5 th Asia Economic Forum “ Asia’s Challenges and Opportunities during the time of Global Economic and Financial Crisis ”. Plenary Session III : Financial Crisis' Impact on the Millennium Development Goals. H.E Dr. Son Koun Thor Advisor to Samdech Prime Minister Hun Sen Vice-Chairman of SNEC.
5th Asia Economic Forum“Asia’s Challenges and Opportunities during the time of Global Economic and Financial Crisis ”
Plenary Session III :
Financial Crisis' Impact on the Millennium Development Goals
H.E Dr. Son Koun Thor
Advisor to Samdech Prime Minister Hun Sen
Vice-Chairman of SNEC
The Financial Crisis Affect and Government’s Policy Measure
The world economy has gone through deep changes since the end of 2007 caused by the increase in oil prices and the real estate crisis in United State.
In 2008, oil price were rising had caused the prices of food, especially rice and also caused the of many other goods to increase. This has created inflationary on the world economy including Cambodia.
In generation, this global financial and economic crisis have impacted to Cambodia’s financial and economic systems, especially the decline in the sources of financing and private investment capital outflow, the fall in demand in key Cambodian markets and reducing tourist visit to Cambodia. As a result, the most vulnerable sectors to the crisis are :
1- Macroeconomic Policy:
1-1 Monetary and financial policy
1-2 Fiscal policy
1-3 Policy to mobilize and increase disbursement of
Official Development Assistant (ODA)
2- Measures related to Structural and Sectoral Reforms:
2-1 Garment sector
2-2 Tourism sector
2-3 Agriculture sector
RGC continues implementing prudent and flexible policies to keep inflation under check and to ensure stability in financial sector especially the robust banking system such as regularly monitoring and ensuring the health of banking system, ensure the solvency and the strength of commercial banks.
In order to compensate the drop in private investments, RGC has to introduced a stimulus package to the extent it can afford to support and stimulate growth in the ways that would not adversely affect economic stability, especially the management of inflation, as well as to effectively mobilize additional resources from the development partners.
In 2009 expenditures policy, the RGC gave priority to increasing public investment in physical infrastructure including transportation, irrigation, increasing agriculture output, reducing manufacturing costs and implementing social safety nets.
Nevertheless, The RGC is vigilant in monitoring the implementation of the budget-on both expenditure and revenue side.
In 2009, RGC mobilized approximately USD 1 billion in ODA, which was highest outcome in its effort to attract Official Development Assistance from development partners. This cooperation financing is one of the important instruments to reduce the impacts on Cambodia from financial meltdown and global economic downturn.
RGC still see the possibility and need to improve procedures and to reduce barriers and difficulties in doing business which can help reducing production and transportation costs and also seeks sources of financing for business activities, diversifying markets and coordinating between employers and workers.
RGC looks for appropriate budget and establish fund to provide scholarships for special skill training including the provision of short-term training to our young and lay-off workers.
RGC pays greater attention to strengthening tourism sector over the short, medium and long terms, by ensuring peace, security, political stability, social order and tourist safety; building more infrastructures; improving legal framework and institutional capacity; developing human resources; and diversifying tourist market.
In order to support Agriculture, RGC continue to enforce zero tariff policy on importing agriculture materials such as seeds, fertilizers, pesticide and agricultural equipments etc.
RGC is drafting legal procedures for investment projects in agriculture especially investment projects in agriculture produces processing such investment projects in rice stockpiling and processing.
“ Transforming Cambodia into White Gold-Rice exporter ”
(The vision of Samdech Hun Sen, Prime Minister of Cambodia)
The Rural Development Bank has provided a soft loan to the Green Company to build rice milling facilities to mill rice for export and local consumption.