Session 1a:Overview: Trade, Growth and Poverty Reduction
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1 Session 1a:Overview: Trade, Growth and Poverty Reduction Presented by Mr. Sok Siphana, Secretary of State for Commerce Senior Policy Seminar for Cambodia and Lao PDR: The Integrated Framework and WTO Accession: Challenges and Opportunities for Poverty Reduction 1
2 The Trends and the Temperature Checks
3 China s Accession to the WTO
4 GATCom TContrac pletedac tingparty cesion SeNot kingaces SekingA cesion Statu Clic sofco konthe untrie yelow sinth oredar ewto eastoa Systcesthe em tabl Stesofco ntentsfo atusas rdocum ofapril entson 1, 20 acesio n The Various Free Trade Areas NAFTA CARICOM EU ECOAWAS SAARC AFTA MERCOSUR SADC SPF
5 Increased regional and international competition China s accession to the WTO US granting MFN status to Vietnam US s Farms Act ($190 billion in farm subsidies) AGOA End of the Multi-Fiber Agreement in 2005 Difficulties in WTO accession process (LDC-Plus or worse WTO-Plus) The changing role (power?) of multinational companies and the role of governments must be reviewed in the changing scenario.
6 Prospects for the Future Future ASEAN-China FTA, ASEAN-Japan FTA, and ASEAN- India FTA. ASEAN Vision 2020 Economic Community. ASEAN 6
7 Trade
8
9 Trade would help break the vicious cycle of poverty Rapid population growth Rapid labor force growth More Jobs opportunities Insufficient employment creation Low growth in per-capita income level Increased incomes Low-per-capita income level
10 Mainstreaming Trade Strategy into the Government s Development Policies Towards Poverty Reduction in Cambodia NPRD (early 1994) INPRD (early 1995) SEDP I ( ) SEDP II ( ) PIP ( ) PIP ( ) PIP ( ) IPRSP (Oct 2000) (2001 onwards) Pro Poor Trade Strategy PRSP (Mid 2002)
11 Cambodia has embraced the globalization process as part of its outward looking economic development strategy. JOINING ASEAN JOINING WTO ACCESS TO THE U.S. MARKET ACCESS TO THE EUROPEAN MARKET 11
12 Cambodia could be the 1 st LDC to accede to WTO.
13 Growth
14 Real GDP Growth (%) 9.00% 8.00% 7.00% 7.60% 7.00% 6.90% 7.70% 6.30% Est. 6.00% 5.70% 5.00% 4.00% 4.10% 4.5% 5% 3.00% 2.00% 1.00% 1.00% 1% 0.00%
15 Inflation 45.00% 41.10% 40.00% 35.00% 30.00% 25.00% 20.00% 17.80% 15.00% 10.00% 9.00% 9.10% 12.6% Est. 5.00% 0.00% -5.00% 3.50% 1.5% 0.7% 4% 4% -0.8%
16 Official Exchange Rate (Riels/US$) (average mid-point buying and selling rate) Source: MOP 16
17 Cambodia GDP by sector (1998 ~ 2001) Agriculture Industry Services 35.3 Source: Ministry of Planning/National Accounts of Cambodia April
18 Cambodia s Foreign Trade 1996 ~ 2003 (million US$) Total Exports Imports Balance m Feb- 03 Source: Ministry of Commerce 18
19 Cambodia s Garment exports (million US$) TOTAL USA EU OTHERS Mar Source: MOC/TPD as of 06 January
20 Number of Garment Factories /
21 Number of Footwear Factories /
22 Session 1b: Regional Impact of China s Integration and the Need for Policy Reform Presented by Mr. Sok Siphana, Secretary of State for Commerce Senior Policy Seminar for Cambodia and Lao PDR: The Integrated Framework and WTO Accession: Challenges and Opportunities for Poverty Reduction 22
