Isolated from a regional trend that has seen steep reduction of poverty and vast improvement in infrastructure, Cambodia, on a decade-long diet of some $600 million in aid per year, now ranks below Laos in infrastructure development and has a higher percentage of poor in its population, according to a new report.
Published by the World Bank, the Asian Development Bank and Japan Bank for International Cooperation, “Connecting East Asia: A New Framework for Infrastructure” highlights the depth of Cambodia’s lack of infrastructure and its inability to remove its citizens from poverty over the last 15 years.
“As a region, East Asia has seen strong growth and strong poverty reduction outcomes. Output has increased by an annual average of over 7 percent over the last 15 years, lifting 250 million people out of poverty in the last five years. Investment levels are generally high, averaging over 30 percent of GDP since the 1990s. Much of this investment has been in providing infrastructure services,” the report, received Thursday, said.
“In contrast to the region’s best performers, a number of countries have been less successful in simultaneously nurturing growth and poverty reduction,” the report continued.
“In Cambodia—despite significant growth (albeit from a very low base)—78 percent of the population is estimated to live on less than $2 a day.”
Of 13.4 million Cambodians, 10.3 million are poor by the $2-a-day standard despite an average economic growth from 1994 to 2003 of 6.8 percent.
In the same 15-year period that saw the percentage of Cambodia’s poor drop from about 85 percent to 78 percent, Vietnam saw a reduction in poverty among its population from 87 percent to 51 percent.
“Vietnam has invested massive amounts in infrastructure,” Nisha Agrawal, the World Bank’s country manager in Cambodia explained on Thursday.
In Cambodia and Laos “a mutually supportive relationship between infrastructure, investment, growth and poverty reduction is less apparent than elsewhere in the region,” the report states.
And compared to Laos, Cambodia’s infrastructure is in worse condition.
Only 44 percent of Cambodians have access to clean water, 22 percent to toilets or latrines, 17 percent to electricity, 0.2 percent to the Internet, and only 4 percent of roads are paved.
In Laos, 58 percent of the population have access to clean water, 30 percent have access to toilets or latrines, 41 percent have electricity, 0.3 percent have Internet access and 15 percent of roads are paved.
Agrawal said that the government, World Bank and ADB are addressing Cambodia’s inability to reach its poor.
“Governance is at the heart of what needs to be done here, but there also needs to be increased investment in infrastructure,” Agrawal said.
“The World Bank and ADB have come out with new country strategies that continue to focus on infrastructure development, but that being said, Cambodia’s infrastructure needs are so great that public investment will not be enough,” she said.
“Private companies are interested, but what needs to be put in place is a legal framework for them,” she added.
Independent economist Kang Chandararot also said infrastructure development is key in bringing the benefits of economic growth to Cambodia’s poor.
“It has been a mistake of the government to put export promotion and attracting foreign direct investment at the center of their economic strategy. Infrastructure needs to be the focus,” he said.
More than 80 percent of Cambodians live in the countryside where little has changed in subsistence farming.
“In the informal sector, Cambodians work just for food,” Kang Chandararot said. “They have nothing left over to invest with.”
“Maybe of the donors only Japan has realized quite how important infrastructure is,” he said.
The economist said donors need to unlink infrastructure commitments from political concerns so that even if the country experiences political turmoil, the important work of building infrastructure in rural areas continues.
Kang Chandararot said that land disputes were a major factor in the continuing poverty spiral.
“In Vietnam, land ownership is far more secure…. Cambodians are becoming landless due to lack of land titles.”