Logo of Phnom Penh Post newspaper Phnom Penh Post - Economic outlook positive, ease of doing business still lagging: ADB

Economic outlook positive, ease of doing business still lagging: ADB

Workers prepare clothing for export at a garment factory in Phnom Penh in 2013.
Workers prepare clothing for export at a garment factory in Phnom Penh in 2013. Pha Lina

Economic outlook positive, ease of doing business still lagging: ADB

Cambodia’s economic outlook remains positive and the economy is forecast to grow at a robust 7 percent this year and next year, according to a report released by the Asian Development Bank (ADB) on Wednesday.

Growth in exports, strong foreign direct investment, growing tourist arrivals and increasing domestic demand should promote strong growth for the next two years, according to the bank’s Asian Development Outlook report.

Potential risks to the Kingdom’s growth remain, however, including the upcoming national elections in July, as well as the persistent difficulty of doing business in the country.

“Rising wages require that other costs of doing business be cut to maintain competitiveness with peer economies,” the report says. “Great potential exists in simplifying cumbersome business procedures.”

The report also calls for an improvement to the judicial system, which “is not seen as effective in resolving commercial disputes”.

Seang Thay, a spokesman at the Commerce Ministry, said yesterday the ADB’s outlook reflected the positive improvement of Cambodia’s economy. He also agreed with the need for further reforms to maintain competitiveness.

“We acknowledge that we need to try more to improve the procedure to provide easiness for business to do business in our country,” he said.

He encouraged patience, noting that the government would get better over time and keep improving.

Jan Hansen, the ADB’s senior country economist, reiterated the call for judicial reforms during the report’s presentation yesterday.

“What I think would be important is the establishing of commercial court,” he said. “The capacity building of judges and the commercial court would also help a lot to improve.”

Asked about a commercial court on Wednesday, Thay said that while it was an important step, further discussion with “relevant stakeholders” needed to take place. He also said that the National Commercial Arbitration Centre already existed for commercial disputes.

The spokesman declined to release any timeframe for possible implementation of a commercial court.

The ADB’s report also noted that garment and footwear exports were likely to slow in the future, but predicted that would be offset by strong growth in emerging industries, such as electrical parts and automobile components.

Higher demand for imports is set to increase the country’s trade deficit, however the bank expects increased tourism to bring in enough revenue to cushion the rise.

Meanwhile, higher foreign direct investments and official concessionary loans from abroad should be more than adequate to finance the current account deficit, even building up foreign reserves to about $10 billion by the end of the year.

MOST VIEWED

  • Omicron patients can stay home: PM

    The Ministry of Health has issued a directive on the treatment of people who have tested positive for the highly transmissible Omicron coronavirus variant, following a suggestion from Prime Minister Hun Sen on the night of January 21. The directive permits home quarantine for those who

  • The effects of the USD interest rate hike on Cambodian economy

    Experts weigh in on the effect of a potential interest rate expansion by the US Federal Reserve on a highly dollarised Cambodia Anticipation of the US Federal Reserve’s interest rate hike in March is putting developing economies on edge, a recent blog post by

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • Hun Sen gets 4th Covid shot, urges compatriots to follow

    Prime Minister Hun Sen and his wife Bun Rany on January 14 received their fourth dose of Covid-19 vaccine and called on compatriots to follow suit as the Omicron coronavirus variant continues to spread in the community. This marks the launch of Cambodia's fourth-dose vaccination campaign,

  • Fourth dose Covid booster drive jabs 43K in two days

    In the first two days of the fourth-dose Covid-19 vaccination campaign, more than 43,000 people volunteered to get the jabs, while over 4.6 million people have received a third shot. Health ministry spokeswoman Or Vandine said that fourth-dose vaccinations, which began on January 14 exclusively with the Pfizer

  • Singapore backs Cambodia's efforts on Myanmar

    Singaporean Prime Minister Lee Hsien Loong supports Cambodia in its efforts to seek a solution to the ongoing Myanmar crisis as the chair of ASEAN. Lee expressed his support during a meeting with Prime Minister Hun Sen via videoconference on January 14, with the talks focused