23 Cambodia carried out a country diagnostic trade integration study (DTIS).
24 ASEAN Competitiveness Study McKinsey & Company Cambodia Working Group Meeting, June 24, Updated June 26, 2002
25 Registration & documentation Sanitary and Phytosanitary measures (SPS) Standards, Testing, Labelling and Certification Custom clearance Custom Valuation Warehousing Taxes VAT Taxes Intellectual Property Transport Rules Of Origin Harbour Services Pre Shipment Inspection Import Licenses Internation al Plant Protection Convention (IPPC) Prohibitions Registry procedures Foreign Exchange measures Services Intl. Office of Epizootics (IOE) Genetic Modified Organisms (GMO) Investment related matters Domestic requirements DFI regulations Banking Health (HACCP) Elaboration of trade agreements Process Codex Alimentarius Commission (CAC) Environmental Standards Labelling Negotiations Testing International Standards Dumping practices Tools and mechanisms for trade Trade disputes Product Packaging Quality System Standard Accreditation Certification Market Access Facilitation The Cause and Effect (Fishbone) Diagram Covering The Multitude of Issues having an Impact on Market Access 25
26 Cambodia s New Competitiveness Paradigm Cambodia is a small economy relying primarily on an export led growth strategy. Our success as a leading LDC to have surpassed the 1 billion dollar mark 2 years ago lies to a great extent on our ability to be and remain competitive. Competitiveness for an outward looking country like Cambodia will depend on our ability to constantly attract new source of foreign direct investment. 26
27 National Development Strategy and the Trade Policy Process National Development Strategy Trade Strategy Support from Multilateral and Bilateral Donors Government ministries and agencies Private Sector and Business Associations Effective Participation in MTS Negotiating and implementing agenda and capacities Trade Policy Process Analysis Formulation of trade policy Negotiation Implementation Trade Policy mainstreamed in development policy Civil Society Academia and Research Institutions Increased Trade and Investment National and regional competitiveness agenda and capacities
28 Cambodia s New Competitiveness Paradigm Trade and Investment Linkages and other companion and mutually supportive policies... Formulating a long-term financial sector development plan RGC s Financial Sector Blueprint (the Blueprint) for Capitalizing on the FDI Opportunities through Reforms of the Investment Regime Initiating Regional Development Master Plan of the Phnom Penh Sihanoukville Growth Corridor Bringing in Private Participation in Infrastructure: Complete the Country Framework Report on Private Participation in Infrastructure (CFR) with World Bank and the Public-Private Infrastructure Advisory Facility (PPIAF) Telecom Comprehensive Sector Study with World Bank
29 Good Governance Enforcement of the Rule of Law Reinforcement of Intellectual Property Rights as Tool for Development
30 Cambodia s New Competitiveness Paradigm Ambitious national legislative agenda to implement the WTO requirements. More than 40 draft laws or regulations are planned to be adopted in order to complete the legal framework of Cambodia, among those are various intellectual property laws like the draft Law on Geographical Indications Including Appellation of Origin, the draft Law on Plant Variety Protection, the draft Law on Layout Designs of Integrated Circuit, and the draft Law on Protection of Undisclosed Information. 30
31 Cambodia s New Competitiveness Paradigm Implementing the IPR policies Membership in International Conventions and Bilateral and Regional Arrangements WIPO in 1995, the Paris Convention in 1998, the ASEAN Framework Agreement on Intellectual Property Cooperation in 1999, Bilateral agreement on Trade Relations and Intellectual Property Rights Protection Agreement with the United States of America in In the near horizon is Cambodia s intent to join the Bern Convention and the Patent Cooperation Treaty 31
32 Cambodia s New Competitiveness Paradigm IPR Legislation The three keys IPRs laws were adopted: Law on Marks, Trade Names and Acts of Unfair Competition in February 17, Law on Patents, Utility Model Certificates and Industrial Design in December, Law on Copyright and Neighboring Rights in January
33 Product Diversification
34 Product value chain Suppliers $ Assembling Processing $ Packaging $ Transporting Inspecting $ Finishing Distribution $ Consumer Sector Value Chain
35 Recapture the Domestic Market Building In-Country Alliances in the Services Sector Cluster sectors with similar clients 1. For projects: engineering, construction, design, planning, surveying and mapping, architecture 2. For investors: corporate real estate, legal, accounting, insurance, banking
36 E-competence 36
37 Destination Diversification
