Implementing Industrial Development Policy

The Khmer Times, 7 April 2016

Cambodian politics is getting unpredictable and ugly. If the trend is not reversed, the Kingdom’s economic outlook will not be good.
In the last six months, personal attacks and political blame games have brought about political risks, if not yet decay, to the Kingdom.
Cambodian scholars are calling for constructive dialogue among political leaders on national issues, particularly economic policy.
Sim Vireak, in his opinion piece published by the Cambodian Institute for Strategic Studies, rightly points out that it is time for “Cambodian politicians to lead Cambodian public discussion to a new level of debate to be based on policy alternatives instead of endless destructive criticism and emotional and personal attacks.”
As Cambodia becomes a lower middle-income country with the per capita income slightly more than $1,000, a more robust economic development strategy is required. The government introduced an industrial development policy last year with the vision to transform Cambodia from a labor-intensive industry to a skill-driven industry by 2025.
The policy aims to promote sustainable and inclusive high economic growth through enhancing production and export capacity and diversifying the sources of growth, focusing on the manufacturing sector, agro-industry and small and medium-sized enterprises.
By 2018 the government plans to reduce the price of electricity, develop integrated and effective logistical systems, strengthen labor productivity and skills development and transform Sihanouk province into a multi-purpose special economic zone.
Different government ministries are tasked to coordinate and work together to realize these goals. However, many government agencies have yet to develop their own action plans to implement the industrial development policy.
The Cabinet reshuffle approved by the National Assembly this week is expected to speed up institutional reforms. But critiques observe that it is just “cosmetic”, which does not have much impact on the efficiency and effectiveness of the public institutions.
The core challenges ahead in implementing the industrial policy is the lack of leadership, coordination and effective decision-making. Other obstacles include industrial infrastructure, a lack of skilled labor, financing and labor disputes and industrial relations.
It is expected that the number of strikes and protests will be reduced after enforcing the Trade Union Law, which was passed by the National Assembly early this week. Yet labor disputes and industrial relations tensions will remain high given the law has been strongly criticized by the labor unions.
Human resources development and skills transformation need time. As a matter of fact, it would take at least another 10 years to see the results of educational reform. Education is a long-term investment.
Confucius said: “If your plan is for one year plant rice. If your plan is for 10 years plant trees. If your plan is for 100 years educate children.”
Under the leadership of Hang Chuon Naron, educational reforms have gained new steam with relatively clear vision and action plans covering early childhood education, primary education, secondary education and technical education, higher education and non-formal education.
Vocational training and technical skill development are the core strategy of human resource development in response to the labor market demand. In the context of regional economic integration, Cambodia has great potential to become one of the main suppliers of parts and components to multinational corporations in the region.
Cambodia needs to attract more foreign direct investments to develop industrial infrastructure such as the electricity supply, special economic zones, industrial zones, economic corridors or gateways and modern transport and logistics systems.
In order to attract and invite foreign investment, the government institutions have to be clean, efficient and business-friendly.  According to the World Bank’s report on “the ease of doing business”, Cambodia ranks 127, second lowest in Southeast Asia after Lao PDR.

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