Cambodia may have reduced its levels of extreme poverty to the single-digits, but its middle class is nearly nonexistent and approximately half of its population remains highly susceptible to economic shocks, according to a World Bank report released yesterday.
In order to bolster the upward mobility and economic security of Cambodia’s most vulnerable populations, new policies that prioritise economic mobility and integrate social protection programs are needed, the bank urged in a regional report.
Cambodia is among the latest in the region to become classified by the bank as an “out-of-extreme-poverty” country, with a mere 0.7 percent of its population in severe destitution.
“While levels of extreme poor have all but diminished and percentage of moderate poor have lowered, about half of Cambodians remain ‘economically vulnerable’ with only a small sliver of Cambodians being counted as ‘middle class’,” the report said.
As a result, economic shocks are common and potentially devastating. Cambodia’s rural populations remain plagued by lack of access to clean water, sanitation and quality housing, and while the main means of escaping poverty remains the establishment of a small business, many in the provinces do not have access to the financial tools to become entrepreneurs.
“The central elements of a strategy for fostering economic mobility must be ensuring that everyone has opportunities for paid employment, that people can move to better opportunities if available, and that the quality of jobs improves over time,” the report said.
Nevertheless, the Kingdom may soon see positive impacts from increased investment flowing from China as the giant northern country aims to take advantage of cheap labour offered in the region.
“Lower-income countries in East Asia and Pacific may be able to reap the benefits of China shifting some of these activities such as electronics, as its labour costs continue to increase, to neighboring countries with lower wages,” the report said, adding that Cambodia would have to improve upon the efficiency of its logistics and create a more favourable business environment.