Cambodia will continue enjoying strong economic growth in the region, regardless of the slowdown in regional and global superpowers, Cambodian Prime Minister Hun Sen said.
Speaking at the 65th anniversary celebrations of the ruling Cambodian People’s Party on Tuesday, Hun Sen said that he was confident the country will be able to grow around 7.1% this year with inflation kept low at below 1.9%, the Khmer Times reported on Wednesday.
The prime minister also said overseas trade surplus would improve with exports climbing steadily compared to imports.
“In the first few months this year, Cambodia’s performance had been impressive in the services, industrial and construction sectors,” added the premier.
Hun Sen said state income from direct taxes and customs and excise duties had also increased.
The prime minister revealed that in the first five months this year, the government had collected $763 million in customs duties. This was an increase of 22% compared to the same period last year, said Hun Sen. He also said income tax collection for the first five months this year amounted to $708 million, representing a 21% increase from the same period last year.
“Overall, every sector is moving robustly in the correct direction, providing fruitful results and improving people’s livelihood,” said Hun Sen.
The prime minister pointed out that the country’s foreign reserves had increased to about $5.45 billion and were sufficient to last for at least four and a half months in the event of acute external crisis.
Hun Sen said the average income per person had reached $1,215 in 2015. It would continue to rise to $1,301 in 2016, he added.
The Asian Development Bank early last month recognised Cambodia as one of the fastest growing economies in Asia. According to the ADB’s “Outlook 2016” the country’s gross domestic product had a steady growth of 7% or more since 2013 and according to the bank, that GDP growth would continue through 2017.
The ADB said Cambodia had embraced the “factory Asia” model of economic growth, deploying low-cost labor to manufacture products for export.
“As the price of labour increased in the People’s Republic of China, and other Asian countries, Cambodia was able to attract many of these investors,” said the ADB.
“Cambodia’s large supply of inexpensive, low-skilled labour has attracted substantial foreign direct investment into the production of garments and footwear for export,” the bank added.
Hiroshi Suzuki, CEO and chief economist for Business Research Institute for Cambodia, agreed with Hun Sen and said Cambodia was now connected with a regional economy.
“The ADB estimates Cambodia’s GDP growth will be 7% this year, followed by the World Bank’s prediction of 6.9% and the International Monetary Fund’s seven percent,” said Suzuki.
“So Hun Sen’s prediction is quite near international estimates and it’s reasonable,” he added.
Suzuki said the comparative economic advantages for Cambodia are lower labour costs and good connectivity with neighbouring countries.
“The launch of Industrial Development Policy last year will be a good move for economic diversification,” he added.
“In order to attract foreign direct investment, especially from Japanese manufacturing industries, continuous efforts are needed from the Cambodian government to improve logistics and infrastructure and expedite bureaucratic clearance procedures,” added Suzuki.