38
39 GMS Flagship Projects North-South Economic Corridor East-West Economic Corridor Southern Economic Corridor 39
40 Myanmar Yangon Thailand Bangkok Hanoi Laos o Vientiane Kunming Vietnam Southern China Manila. CAMBODIA Phnom Penh The Philippines Brunei Kuala Lumpur Begawan Malaysia Jakarta Singapore Indonesia 40 cdc
41 Myanmar Yangon Thailand Bangkok Hanoi Laos o Vientiane Kunming Vietnam Southern China Manila. CAMBODIA Phnom Penh The Philippines Brunei Kuala Lumpur Begawan Malaysia Jakarta Singapore 5 Provinces of Cambodia 4 Provinces of Lao PDR 4 Provinces of Thailand Indonesia 41 cdc
42 Greater Mekong Subregion (GMS) Economic Cooperation Program 42
43 Forging Stronger Partnership with Thailand through Joint Economic Development Cooperation 43
44 44
45 45
46 Comparative Advantage and Investment and Trade Strategies Comparative Advantages Cambodia A potentially large and currently underdeveloped natural resource base (agriculture, fisheries, forest) Comparative Advantages Thailand Some natural resources over exploited or depleted providing market opportunities for trading partners Strategies Integration of production base Strategic partnership in marketing 46
47 Comparative Advantage and Investment and Trade Strategies Comparative Advantages Cambodia A largely untapped store of natural attractions and resources Comparative Advantages Thailand Tourism experience and the springboard for destination linkage Strategies Two Kingdoms one destination Two countries one coastline 47
48 Comparative Advantage and Investment and Trade Strategies Comparative Advantages Cambodia An infant manufacturing sector with low labour costs but poorly developed skill levels Comparative Advantages Thailand A rapidly developing manufacturing sector with rising labour and production costs Strategies Import substitution for Cambodia 48
49 Comparative Advantage and Investment and Trade Strategies Comparative Advantages Cambodia Low levels of investment but high incentives (GSP status) to compete in the international market place Comparative Advantages Thailand Higher investment levels in an increasingly competitive world market Strategies Reallocation of Thai industries to Cambodia 49
50 Comparative Advantage and Investment and Trade Strategies Comparative Advantages Cambodia Poor transport links to the rest of the country and international outlets Comparative Advantages Thailand Good transport infrastructure offering good linkages to international air and sea ports Strategies Strengthening competitiveness 50
51 Comparative Advantage and Investment and Trade Strategies Comparative Advantages Cambodia A big demand for immediate infrastructure supply systems Comparative Advantages Thailand A capacity for cross-border system expansion to meet short-term needs Strategies Utilization of existing infrastructure in the Thai side of the TCJDS area 51
52 TOURISM Two Kingdoms One Destination - Advocacy on integration of tourism resources, tourism cluster and network. Strategy 1: tourists Buri Ram and Surin cluster Sakaeo cluster Tonle Sap cluster Chanthaburi cluster Trat and Koh Kong Cluster Increase the number of 52
53 TOURISM Two Kingdoms One Destination - Advocacy on integration of tourism resources, tourism cluster and network. Strategy 2: revenue Strategy 3: facilities Strategy 4: Diversifying source of tourism Improvement of existing tourism Development of new routes and destinations 53
54 AGRICULTURE Strategy 1: Integration of Production Base Target crops Rice - 16,000 ha in Battambang and Banteay Meanchey Maize - 10,000 ha in Battambang Castor Bean - 1,000 ha Sugarcane - 5,000 ha in Banteay Meanchey Soybean - 10,000 ha in Battambang Eucalyptus - 15,000 ha in Preah Vihear and Oddar Meanchey Para Rubber - 40,000 ha in Siem Reap, Pursat, Banteay Meanchey and Battambang Inland Fisheries - 4,000 ponds in Siem Reap, Pursat and Battambang 54
55 AGRICULTURE Strategy 2: Joint Marketing Strategy 3: Promotion of Agro- Processing Industry Strategy 4: Development of Agrobased Joint Ventures 55
56 INDUSTRY Target Industries for Cambodia Type of Industry Food processing Products Rice flours Vegetable oil Processed fruits/vegetables Tapioca Animal feed Sugar Confectionary Market Cambodia/ Thailand 56
57 INDUSTRY Target Industries for Cambodia Type of Industry Products Market Construction materials Plastic products Concrete block PVC pipe PVC pipe Kitchenware Household plastic utensils Cambodia Cambodia 57
58 INDUSTRY Target Industries for Cambodia Type of Industry Metal working Wood processing Electronics and household appliances Products Metal-fabrication Building materials Agricultural Machinery Furniture Decorative wood (made from soft wood) Parts and component for semi conductors and other electrical appliances Market Cambodia Cambodia and export Export 58
