Cambodia looks to be winner for growth for AEC: ILO

Wed, 20 August 2014

Cambodia stands to be the biggest beneficiary, in terms of GDP growth, for the first decade following ASEAN Economic Integration in 2015, according to a study released publicly today by the International Labour Organisation (ILO).
The ILO’s 160-page report says Cambodia could see a 19.9 per cent increase in its GDP value by 2025, provided member states continue to reduce trade costs, remove intra-regional tariffs and liberalise non-tariff barriers.
“The lower-income ASEAN Member States in general see the largest increases in GDP … in part as consumers and producers in these countries face relatively high trade barriers and costs, and thus stand to gain most from increased international trade,” the report states.
But the forecast is “highly optimistic” according to Jayant Menon, lead economist at the ADB’s office of regional integration, who says the model likely takes in to account a rapid flow of capital to support growth that Cambodia does not have the current capacity to absorb.
“Cambodia doesn’t have the kind of skilled labour force or infrastructure to accommodate a rapid increase of capital,” Menon said.
The ILO predicts that while retail, wholesale, trade management and electrical repair jobs will increase the most by 2025 in Cambodia, driven by more attractive wages and higher skills, the share of the population finding employment in the key agricultural sector may steadily decline.
Cambodia’s food processing sector is flagged by the ILO as a potential area for job losses, brought on by weak linkages with the country’s agricultural sector.
“Of particular concern is the potential of trade integration to weaken the food processing sectors in some of these countries, notably Cambodia, Indonesia and Lao People’s Democratic Republic. Concerted policy efforts will be required to strengthen the value chains associated with agriculture.”
Ly Visol, Office Manager at The Federation of Associations of Small and Medium Enterprises (SME) of Cambodia said yesterday that unfair domestic competition was hampering the food industry – a problem that would make it difficult to achieve the standards needed to compete with regional peers.
“While one SME owner in one company can get around the law, the other owner can’t, yet all of them have to sell their product at the market,” he said.
“In such a system it discourages owners follow the right standards of production, as it is at a higher cost.”