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AEC SPECIAL REPORT - CAMBODIA: Challenges and potential

Publication Date : 30-12-2013

 

Millions of eyes are focused on how Asean is going to realise its goal in establishing the Asean Economic Community (AEC) by 2015.
Cambodia, one of the poorer members of the 10-country grouping, is optimistic that the kingdom will be ready to join the economic community. It sees AEC as an opportunity to boost economic growth even though there are challenges ahead for its small and medium-sized enterprises (SMEs).

“Even if Cambodia is a young country in the association, it has been committed to regional integration, especially the formation of AEC,” said Sok Siphanna, an adviser to the Royal Government of Cambodia.
As the deadline approaches, he said “Cambodia is ready".

Siphanna, former secretary of state of Commerce and a key person in Cambodia’s accession to the World Trade Organisation, noted that AEC is not the first time Cambodia is integrating to a regional and global market.

“The country has tried to open itself since 1993, and now Cambodia is already open for regional and global integration. It has accumulated experience on how to open the country since it became a member of Asean in 1999, and the WTO later,” he said.

“The policies are already in place. Therefore, Cambodia can meet the requirements for AEC.”

He is optimistic that Cambodia will benefit from the community. “AEC will bring more foreign investors, technology, knowledge and expand the country's market share.”

“Before, foreign investors hesitated to come to Cambodia because of the small market, but now they recognise Cambodia’s potential thanks to the booming Asean market."

“It no longer only has 15 million people. It will soon have 600 million people and Cambodia will become one of the 10 gates to this 600-million-population market,” he said.

Concern
Cambodia is the youngest Asean nation to become a full member of this regional geo-politic and economic organisation in April 1999, after having been an observer for nearly four years.

Although it’s already a full member, Cambodia still can’t rival older members in terms of economic strength, trade volume, human resources, technology, and infrastructure, among others.

The country is faced with the formidable challenge of accomplishing the objectives of AEC including setting up a single market and production base to pave the way for a highly competitive economic region.

Most of Cambodia's production chains are dependent on SMEs, except the garments and textiles industries.

Meng Saktheara, director general of the Ministry of Industry, Mines and Energy, said: “Skills, technology, capital and marketing are all concerns of Cambodian companies, especially the SMEs.”

The ministry has launched projects with development partners, including the Asian Development Bank, Japan International Cooperation Agency, Korea International Cooperation Agency, United Nations Industrial Development Organisation and other partners to provide capacity building for SMEs, Saktheara noted.

Oknha Te Taing Por, president of the Federation of Association for Small and Medium Enterprises of Cambodia concurred that SMEs are concerned over how a regional economic community will impact on their businesses.

There are some 400,000 SMEs in Cambodia, and more than 90 per cent of them are in need of help from the government, he said.
Ly Chheng, director of Ly Chheng Food Production, meanwhile noted that Cambodia's imported products may have a niche market. 

“It’s difficult for Cambodia to compete with Thailand, Vietnam and China in terms of products, because they have price advantage and edge in packaging, technology and marketing,” Chheng said.

“For Cambodia, it has to recognise that it’s not Thailand or Vietnam. It started from zero as Cambodia was completely destroyed by Khmer Rouge. It started its rehabilitation with an almost empty economy,” Chheng said.

Siphana, on the other hand, said SMEs need to expand their production capacity, and develop themselves to become industrial giants.

Progress
Some experts, economists, and politicians earlier warned that Cambodia would die once it becomes a member of Asean. This is the same warning that many are issuing today as AEC looms in the horizon.

Siphana, however, said there is no reason for Cambodians to worry. “Cambodia didn’t die after joining Asean. In fact, it has progressed well and recognised worldwide for its development, so why worry?” Siphana asked. 

Since Cambodia has opened its economy 15 years ago, many international hotels, restaurants, fastfood joints and malls have been operated by locals, he pointed out.

Cambodia’s engineering sector has also taken big strides and now has capability to undertake big construction projects.

“In addition, more and more foreign companies flock to the country. For example, Japan has poured hefty investment here,” he said.  
“Don’t worry, it will not die. It will adapt to the new environment and realise economic growth step by step."

“We just need to find our weak points and fix them," he said.

 

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