World Bank economist sees Cambodia’s new drivers of growth

Thmey Thmey senior journalist, Ky Soklim interviews Miguel Eduardo Sanchez Martin, senior country economist for the World Bank Cambodia Office.



KY SOKLIM: Over the last 10 years, Cambodia's GDP growth has been around seven percent. But the gap between rich and poor is becoming bigger. How can this gap be reduced from the World Bank’s point of view?



SANCHEZ: First, it is worth clarifying that official data shows that, in addition to impressive decreases in poverty, strong economic growth also resulted in a reduction in inequality during the period 2004-2013. 



Growth in Cambodia over the past decade has been pro-poor. Going forward, it is important that Cambodia improves the quality of education and healthcare, as well as its social protection policies, to ensure that the poor and vulnerable increasingly participate in future growth and contribute to the transformation of the Cambodian economy.



KY SOKLIM: What is the economic backbone of Cambodia nowadays?

SANCHEZ: Garment exports, agriculture, traditional services such as tourism and transportation as well as construction remain the backbone of the Cambodian economy. At the same time, one observes the emergence of light manufacturing and some modern services — legal, information and telecommunications — which could become the drivers of growth in the future.



KY SOKLIM: In the coming five years, will the technology sector play a crucial role for the Cambodian economy? If so, why? If not, why?

SANCHEZ: Cambodia would benefit from exploring new drivers of growth that will create jobs and boost prosperity over the next 20 years. For example, digital platforms are expected to play a key role in enabling local entrepreneurs to participate in global value chains more effectively. Financial technology, or fintech can provide expanded access to finance for both enterprises and individuals as well as facilitate the growth of e-commerce.

KY SOKLIM: How can Cambodia move to e-commerce and an e-economy while its people lack IT knowledge? 

SANCHEZ: Cambodia has already embraced mobile technologies and is catching up quickly with other ASEAN economies in terms of internet adoption. For Cambodia to maximize the benefits of digital technologies in the coming years, it will be important to roll-out new generation infrastructure — for example, 4G — and expand coverage in rural areas; adopt e-commerce, digital transactions, data protection and cybersecurity regulation; use digital technologies to facilitate business registration and other key e-government services; and provide digital skills to the population.



KY SOKLIM: Cambodian workers’ productivity is still weaker than most other ASEAN countries. How can it be  improved?



SANCHEZ: Both improved education, building skills for changing the economy and digital adoption could help enhance productivity in Cambodia.



KY SOKLIM: Is corruption still the main concern of investors in Cambodia?

SANCHEZ: According to the latest Cambodia Enterprise Survey by the World Bank Group in 2016 informality is the top obstacle for 28 percent of the surveyed firms.



KY SOKLIM: You have seen the boom of the real-estate sector in Cambodia over the last few years. Do you think this sector will continue to grow? Will the real-estate sector be a brake on economic growth or, on the contrary, will it help to boost the economy?

SANCHEZ: The construction and real estate sectors have been an important driver of growth in recent years. It is worth closely monitoring developments in the sector, since it is prone to booms and bust cycles, though.


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