by H.E Cham Prasidh, Senior Minister, Minister of Commerce

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1. Cambodia's Bright Future

I believe that the formation of the new government last year has unlocked a window of opportunity for Cambodia. This window of opportunity is the best hope that Cambodia has in building a brighter future for our economy. My view is that the formation of the new government is further consolidating peace and enhance greater political stability that Cambodia ever had before. The first opportunity that I see now is that we have the confidence of our people, and the support and recognition of the international community, especially those from our ASEAN brothers and sisters. The confidence and support of the Cambodian people and the international community will significantly contribute to a speedy recovery of our economy and thus development of Cambodia. This is important to our unfailing efforts and commitments to improve the living standards of our Cambodian people.

2. The Importance of Aid, Trade, Investment and Tourism for Cambodia

The second opportunity, I am convinced, is the renormalization of the flows of aid, trade, investment and tourism to Cambodia. The international community has been generous to Cambodia, and I hope that they will continue to support Cambodia's efforts of reconstruction, development, and integration. In this context, trade is what Cambodia hopes to build on because the future of our country will, in part, be dependent on our ability to produce and trade, at least with ASEAN members in the region. Investment is another important area which Cambodia needs to build on and further strengthen. Since our elections in 1993, Cambodia has been able to attract a considerable amount of investment, reaching over US$2 billion. In light of the regional financial crisis, I am still convinced that Cambodia continues to offer a competitive place for investment in the region because our investment climate after this year's elections will be further improved and the investors will not have to adopt a wait-and-see attitude any longer. In the area of tourism, I also believe that tourists will make a major comeback to visit our country because Cambodia is now much more secure, more stable and safer than ever before. I believe our tourism industry will be one of the most important industries in the coming years. And now that Cambodia is in a much better position than ever before to concentrate on economic development and reconstruction of the country I am sure that the Coalition Government will put the economic policy on top of the agenda.

3. Cambodia and ASEAN

Having said that, I am confident that the new government will give top priority to our membership in ASEAN. Cambodia is still very much committed to pursue our policy of integration with the region and the world. We have no second thoughts on our membership in ASEAN. But we hope that ASEAN will soon have a consensus and a clear position on Cambodia. We have proved ourselves that our elections had been free fair and credible, as has been seen by many of the international observers, especially those from the ASEAN countries who had participated in the monitoring and observation of our elections. We are looking forward to be a full member of ASEAN within this year if not sooner.

Despite the recent regional financial crisis, I believe that Cambodia has much to gain from our membership in ASEAN. The immediate gains that Cambodia can make are in the areas of diplomacy, politics and security while the economic and trade benefits are more in the long term. Once Cambodia becomes a full member, Cambodia can fully engage the great power nations through the multilateral framework of ASEAN. The great power nations are the dialogue partners of ASEAN, and Cambodia can take advantage of such important multilateral diplomacy. Because of the fact that Cambodia is a member of the ASEAN Regional Forum (ARF) it can enhance its confidence and security and can work to contribute to regional peace and stability. Another important are in which Cambodia can benefit from the membership, in my view, is the psychological factor as well as the image of the country. Cambodia can improve its confidence and the positive image of the country by regaining its regional role and by associating with ASEAN. In economic terms, Cambodia will slowly benefit from ASEAN and AFTA. At present, Cambodia trades heavily with at least four members of ASEAN - Malaysia, Singapore, Thailand and Vietnam. Cambodia's trade with the ASEAN member countries constitutes roughly 75% of its total foreign trade. This figure shows there is already a strong trade link between Cambodia and ASEAN. Moreover, Cambodia can also benefit from the regional and international tourism industry because it can tap into the regional tourism and the positive image that Cambodia will gain from being a full member of this regional dynamic region. In areas such as economic reforms, human resources development, legal reforms Cambodia will benefit from ASEAN because of the need to have speedy reforms to ensure that Cambodia will be able to catch up with the rest of ASEAN members. I am confident that Cambodia will be a great asset for ASEAN. While Cambodia will gain much from ASEAN, it will contribute back to this regional grouping as well.

4. Cambodia in a Wider Economic Context: AFTA, APEC, and WTO

Despite the Asian financial crisis and its impacts on our economy, Cambodia will continue to pursue economic integration and liberalization. Cambodia will not retreat from the process of economic integration and liberalization, as some have suggested we do. I believe that the process of globalization will continue, and Cambodia cannot afford to close its economy. Rather, we must strengthen our economic institutions, laws, and other economic fundamentals to ensure that Cambodia's economy will not slide back to where we were a few years back.

Our integration policy is to ensure that Cambodia will be smoothly integrated with the ASEAN Free Trade Area (AFTA), and hopefully in the near future joining the Asia Pacific Economic Cooperation (APEC) as well as the World Trade Organization (WTO). We have more to gain from our integration than staying isolated from the rest of the world. But the important thing is that we must learn as much as possible from our integration into ASEAN and AFTA to ensure that our experience and training will further guide us into a better future in our search for membership within bigger multilateral arrangements.

5. The Important Role of the Private Sector in Cambodia's Economic Development

To do that, we must recognize the important role of our private sector. They have a vital role to play in the shaping of our economy. Therefore, their understanding of the ASEAN Free Trade Area, APEC and WTO and theirs implications for all aspects of the economy is crucial to the survival of our country. In this regard, I hope that every member of our private sector would try to understand the changing dynamics of business, trade and economy not only in our country but also in the region and the world as they conduct their day-to-day business transactions. As we set to join ASEAN and as the world moves into the next century in the not-too-distance future, Cambodia needs to strategically look at how we can best maximize the benefits from our membership in ASEAN and AFTA and other institutions that Cambodia will later join.

6. Maximizing Benefits from AFTA for Cambodia

In the conclusion, I wish to highlight several important respects in which I strongly believe that Cambodia can maximize the benefits from AFTA. First, I think that Cambodia should utilize its imminent accession to AFTA as a building block towards free and open trade. Cambodia can gain from the training and the actual experience as well as the development lessons from other ASEAN member countries. Second, Cambodia can help cut the administrative costs by multilateralizing its common effective preferential tariffs. This will pay off in the long term through efficiency. Third, Cambodia can gain from AFTA through the economies of scale because of the enlarged market to about 500 million. Fourth, I believe that Cambodia can better utilize its economic resources because of the need to have the most efficient allocation of resources when Cambodia joins ASEAN/AFTA. Finally, I believe that AFTA will contribute to the more sustainable flows of foreign direct investment and tourism to Cambodia. But all of these cannot be done without a strong role for the private sector. In this regard, I would like to appeal to the private sector to pay close attention to this new development in Cambodia and in the region. I think everyone has a role to play.

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