World Bank Tells Cambodia To Expect Funding Fall


As Cambodia gradually moves to lower middle-income country, it may expect a decline in preferential trade treatment and donor financing, the World Bank said yesterday in a report.

world bank cambodia funds decrease ldc
World Bank country manager for Cambodia Inguna Dobraja (centre) presents the bank’s new report at a press conference in Phnom Penh yesterday. KHMER TIMES / CHOR SOKUNTHEA

“Gross national income (GNI) per capita more than tripled from $300 in 1994 to an estimated $1,070 in 2015, the year in which Cambodia became a lower middle-income economy,” stated the bank’s report titled “Cambodia: Sustaining Strong Growth for The Benefit of All”.

The World Bank said Cambodia’s impressive achievements have been built upon openness to trade and capital flows and driven by preferential trade treatment and large official development assistance and foreign direct investment inflows. 

“Going forward, Cambodia may not be able to rely on the same factors that drove strong growth and poverty reduction over the past two decades,” the report pointed out. “Cambodia’s eventual graduation from being a least developed country (LDC) will bring a progressive decline in donor financing and an erosion of preferential trade treatment.”

The report also stated that in terms of development status, Cambodia has become a lower middle-income economy according to the World Bank classification system but remains an LDC according to the United Nations.

Miguel Eduardo Sanchez Martin, senior economist at the World Bank, said poverty reduction in Cambodia is significant over the past decades and has been one of the fastest in the world partly due to strong performance in the agriculture, tourism and industry sectors.

“Land expansion and rising agricultural prices have been the most significant contributors to poverty reduction thus far,” said Sanchez Martin. “Poverty reduction will probably happen if growth continues and it is important to look at people that are no longer poor and very importantly at the next stage to basically shield these people,” he added.

To ensure that growth will continue to be inclusive, said Sanchez Martin, a series of constraints that particularly affect poorer households must be overcome. He said that poor nutrition was a factor that needed to be addressed.

“Human capital limitations begin early in life due to poor nutrition, lack of nurturing care and absence of early stimulation,” said Sanchez Martin. “Having grown up in a period of very high poverty and maternal and child undernutrition, the majority of Cambodia’s current cohort of young workers likely experiences some of the lifelong, negative consequences of childhood malnutrition and other early life deprivations.”

Commenting on the gender gaps in earnings and job quality, the World Bank report stated that female labour force participation in Cambodia, at 79 percent in 2014, is among the highest in the world, and female-owned enterprises comprise more than half of all business establishments in the country.

“However, female owned businesses are generally smaller, less profitable, and less likely to be registered than male-owned businesses. While women represent 85 percent of the garment sector labour force, most of them are engaged in assembly, while the higher paying quality and supervision work is done by men.”

Hem Vanndy, under-secretary of state at the Ministry of Economy and Finance, said Cambodia had worked hard to lift its people out of poverty. “We are committed to delivering more inclusive growth across the country and we remain committed to openness in trade and investment,” he said.

This article was originally published by the Khmer Times.

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