As Asean heads toward greater economic integration, Cambodia remains one of the least competitive countries in the world.
A country is competitive when it can attract investment and sell and supply goods and services for export at an accelerating rate. According to the World Economic Forum 2015, Cambodia was ranked 95th in competitiveness, surpassing only Myanmar among countries in Asean.
Dyna Heng, an economist based in Washington, says Cambodia does well in macroeconomic stability, particularly in inflation. “Cambodia has more flexibility in regard to hiring and firing practices, in addition to competitive wages,” he said.
However, he said that Cambodia faces major challenges, including property rights, skills shortage, lower productivity, limited infrastructure, lack of predictability, and higher costs of transportation and electricity.
“Cambodia has limited capital, limited market access, and limited technology and know-how to compete,” he said. “The cost of transportation and electricity is among the highest in the region.”
The Asean Economic Community, which will create a competitive market and free flow of goods and services in Southeast Asia, comes online in January. And while it is possible Cambodia will benefit from the integration, it still needs improved labor skill, infrastructure and agricultural production.
The country’s annual growth rate remains around 7 percent, driven by garment exports and tourism. That growth will improve when rice production improves, Dyna Heng said.
“Success in our agriculture could bring a lot of social and economic benefits,” he said. “It will help diversify our economies and ensure our food security.”
That all requires political stability, and recent events, like the beatings of two opposition lawmakers, do not contribute to that stability.
“We cannot go anywhere without these [macroeconomic and political stability], which are the preconditions for growth and development,” he said.
