Re: Just as the stage seemed set for further growth, the four drivers of Cambodia’s economy—agriculture, garment exports, tourism and construction—were hit by changes in external conditions

On Jan 31, 9:46 am, Chim <Chi...@xxxxxxx> wrote:
On Jan 31, 3:35 am, Chim <Chi...@xxxxxxx> wrote:





Out Of Luck?
Headline Business  2009-01-31 11:33
Just as the stage seemed set for further growth, the four drivers of
Cambodia’s economy—agriculture, garment exports, tourism and
construction—were hit by changes in external conditions.

"Unlucky.” This was the assessment of the Cambodian economy by Vikram
Nehru, the World Bank’s chief economist for East Asia and the Pacific,
late last year. It certainly seems appropriate.

While citizens in just about every country in the region can blame the
current global economic storm for at least some of their problems,
Cambodians probably have more reason than most to feel aggrieved.

Still one of the world’s poorest countries, Cambodia was nevertheless
doing well before the global crisis hit. Recovering from a long period
of political and social disruption dating back to the 1970s, the
economy grew by an average of 11.1% a year between 2004 and 2007.

And the elections of July last year, which saw a landslide victory for
the ruling Cambodian People’s Party, suggested that the country would
soon be able to add political stability to its list of attractions.

The garment sector, which began to expand rapidly in the mid-1990s,
provided employment for about 350,000 people. The tourism industry was
also booming, with the number of foreign visitors rising by more than
20% annually. Further evidence of the country’s success could be seen
in the growing level of direct foreign investment, which reached a
high of 10% of gross domestic product (GDP) in 2007.

There were problems, of course. They included rampant corruption,
rising inflation, a dysfunctional public service, infrastructure
bottlenecks and a developing property market bubble. But with the
economy making great strides, and with leaders no longer preoccupied
with political survival, there was hope that at least some of these
issues would be addressed.

Indeed, soon after the elections, economic managers moved quickly to
minimise financial sector risks arising from the enthusiasm with which
local banks were rushing to profit from the economic boom. The central
bank doubled reserve requirements in July, introduced a ceiling on
loans to the real estate sector, then tripled capital requirements in
September. Meanwhile, plans were well advanced for the establishment
of a stock market.

But just as the stage seemed set for further growth, the four drivers
of the Cambodian economy—agriculture, garment exports, tourism and
construction—were hit by changes in external conditions.

The tourism industry got into trouble as early as July, when the
decision by Unesco to list Preah Vihear temple as a World Heritage
Site resulted in a military stand-off between Cambodian and Thai
forces. Cambodia also suffered from the effects of Thailand’s internal
turmoil last month, when anti-government protesters forced the closure
of Bangkok’s international airport. The result was a wave of
cancellation of hotel reservations at Siem Reap during the height of
the tourist season. The global financial crisis looks set to cut
further into tourist arrivals.

The garment industry, meanwhile, has begun to suffer from lower demand
in the United States, its main export market. Expectations that rice
exports would boost economic growth have also been dashed by the fall
in international prices since their mid-2008 peak.

The juxtaposition of these political and economic developments has
already been reflected in a 25-per-cent drop in revenues from the
kingdom’s trade-dependent railway network last year. Rail links with
Thailand were cut completely during the tension with Thailand in
October.

Finally, South Korean and other foreign companies that were the main
drivers of the nation’s construction sector have been winding down
their activities in response to developments in their home countries.
Modern Cambodia’s first-ever property boom is no more.

Influenced, perhaps, by years of rapid growth, the government late
last year rejected as too gloomy an International Monetary Fund report
that suggested that GDP growth would fall to 4.8% this year. But
officials have since responded to the global slowdown by announcing a
budget that increased spending and offered incentives to the garment
industry. They have also delayed the launch of the stock exchange.

Early last month, foreign donors demonstrated their continued faith in
the country by pledging more than US$950 million in aid, an increase
of almost $300 million over pledges made in 2007.

Even so, there is little doubt that the nation faces difficult times.
Foreign direct investment fell last year and, according to the World
Bank, will likely fall again this year.

With the garment and tourism sectors faltering, widespread
unemployment is a distinct possibility. Fifty per cent of the
population is under 20 years of age, suggesting that a large number of
job seekers will begin to enter the workforce over the next few
years.

Yet all is not lost. While international rice prices have fallen, they
are still relatively high. Programmes designed to boost agriculture
could help absorb some of the unemployed.

Meanwhile, continued strong supervision of the banking sector, an
increase in government-funded infrastructure projects and further
moves to upgrade the legal framework for investment could help prepare
the country for the inevitable recovery. In times like these, Cambodia
needs to make its own luck. (By BRUCE GALE In Phnom Penh/ The Straits
Times/ AsiaNews)

How can the Cambodian people do more to improve their luck? The author
mentioned the 4 drivers of the economy in the country. We need to add
several more in order to spread the luck and expand the economy at the
same time. I'm seeing that the banking industry is accelerating at a
fast pace. It's the same thing with the cell phone. So, there are 2
more sectors of the economy that we can bank our hope on. These are
finance and IT. However, finance is not just banking or micro-banking.
There are insurance and investment, besides banking. And within each
one of these industries, there are sectors within the sectors
themselves. For example, in insurance, we have health, casualty and
life. Each one of these subgroups of the insurance industry is a
trillion dollars market by itself in the US.

The easy one to start is the life insurance company.

And within the IT industry, there are computer manufacturing, software
development, computerized software package that is specialized to
other industries such as insurance, distribution, manufacturing and
accounting. These are more complicated and they require technical
knowledge, user education, marketing, management and consultants. The
cell phone part is the easier to implement.

The impact of cell phone on development has been proved all over the
world. In fact, the problem of Thailand's political issues is being
tied up to the cell phone rapid spreading that has generated instant
awareness and freedom of speech that, in turn, go to challenge the old
political and social structure. In this kind of situation, the problem
here is knowing how to manage change on a bigger scale. It's not god
vs. man. It's a simple change process that needs to be analyzed,
implemented and administered. It's socio-cultural and technical
issues.

The other thing that we need in Cambodia is to improve the commercial
exchange among the Cambodian themselves. And that is much easier to do
and it's within reach. It will spur employment, development, and
transactions.

In the final analysis, in order to smooth out development and keep the
economy moving forward and spreading the wealth, communication between
the different segments of the Cambodian societies needs to be
resolved. Again, that's another source for challenge and opportunity.

Out of luck?

It's all imagination, creativity, productivity and one whole big
family who understands the needs of each other and the approach to
fulfill human happiness.- Hide quoted text -

- Show quoted text -

Oh yeah, these are functions of the service economy. In fact, we'll
bunch everything and all developmental issues into the service
economy.

One more thing about the cell phone issue in Thailand. By working to
understand these issues of the change process that are end-results of
implementation of a certain phase of technological implication, we'll
come to understand better the political issues that our brothers
across the border are wrestling for the time being. And consequently,
understanding would go to help us to become patient with Thailand's
political and cultural issues at the same time. From the psychological
perspectives, that will in turn motivate a whole demographic in
Cambodia to excel themselves in science, industry, culture, politics,
business and international relations.

Enlightenment, you said? Yes, if we apply the Buddhist scriptures for
interpretation of these works to resolve mundane issues of the 21st
centuries. From my point of view, these seemingly miraculous visions
of the future are not necessarily outcome of religious reflection. As
we can see from these interactions on the forum, they are
collaborative efforts from many sources. They are works of the minds
that care for the communities.

I'd want to thank Bruce Gale for his excellent analysis and
contribution.
.

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