereafter, assuming of course that the research methodologies will be kept consistent throughout. There seems to be a sincere drive to remove Cambodia from the bottom group of six countries whose ex-leaders are being actively sought by courts for their past accomplishments, like former president Hissein Habré of Chad (ranked 117/117).

The EIC launch included a discussion panel consisting of some movers and shakers in the private sector, speaking about ways to enhance the competitiveness of Cambodia. However, the panel offered nothing further than what was revealed in the EIC survey of Cambodian business executives that push the countries to the bottom. Among basic reforms that they expect to improve the business competitiveness are reforms in public administration, judiciary and financing. The country credit rating for Cambodia has been so low (1.68 out of 7.00) that a panelist claimed his multi-million dollar development project - with plenty of real estate as collateral - could not even secure a capital loan.

However, the panel discussion seemed to give some inkling that the private sector may not have been enthralled completely with the idea of improving competitiveness, especially from those who run a monopoly or oligopoly. As pointed out by one of the panelists, due to local competition he dropped his bank's monthly interest rate on loans from 5 percent to 4 percent. Unless the bank can issue sufficient new loans to make up for the loss of interest incomes due to the rate decrease, such competition will not be welcome, especially from any large firm that is used to controlling the industry and aims for profit maximization.

Another panelist who controls a huge portfolio of diversified business operations, said he is in business to make money, and all costs will be passed on to end-consumers. It seems the impact of the costs of endemic corruption claimed in the EIC business executive survey affect his profitability little, if any. It is therefore no longer certain if there exists any intrinsic incentive, particularly for large businesses, to push forward the reforms many businesses claim necessary to improve competitiveness the top executives could do without.

To top it off, the government has kept on referring to the Pol Pot Index that obviously puts Cambodia on the top of the "scrap" heap. It is absolutely right to be proud of the achievements that have made the life of some better off than what the murderous revolution could offer. It may not, however, be too wise to hitch a ride with a driver who focuses on the rear mirror, in defense of his past.

With such pride and complacency in the public sector, and profit maximization mentality among business moguls, it begs the questions: where would the competitiveness come from?

Ung Bun-Ang, Senator, Sam Rainsy Party

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