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Reforms making an impact

An employee at a light manufacturing plant checks products for irregularities at Phnom Penh’s special economic zone.
An employee at a light manufacturing plant checks products for irregularities at Phnom Penh’s special economic zone. Heng Chivoan

Reforms making an impact

Cambodia was ranked higher than other CLMV countries (Cambodia, Lao, Myanmar, Vietnam) for the readiness of private and state-owned organisations to deal with external economic changes, according to the Change 2015 Readiness Index released by KPMG.

The international auditing firm’s report shows that Cambodia was the highest placed low-income country, ranked 50th, above its neighbours – Myanmar ranked 97, Vietnam placed 98 and Lao was at 115.

While Cambodia placed high on its readiness for economic change, or as the report calls it “enterprise pillar”, and the ability of its governmental and regulatory institutions to manage change, it didn’t score as well on individual citizens’ and civil society institutions’ ability to do the same.

This achievement is primarily due to its 34th placing in the enterprise pillar, with a notable fourth place in the economic diversification sub-index and a first place on the informal sector index.

“Cambodia is poised to join a new generation of Asian frontier economies, transitioning from low income to emerging-market status,” the report wrote.

While details of Vietnam’s and Lao’s ranking were not mentioned, the report, however, noted that Myanmar had slipped from 52 in the rankings in 2014 to 72 in 2015.

“Weaknesses include ineffective corporate boards, a lack of local competition and ineffective anti-monopoly policy.

The pace of reform in Myanmar has slowed, and possibly even stalled, in the past two years,” the report wrote.

Cambodia’s ranking among CLMV countries was a result of extensive reform undertaken by the Cambodian government, explained Srey Chanthy, an independent economic analyst, yesterday.

“In addition, extensive reform programs in business environment and justice sector have also begun since Cambodia joined the World Trade Organization.

Recent political developments, after the elections in 2013, has also pushed for the deepening of reforms,” he said.

Cambodia National Rescue Party whip Son Chhay said that being ranked higher than Vietnam was testament to concrete structures put in place in the Kingdom.

While welcoming the report’s findings, Chhay said that it should encourage the government to undertake further reforms and economic diversification.

“While Cambodia is seen as open to foreign direct investment and achieving good growth, the economy growth is not based on local production.

We are a consumption country,” Chhay said.

“The economy is based on trading and the preparation mechanism for the economy to transition to a middle-income economy is very limited,” he said.

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