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Cambodia economic update : Clear skies (English)

This issue of the Cambodia economic update covers the following selected issues: 1) making the most of the Cambodian rise sector; and 2) creating opportunities for firms as reflected in findings from the investment climate assessment. For FY2014 economic growth held up well despite domestic uncertainty and instability in neighboring countries. Real growth is estimated to reach 7.2 percent, driven by the garment, construction, and services sectors. Overall macroeconomic management has been good with fiscal consolidation underpinned by improved revenue administration. In 2015 with the expectation of renewed confidence and the return of political stability after ending a yearlong political deadlock in July 2014, bolstered by a strengthening global economy, Cambodia's real growth rate is expected to reach 7.5 percent, similar to that of 2013. The downside risks to the projected robust growth are a potential recurrence of labor unrest, natural disasters, especially the possibility of heavy floods, as well as regional political uncertainty. Concerning rice production, growth decelerated in 2013 highlighting the importance of revitalizing the rice sector so it becomes once again a key engine of GDP growth. While the milled-rice export market is steadily expanding and increasing the number of destination markets, the milling and transport costs of Cambodian rice make it loose the competitiveness it has at farm gate prices. The Royal Government of Cambodia (RGC) has set a very legitimate target of one million tons of milled rice exports that matters tremendously for poverty reduction and shared prosperity. Concerning the investment climate assessment findings, RGC's new five-year Rectangular Strategy III continues to prioritize improving the business environment to help diversify and increase value-added in production. The current period of robust growth represents an opportunity to make improvements to the business environment that will attract long-term investors. Proposed next steps in reforming the business environment include: a) addressing the high cost of electricity; b) automating government processes; c) encouraging new investment, particularly in special economic zones; d) continuing improvements to trade facilitation; e) completing the draft Competition Law; f) designing and implementing a system of incentives for business registration; and g) focusing on implementation and enforcement.

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Details

  • Author

    Aldaz-Carroll,Enrique, Ly,Sodeth

  • Document Date

    2014/10/01

  • Document Type

    Working Paper

  • Report Number

    91023

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Cambodia,

  • Region

    East Asia and Pacific,

  • Disclosure Date

    2014/10/06

  • Disclosure Status

    Disclosed

  • Doc Name

    Cambodia economic update : Clear skies

  • Keywords

    Integrated Fiduciary Assessment and Public Expenditure Review;tourism sector;World Travel and Tourism Council;Rural and Social Development;real effective exchange rate;current account deficit;lender of last resort;Cost of Doing Business;public sector service delivery;dry season rice production;export growth;Real estate;engine of growth;exchange rate targeting;banking sector;competitiveness of firms;gdp growth rate;global financial crisis;debt sustainability analysis;competition among bank;Labor Market;Exchange Rates;tourist arrival;real growth rate;expansionary fiscal policy;dollar exchange rate;accumulation of savings;generous tax incentives;corporate income tax;aggregate production function;monetary policy independence;Irrigation and Agriculture;irrigation system maintenance;Oil and Gas;physical capital stock;consumer price index;international price volatility;increase in inflation;exchange rate stability;reduction in production;international experiences show;economic growth rate;global economic expansion;domestic political stability;agricultural commodity price;natural petroleum product;trade and competitiveness;growth and development;high growth rate;finance and markets;code of conduct;implementation of reform;automation of business;farm gate price;international financial market;access to finance;human asset;change in status;Oil & Gas;Maintenance of Irrigation;rice price;deposit growth;broad money;international reserve;improve revenue;domestic revenue;monetary sector;agricultural price;revenue administration;fiscal deficit;government saving;Macroeconomic Stability;international tourist;banking system;credit growth;factor accumulation;political uncertainty;agricultural sector;Macroeconomic Management;retail business;tourism receipts;Tax Administration;trade deficit;Agricultural Extension;tourist attraction;fixed asset;Fixed Assets;business environment;minimum wage;transparent process;tertiary canal;tax revenue;real sector;monetary aggregate;rainy season;staple food;Capital Inflows;import growth;price stability;tax base;coastal area;manufacturing sector;construction material;rural area;consumption good;downside risk;development partner;international arrivals;competitive practice;borrowing cost;lending rate;Business Climate;Financial Sector;political turmoil;Banking Supervision;agriculture sector;outstanding credit;construction permit;irrigation investment;preferential treatment;global recovery;informal payment;expenditure composition;foreign investor;

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Citation

Aldaz-Carroll,Enrique Ly,Sodeth

Cambodia economic update : Clear skies (English). Cambodia Economic Update Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/964851468020720928/Cambodia-economic-update-Clear-skies