Commentary by: Chea Sokhour
Recently, the
Asian Development Bank approved $800 million in occasional loan to Cambodia
over 5 years under the new Cambodia Country Partnership Strategy (CPS) for
2014-2018. This is a positive reflection from the appreciation of the right
leadership of the current government.
Not surprisingly,
that the ADB’s supports contribute to the development of Cambodia and the
realisable judgement from ADB over the Government’s Rectangular Strategy, Phase
III for the Growth, Employment, Equity and Efficiency, and also the National
Strategic Development Plan that bring ADB closer to Cambodia with stronger
cooperation.
Broadly, the loan
will benefit a wide range of areas such as agriculture, urban infrastructure,
resources management and micro, small and medium-sized enterprises. According
to the bank, is its press statement, it clearly stated that some amounts of the
loan aims to increase the agricultural productivity and commercialisation,
improve management of resources along the transport facilitation.
Nonetheless, we
should discuss here] how the growth and employment play important roles in
decision making for the loan and how those contribute tirelessly to the
development of the nation.
Nothing
could be further from the truth that most of the sectors have been improving and growing in noticeable
scale from the center of the nation to the borders of the country. Even though
the economic growth at above 7% for the third consecutive year, the industry
and services have shown significant improvement although the agricultural
sector seems slow in productivity according to the Asian Development Outlook
2014 report from ADB. This comes to the point that more works will need to be
done to diversify over the agricultural production.
As we all have
known, the royal government of Cambodia has been promoting Cambodian rice production
to the globe and what is more, Cambodian rice has again won the best rice
award. This is what we all Cambodian should be proud of and this can only be
happened by the growth in technology, techniques in production and also a step
further into the international market.
The loan will
help assist the improvement of the production process and provide better way to
produce more and better quality. Some of
the fund will be used in financing local farmers and also rice-milling. The
famers will be able to produce more with better quality. The packing process
will reach standard that meet the international market requirements. The
conclusion comes to the advantages that not benefit one or two farmers but all
Cambodians will enjoy. From famers to the rice dealers will enjoy this by
increasing their scale of production and access to bigger rice market from the
seller side.
Eventually, the
living conditions of people will get better and the national wealth will
increase by time. The opportunities of growth will not always be there and the
time to get the full growth is rare, and gets the most of it, is potential. For
these reasons, the opportunity of having a loan from ADB is low and better off
its benefits.
Furthermore,
job creation is an urgent task for Cambodian government, as recently there are
quite numbers of illegal workers, who had migrated to neighbouring countries to
find job, have been deported. The job market becomes the first priority area to
look into for the government. Interestingly, the micro, small, and medium-sized
enterprises (MSMEs) account for 99% of private companies and those companies
are the major factors that could help minimise the unemployment rate. The
government intervention is needed for those companies and according to the
National Bank of Cambodia, 84% of MSMEs are financed through informal financial
sectors where interest rates can jump by as much as 10% per month. This is one
of the biggest barriers for those enterprises to survive and the ADB’s loan
will provide the stable and long-term financing. This will definitely encourage
more investments locally and internationally that include the MSMEs.
As the
consequence, the demand for workers by those companies will get higher and the
labor market will increase its scale and this comes where all Cambodians will
enjoy the advantage. Once people are easy to find job then the GDP will be
increased and unemployment rate reduced. In addition, the agricultural sector
employs 60% of workforces and 80% of the population is dependent on this
sector. Expanding the agricultural production scale will eventually eliminate
the surplus in labour market. From this point of view, the ADB’s loan
contributes to increase employment.
However, some
people address the concern regarding the increasing numbers of loan shows nothing
good at all. This idea conflicts to the truth that the nation fund is limited
and in order to have a manageable and reach the full capacity of the economy,
the loan fund will need to be used. For example in private sectors, many global
scale companies raise fund from the public by issuing shares. From this
perspective, it shows those benefits of the borrowed fund are out weight.
In
short, the Government’s Rectangular Strategy has been giving the trustable
roadmap for the future of Cambodia and sustainable management over the economy.
From the appreciation of the right direction, which is set out by the government
of Cambodia, the gained trust from the ADB has given back the stronger and
closer cooperation. The loan is one of the significant outcomes from all those hard
works that have been achieved by the Royal Government of Cambodia. After all,
more fruitful results will be seen in the short future for all Cambodians.
