A general view shows building and property developments in Phnom Penh. Heng Chivoan
As the government ambitiously sets its sights on becoming an upper-middle-income country by 2030 and a high-income one by 2050, it urged all stakeholders to join hands and prioritise key strategies, embracing the challenge to transform the vision into reality.
Prime Minister Hun Manet launched the first five-year phase of the Pentagonal Strategy on August 24, to pave the way for the ambitious plan, which focuses on five key areas: building human capital; diversifying the economy and enhancing competitiveness; developing the private sector and employment opportunities; promoting resilience, sustainability and inclusive development; and strengthening the digital economy and society.
During the initiative’s launch, Manet reflected on the past 25 years dedicated to post-war rebuilding.
He emphasised that the forthcoming 25 years would initiate a new era, focusing on strengthening the nation and propelling it towards high-income status.
The strategy is divided into five phases, with the first phase prioritising roads, people, water, electricity and technology.
He added that the first phase would work to ensure crisis-resilient economic growth, create jobs, alleviate poverty, improve governance and public institutions and ensure sustainable socio-economic development.
Ky Sereyvath, director-general of the Royal Academy of Cambodia’s (RAC) Institute of China Studies, noted several key factors enabling the country to achieve its ambitious vision, such as peace, an openness to a diverse policy and strengthening internal factors.
“Cambodia’s potential lies in peace. Without peace, we will not be able to achieve our goal of becoming a high-income country by 2050,” he said.
“Consider this: if a country is at war, how will it attract investment and business? Therefore, maintaining peace is critical. Historically, our commitment to peace, both politically and economically, has fostered growth and drawn a significant number of foreign investors,” he added.
Sereyvath mentioned that the second factor is the openness of a diverse policy, explaining that the government has announced that it does not affiliate with any particular alliance.
“The adoption of this policy aligns with the current multilateral policy, ushering us into globalisation. We have numerous allies and markets, being part of the Regional Comprehensive Economic Partnership [RCEP], ASEAN, the World Trade Organisation [WTO] and maintaining relations with the US, Europe, China, Russia, Japan and Canada. Joining these markets is a deliberate strategic decision,” he said.
Regarding the third factor, he emphasised that internal elements are crucial, with the five-year plan of the National Assembly (NA) starting with strengthening the education sector and human capital for the long term.
“In the short term, 1.5 million will undergo vocational training. We are looking at the human capital reform starting from young children until they graduate, a span of another 12 years. In the next mandate, this could extend to two or three million individuals.
“Therefore, the rise in skilled labour will serve as an important investment attraction and the driving force behind production. It’s important to understand that if our productivity is low, even small wages won’t attract foreign investors, as they weigh the profitability of investing $1 in our workers against potential returns,” he added.
He expressed his belief that by 2050, growth would come through the improvement of education.
Anthony Galliano, group CEO of Cambodian Investment Management Co Ltd, said the country’s economy has undoubtedly been one of the top performers, averaging over 7% growth per annum in the decade before the pandemic, making it one of the fastest-growing economies in the region.
“While economic prosperity and progress have been superb, it has started from a low base. The aspiration to reach upper-middle-income status by 2030 is indeed a stretch and will require substantial acceleration, diversity and inclusion in economic development,” he said.
He added that to achieve the status, the country must reach a Gross National Income per capita (GNI) of $4,466. The number is presently expected to be approximately $1,700 in 2024.
GNI increased 7.59% from 2021 to 2022 and 3.27% in 2021 from 2020. There was a decline of 1.92% in 2020 from 2019, and an increase of 9.86% in 2019 from 2018.
Galliano stressed that even if GNI increased a compounded 10% per annum over the next seven years, it would reach $3,300, 25% short of the $4,000 target.
Out of 190 countries, Cambodia presently ranks 152 in GNI, and only 115 countries have reached upper-middle-income status or better.
“Cambodia does have the proficiency and foundation to achieve [the] status within the next 10 years. In setting goals, it is always preferable to set more ambitious ones, and this is the case if the target is 2030,” he said.
“In the context of time, a few years later than projected is immaterial and still an outstanding record of incredible success. I am confident the target will be accomplished in the range of 2033 to 2035,” he added.
Galliano noted that the government is addressing the fundamental requirements to achieve the goal through physical and human capital development, infrastructure investment, introducing reforms to enable sustained and inclusive growth, improvements in investment law, execution of trade agreements and addressing the current slowdown in tourism, construction and real estate.
“The strong foundation laid by the previous government and the formidable confidence and hope in the new government should not be underestimated in what is expected to be a period of inclusive and sustainable prosperity and peace,” he said.
