Singapore, 26 July 2010
Your Excellency Mr. Lim Hng Kiang, Minister of Trade and Industry
Excellencies, Ladies and Gentlemen,
I am greatly honored and delighted to participate in this auspicious business luncheon. I would like to deeply and sincerely thank the Minister for Trade and Industry His Excellency Mr Lim Hng Kiang for hosting this very important event. I also thank all the Singapore investors for their presence and interests in Cambodia.
I am confident that this visit will greatly contribute to the further strengthening and development of the close friendship and fruitful cooperation between Cambodia and Singapore.
I also take this opportunity to extend my profound gratitude to the people and the Government of Singapore for their continued support to Cambodia through the training of Cambodian officials in Singapore and in Phnom Penh and in particular for the establishment of the Cambodia-Singapore Training Center in 2002, where as of today, nearly 5000 officials have benefited from its short term training courses. This support is invaluable as Cambodia still requires to further develop its human resources and will contribute to Cambodia integration into ASEAN as well as to the economic development of the country.
As an ASEAN member, Cambodia wish to acknowledge the critical role of Singapore in many ASEAN initiatives such as the Initiative for Asean Integration (IAI) aiming at narrowing the development divide and enhancing ASEAN’s competitiveness as a region.
Although Europe, and to a lesser extent, the USA are still under threat of a double-dip recession, East Asia seems to have recovered from the global financial and economic crisis. Largely thanks to China and India, the region’s output, exports and employment have mostly returned to the levels before the crisis. Real GDP growth in developing East Asia is poised to rise to 8.7 percent in 2010.
However in order to ensure growth’s sustainability, countries in the region will have to adopt appropriate policies to readjust their economic structure and enhance their competitiveness.
As for Cambodia, the Royal Government has carefully and proactively prepared and implemented a set of key policy measures to weather the global financial and economic crisis. Our basic philosophy was to closely monitor the national economic pulse and ensure a sound macroeconomic environment conducive for economic activities, more importantly, maintain people’s livelihood. Thus, Cambodia has responded vigorously and effectively to the crisis by undertaking budgetary measures in conjunction with monetary policy and close supervision of the financial system in order to maintain monetary stability and a sound banking system which will sustain economic growth.
Within this framework, the National Bank of Cambodia has introduced a set of measures to adjust the level of capital reserve requirement, improve banking supervision, tighten regulation, and undertake on-site inspections in order to strengthen risk management and corporate governance among commercial banks so that they are well equipped to tackle any economic and market shock.
Along with this, the Royal Government has taken measures to promote the domestic economy by increasing public expenditures to develop a social safety net, and provide re-training as well as job opportunities for people in crisis-hit sectors. We have also established an agriculture support and development fund in order to improve productivity and diversify our growth base. Regarding public investments, we have given priorities to physical infrastructures development which will contribute to the agriculture sector growth.
These efforts have enabled us to overcome the adverse impacts from the world economic and financial crisis last year and preserved the foundation of the Cambodian economy. Indeed, in 2009, despite drops in the manufacturing and real estate sectors, as well as the weakening of the services sector growth, the agriculture sector continues to achieve good results with a growth rate of over 5%. Given the vast production potentials and market opportunities for agricultural product’s exports, the Royal Government has recently adopted the rice production and export promotion policy, paving the way for the exports of other agricultural products in the following step. In this context, our target is to achieve a paddy production surplus of over 4 million metric tons by 2015, so that Cambodia can export at least 1 million metric ton of rice. I believe this policy offers good opportunities for all investors, especially those from the region including Singapore investors.
In 2010, economic growth is expected to rebound and forecasted at around 5%. Inflation has drastically decreased due to the drop in food price, and the exchange rate remains stable against the dollar. Foreign reserves have increased from USD 2.3 billion at the beginning of the year to USD 2.5 billion by May which can accommodate 4 months of import. Based on these new indicators, we can confidently conclude that the Royal Government has successfully weathered the hardest stage of the crisis along with the other Asian economies. Over the course of this tough journey, we have been able to maintain a sound financial sector as well as macroeconomic and social stability, particularly maintain the livelihood of the entire population.
Cambodia has gone through a rapid transition; starting from scratch and civil war to the current situation in which the country enjoys peace, political and macro-economic stability and social progress. Cambodia has learnt that peaceful, stable and a secure environment are the pre-requisites for its future growth and prosperity. Based on this solid foundation, Cambodia has actively endeavored to integrate itself into the region and the world, the ASEAN cooperation being of highest priority.
Since Cambodia is back on the path of strong and sustained economic growth, testified by considerable and encouraging achievements during the last few years, I believe that this is most opportune time for the business community and all investors to assess Cambodia’s potential and to seize investment opportunities.
