The world is becoming more interconnected each day. As a result, global and regional co-operation has increased dramatically. This is particularly true in Asia.
Cambodia, of course, is closely linked to regional bodies, having just finished chairing the Association of Southeast Asian Nations and having been an active member of the Greater Mekong sub-region (GMS) grouping for more than two decades.
Cambodia also has much to gain through the wider ASEAN+3 and East Asia Summit processes. And, as Myanmar becomes more deeply engaged with the GMS, closer co-operation can bring further benefits for Cambodia and its neighbours.
Regional co-operation benefits Cambodia and its neighbours in a number of ways.
The GMS economic co-operation program promotes physical connectivity, whether through power grids or building economic corridors.
An open economy also brings greater access to new markets, resources and investments.
Supply chains and production networks link neighbours and accelerate growth, productivity and employment generation.
Financial co-operation, including through sound banking systems and capital markets in equities, bonds and insurance, can effectively mob-ilise public and private savings.
The promotion of regional public goods can also address common issues, ranging from disaster relief to cross-border human trafficking and health epidemics.
As a small, open economy, strat-egically located within the GMS and ASEAN, Cambodia must make regional considerations a core element of its development planning.
The Asian Development Bank’s three-year Cambodia country partnership strategy explicitly calls for efforts to harness the benefits of regional co-operation and integration through closer alignment of GMS activities with Cambodia’s national development strategy.
In particular, leveraging and deepening the assets of the GMS’s southern economic corridor, and linking the two big urban hubs of Bangkok and Ho Chi Minh City through Phnom Penh, can generate income, improve the competitiveness of business and promote inclusive economic growth.
Strengthening connectivity, as convincingly laid out in the ambit-ious master plan on ASEAN connectivity, which includes GMS priority projects, is a critical regional co-operation agenda item for Cambodia as the GMS forges ahead towards middle-income status.
Indeed, the Asian Development Bank has estimated that complete connectivity in ASEAN will carry a price tag of almost $600 billion.
In order to frame an agenda for promoting connectivity, four key elements can be enumerated — finance, foundations, facilitation and framework:
- Financing connectivity through fine-tuning the allocation of existing national infrastructure programs to incorporate regional connectivity elements more effectively, leveraging private-sector finance through public/private partnerships, and improving the intermediation of financing to meet infrastructure needs such as the ASEAN Infra-structure Fund (AIF).
- Building the hardware foundat-ions for connectivity by using sub-regional groupings as connectivity building blocks or foundations for ASEAN, and complementary provision of regional public goods to improve physical connectivity in the ASEAN region as a whole.
- Facilitating connectivity and recognising the growing importance of the “soft” side through intensified efforts to improve logistics and trade facilitation; improve transport services, through initiatives such as the recently formed GMS Freight Transport Association and related reforms; and implementing at the sub-regional level non-discrimin-atory, World Trade Organisation-consistent trade and investment facilitation measures that will strengthen the ASEAN Free Trade Area framework at the regional level.
- Meeting the challenges and harnessing the immense potential of the (somewhat) new and evolving business sector framework of global value chains through efforts to link GMS enterprises to international markets.
Global enterprises are re-organising and relocating the production of goods and services through increasingly fragmented global value chains that demand increasingly stringent global standards with respect to quality, price, timely delivery and flexibility.
This creates significant challen-ges, but offers appealing benefits.
In Cambodia, the GMS southern economic corridor has already attracted a number of global players that demonstrate clearly the benefits of enhanced connectivity.
Minebea, the global leader in micro-motors, and Sumitomo Electric, a leading producer of wiring harnesses, have set up state-of-the-art production facilities in Phnom Penh to serve global markets.
Cambodia can maximise the benefits of this through programs to support the spillover benefits to local enterprises, to strengthen training programs that reflect labour-market needs, and to build better transport and logistics infrastructure.
The Asian Development Bank is determined to support government efforts at balanced, inclusive growth, creating income opportunities, bridging rural/urban gaps and more closely integrating Cambodia within a region that has grown to become one of the most dynamic in the world.
Peter Brimble is the deputy country director, and Sothea Ros the external relations co-ordinator, for the ADB in Cambodia.