59 INDUSTRY Strategy 1: Promotion of Co-Production Venture Strategy 2: Promotion of Clustered and Networking System 59
60 Potential Export Processing Zones (EPZ) Poipet Pailin Eastern Seabord of Thailand Koh Kong Kompong Cham Kaam Samnor Stung Hav/Sihanoukville Kep Bavet Ho Chi Minh-City
61 ARAN-POIPET 61
62 KOH KONG 62
63 PAILIN-BAN PAKKARD 63
64 Phnom Penh-Sihanoukville Growth Corridor 64
65 STUNG HAV EXPORT PROCESSING ZONE Oil Terminal Sihanoukville Port National Road # 4
66 ($ Million) Apparel exports, Value added and Employment 1,200 1, (Jobs) (000') Value added (million dollars) Employment (000') Exports (million dollars) 5/29/2003 Sources: Ministry of Commerce and CDRI 66
67 Foreign Tourist Arrivals to Cambodia by Air ( ) Tourists 500, , , , , , , , ,000 50, (Jobs, 000') * Tourist arrivals Via Siem Reap Employment 5/29/2003 Sources: Ministry of Interior, Ministry of Tourism and CDRI 67
68 Poverty
69 Background: The Millennium Development Goals (MDGs) The Millennium Development Goals (September, 2000) aspired to the goal of developing a true Global Partnership for Development which pointed to the establishment of an inclusive and equitable globalization. The Millennium Declaration called for an open, rule-based, predictable, nondiscriminatory trading system, and a commitment to good governance, development, and poverty reduction both nationally and internationally.
70 UN LDC-III Conference in Brussels WTO 4th Ministerial Meeting in Doha The Quad countries statement at the UN LDC-III Conference in Brussels (May 2001) and the Doha Ministerial Declaration (November 2001) are full of promise for trade-related assistance to help LDCs better address their capacity needs in relation to trade and poverty reduction and to better participate in, negotiate and implement WTO agreements.
71 The Financing for Development Conference s Monterrey Consensus (March 2002) moved the commitment further toward a new resource framework, which goes beyond ODA and included mobilization of domestic resources, revenue generated by trade, and FDI.
72 Cambodia and the MDGs At the International Conference on Financing for Development (FfD) Cambodia affirmed its commitment to reduce poverty by half by 2015.
73 NPRD (early 1994) It is interesting to note also that the Royal Government's goals are in line with the MDGs as reflected in various national development strategy documents (Socio- Economic Development Plan II, IPRSP) INPRD (early 1995) SEDP I ( ) SEDP II ( ) PIP ( ) PIP ( ) PIP ( ) Mainstreaming Trade Strategy into the Development Policies Towards Poverty Reduction in Cambodia IPRSP (Oct 2000) (2001 onwards) Pro Poor Trade Strategy PRSP (LATE 2002)
74 MDG: Halve the proportion of people living in extreme poverty between 1990 and 2015 Poverty rate (% below US$1.08) Global poverty rates down 20% since 1990, but progress uneven East Asia and Pacific Europe and Central Asia Latin American and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Developing Countries Cambodia
75 MDG: Halve the proportion of people who suffer from hunger between 1990 and 2015 Proportion of children under 5 who are underweight (%) Malnutrition-another dimension of poverty Africa Asia Latin America Cambodia
76 MDG: Achieve universal access to primary education by 2015 Net enrolment rate in primary schools (%) Rising enrollments-but too many children out of school 120 East Asia and Pacific Europe and Central Asia Latin American and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa High-Income Countries Cambodia
77 MDG: Halve the proportion of people unable to reach or afford safe drinking water by 2015 % of population with access to an improved water source Water systems are reaching more people East Asia and Pacific Europe and Central Asia Latin American and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa High-Income Countries Cambodia
78 MDG: Empower women and minimize gender disparities in the policy and decision making process at all levels Gender equality Ratio of girls to boys in primary and secondary schools (%) 120 East Asia and Pacific Europe and Central Asia Latin American and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa High-Income Countries Cambodia
79 MDG: Halt and begin to reverse by 2015 the spread of HIV/AIDS and reduce child mortality by two-thirds by 2015 Under-five mortality rates (U5MR) deaths per 1,000 live births East Asia and Pacific Europe and Central Asia Latin American and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa High-Income Countries Cambodia
80 MDG: Reduce maternal mortality rate by threequarters by 2015 Births attend by still health personnel (%) Skilled care at birth is still not available in many places Latin American and the Caribbean Middle East and North Africa Asia, excluding China and India Sub-Saharan Africa Cambodia
81
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