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IMPLEMENTING
THE INTEGRATED FRAMEWORK
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| • Home • Introduction to MOC • Functional Structure • Trade Statistics • Economic Integration • Cambodia's Exporters • Cambodia's Imports • MOC Links • MOC Contacts • Legal • Licensing & Registration • Activities • Seminar • Pro-Poor Trade Sector Strategy • Integrated Framework (IF) • Speeches • Trade Directory • IPR |
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Presented
by the Ministry of Commerce, Royal Government of Cambodia to the 6th
Consultative Group (CG) Meeting, PRO-POOR
TRADE SECTOR STRATEGY
TRADE
AND INVESTMENT LINKAGES Maximizing
Cambodia’s LDC status to develop exports through companion and mutually
supportive policies... Companion
and mutually supportive policies are required:
·
Enforcement of the rule of law / Peace and National Reconciliation Ultimately,
trade mainstreaming means giving greater visibility to the linkages
between trade and all other related economic policy areas. The creation of
an environment that encourages trade is instrumental to sustainable,
long-term economic growth. That environment will require changes to the
investment, financial and commercial institutional infrastructure,
including in areas such as accounting, corporate governance, and
supervision of financial institutions. Moreover, the critical importance
to ensure effective trade mainstreaming will require linkage with other
ongoing Government led policies and strategies for poverty reduction like
the SEDP II, GAP, and legal and judicial reform. Externally mainstreaming
means encouraging broad-based economic cooperation and resource
mobilization through regional and global economic linkages. To that effect
it is worth highlighting a few recent developments: Formulating
a long-term financial sector development plan… A
sound and efficient financial system is essential for achieving
broad-based economic growth and socioeconomic objectives, including
poverty reduction. A well functioning financial system is the key to
ensuring macroeconomic stability, mobilizing savings, allocating resources
for productive purposes, promoting private sector development, and in turn
generating employment opportunities and reducing poverty. In Cambodia, a
sound financial sector development will also contribute to promoting FDI
and safeguarding the economy from external shocks. A weak financial
infrastructure, on the other hand, hampers the further development of the
financial sector. In particular, the underdeveloped financial system, with
low public confidence and limited intermediation, has been a main
impediment to private sector development and thus to broad-based economic
growth. In recognition of the strategic value of financial sector
development, the Government requested the ADB for assistance in
formulating a long-term vision and a financial sector development plan. In
response to the Government's request, ADB conducted a comprehensive
diagnostic review of the financial system and formulated a financial
sector development plan, or the Financial Sector Blueprint (the Blueprint)
for 2001-2010. The Blueprint outlined a long-term vision and strategy for
sequencing policy reforms to develop the financial system over three
phases during 10 years. The Blueprint addressed key policy issues and
proposed reform agenda in the banking and nonbanking sectors, contractual
savings, and interbank/money and capital markets, as well as the basic
infrastructure to underpin the development of the financial sector.8
Capitalizing
on the FDI Opportunities through Reforms of the Investment Regime… Reviews
of the Law on Investment (LoI)9
had concluded that it suffered in several respects. Both the World
Bank and the International Monetary Fund shared these concerns and in
early 2001 both agencies suggested a number of reforms to the LoI as part
of negotiations in the context of a Structural Adjustment Credit (SAC). In
recognition of the problems associated with the current investment
incentive regime, a number of changes to the LoI have been formulated with
the aim to make the regime more conducive to the encouragement of private
investment in Cambodia through transparency, simplicity and predictability
in both the approval process of private investments and the provision of
fiscal incentives to such private investments.10
On February 2002 the Government approved the amendments to the LoI
and submitted them to the Parliament for adoption.
Initiating
Regional Development Master Plan of the Phnom Penh – Sihanoukville
Corridor. One
of the 3 Concepts for a Pro-Poor Trade Sector Strategy calls for the
regionalization and decentralization of the export sector within Cambodia.
For that purpose MoC has requested JICA to assist in the development of a
Regional Development Master Plan with a focus on encouraging industrial
development along the Phnom Penh – Sihanoukville Growth Corridor and the
Sihanoukville Export Processing Zone (EPZ). With the development of
numerous EPZs in the ASEAN region to attract FDI and the changing nature
of foreign investors to compete in the world market place, there is a
growing trend for EPZs to compete among one another. The Study will assess
the comparative and competitive advantages of EPZs in the neighboring
countries to clarify their changing trend and issues. The final target
year of the regional master plan is set for 2015 with an intermediate
target year of 2008 to adjust to the evolving process of globalization and
regionalization. Bringing
in Private Participation in Infrastructure Good
infrastructure is vital for economic and social progress. That is true of
any region in the world. However, establishing a modern and efficient
infrastructure in poorer countries is a key challenge. The infrastructure
will not be built without private-sector involvement because its capital
is needed, and because its efficiency and performance are vital.11
Improving access to efficient and affordable water, electricity,
transport and telecommunication services can have major impacts on the
living standards of individual households.
Efficient infrastructure is also essential to sustain broader
economic growth and industrial competitiveness, thus creating jobs and
expanding the country’s tax base. In
recognition of the key role private participation in infrastructure may
play in improving living standards for its people the Government requested
the World Bank and the Public-Private Infrastructure Advisory Facility (PPIAF)
to undertake a Country Framework Report on Private Participation in
Infrastructure (CFR). The Cambodia CFR which is designed to help the
Government improve the quality of their infrastructure through private
sector participation will review opportunities, priorities, and
constraints across infrastructure sectors, and so is intended to
contribute to the development of effective policy and strategic choices.
It is also expected that the CFR will assist potential investors in
identifying possible opportunities. The
project was recently completed and the report is being published. In
summary, the report presents an overview of the Cambodian country context,
the current performance of its infrastructure, and the promise and
challenges associated with expanding the role of the private sector
involvement. It reviews
issues and options in individual infrastructure sectors of water,
electricity, telecommunications and transport as well as several important
issues that are substantially common across sectors.
Finally it presents a draft action program for expanding private
participation in Cambodia's infrastructure for consideration by the
Government. Benefiting
from Economic Integration.... The Government considers the integration of the country’s economy into the regional and world economies as not only a necessity for its sustained growth but as part of the irresistible worldwide process of globalization. After the 26 July 1998 elections, a new "Economic Government" led by Prime Minister Hun Sen was established and was specially devoted to economic development.12 A new strategy, called the Government's "Triangle Strategy", was developed to materialize this long-term vision. It consists of three key areas, one of which is Cambodia's economic integration and normalization of relations with the international community. This has allowed Cambodia to attract more foreign assistance and FDI to support the ultimate objectives of development. Soon thereafter, Cambodia succeeded in regaining its seat at the UN, became the 10th member of ASEAN and aims to join the WTO in the near future. Other bilateral and regional initiatives such as GMS and the Bangkok Agreement are being pursued quite dynamically and in a coherent manner. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||