As Cambodia continues its impressive economic development and reaches higher stages of industrialisation and social well-being, there is an urgent need to prepare for future cutbacks in international development assistance, the Commerce Minister said on Friday.
Speaking during the opening ceremony of the Import-Export and One Province One Product Fair in Phnom Penh last week, Pan Sorasak, the Minister of Commerce, said the country needs to start getting ready for a near future in which development money is not so easily accessible.
“We will have issues when the country moves up the income ladder,” Mr Sorasak said. “Because of this we need to properly plan our graduation to an upper-middle-income nation in the future.”
The minister said the country needs to start funding its own development, becoming self-reliant through the expansion of trade and improving the investment climate to welcome increasing amounts of FDI.
“If we’re not ready for the cutback in grants from our development partners and the scaling back of preferential tax treatment from the US and the European Union, we will ask for a grace period,” he added.
Last year, the World Bank upgraded Cambodia’s economic status to a lower-middle income country.
The World Bank defines low-income economies as those with a gross national income (GNI) per capita of less than $1,025; lower-middle income countries are those between $1,026 and $4,035, and upper-middle income economies are in the range of $4,037 to $12,745. High-income countries are defined as those with a GNI per capita above that level.
Cambodia shares its current status with 51 other economies, including India, Vietnam and the Philippines.
Prime Minister Hun Sen, who also gave inaugural remarks at the event, stressed the importance of the trade sector in helping Cambodia move up the World Bank’s ranking.
“Trade has contributed significantly to developing and boosting economic growth,” he said.
“Exports of Cambodian goods to international markets have steadily increased. For instance, in 2016, Cambodia exported goods worth $8 billion, up 11 percent over the same period in 2015.”
Mr Hun Sen went on to explain that the government has identified four key drivers of economic growth, namely the textile, construction, tourism and agriculture sectors.
He said the government has done its part in helping these sectors, specifically mentioning the fact that now provincial commerce departments can issue certificates of origin and that the wages of workers in the garment industry have been significantly raised.