I wish to bring to your attention that Cambodia has great potential in several important sectors such as agriculture, agro-industry, infrastructures, labor intensive industries, export oriented industries, exploitation of natural resources such as oil and gas, mining as well as tourism. These sectors have not been fully capitalized and still offer many investment opportunities.
It is important for me to reiterate that Cambodia treats equally and provides the same rights to both local and foreign investors except for land ownership. However foreign investors can use land through long term leases of up to 99 years. We have opened our economy to Foreign Direct Investments in all sectors including banking, insurance, and telecommunications. I must stress here that in many countries in such sensitive sectors, foreign investors are not allowed to control 100% shareholding without local participation. Moreover, we are actively expanding and deepening our financial sector by strengthening the banking and insurance system and by establishing the Cambodia Stock Exchange which operation is due in mid 2011. This openness has already provided Singaporean companies, pioneer investments in banking and insurance sectors among others, ahead of investors from other countries.
Along the improvements of physical infrastructures in the past years, on the soft side, Cambodia has made significant progress in strengthening its legal framework: although as mentioned earlier, ownership of land is still reserved to nationals, I wish to inform this distinguished gathering that on 5 April, 2010, the National Assembly passed legislation allowing foreigners to own private units in co-owned buildings. In combination with earlier legislation organizing separate titles of ownership for condominium units, this is a significant development for the real estate sector. The rights of private property investors, both Cambodians and foreign nationals are now better secured while reducing the risk for developers and for the final consumer. In practice it will now also become easier for end consumers to finance condominium unit purchases, as the titles serve as secured collateral.
Furthermore a number of legal and judicial reform efforts in the Government’s programs, such as the creation of the National Arbitration Center, will address some of the existing gaps. Commercial arbitration will be implemented. Currently private sector arbitrators are being trained by international experts. The Insolvency Law has been promulgated, significantly improving the rights of creditors and the transparency of enforcing debts. It is also noteworthy that Cambodia is one of the few countries in the region where security on movable goods can be registered online in real time, a procedure that is highly popular with the private sector. A new Law of Commercial Contracts, which is being drafted, will also improve the legal certainty relating to the most common contracts that are used in business.
In addition to the strengthening of the legal framework, the Royal Government is paying great attention to the business environment and welcomes public-private dialogue. Through the Government Private Sector Forum (GPSF), the entire Cabinet and I meet regularly with the business community to consider and address private sector development, trade and investments issues the private sector is facing. Since its inception in 1999, the GPSF has convened 15 times with the last forum being held on the 27 April 2010. For ten years now, the GPSF has provided us with many success stories of partnership between the Royal Government and the private sector.
I am proud to share with you all that in a 2009 World Bank report on public-private dialogues, Cambodia was ranked first out of the 24 countries surveyed. Thanks to this dialogue mechanism, the business and investment climate has been steadily improved. In this context, I strongly encourage Singaporean investors in Cambodia to participate actively in this dialogue mechanism.
Notwithstanding the above mentioned progress and achievements, the Royal Government of Cambodia will pursue its efforts to streamline processes and formalities for private investments; we will implement necessary measures to reduce the cost of doing business in Cambodia, in particular by strengthening governance and lowering transportation and electricity costs. Concerning the latter, the Royal Government expects considerable improvement from 2010 on with the energy generated by our hydropower plants. Also as a first step towards simplification of administrative procedures is the establishment and operation of Special Economic Zones at the borders with Vietnam and Thailand, in the vicinity of Phnom Penh and in Sihanoukville where is located our deep sea port. The One Stop Service at each of those SEZs has already reduced time and cost of transactions.
I wish to invite Singaporean businessmen who have not visited Cambodia yet to come for fact findings, explore investment opportunities, meet and discuss with the Cambodian business community looking for partnership, join hands together to ensure a win-win outcome. You have the capital, the know-how and the experience. Let’s combine yours assets with our endowments and potentials. I see so much room for complementarities between our two economies. I am personally committed to assure you a conducive and friendly business environment.
My key message today, therefore, is that Cambodia is open for business to you Singaporean investors. We wait to welcome you.
Finally, I hope that the Singapore Government will continue its support to Cambodia and further improve the cooperation in all fields in order to contribute to Cambodia’s socio-economic development. Indeed, I strongly believe that our closer cooperation will bring prosperity to our peoples and both our countries, and will strengthen the long-lasting Cambodia-Singapore friendship.
Before closing, I would like to wish Your Excellencies, Ladies and Gentlemen attending this Business Luncheon, Happiness, Prosperity and Success in all your endeavors.
Thank you for your kind attention!