Cambodia to See Biggest GDP Gain From AEC

Cambodia’s gross domestic product is predicted to rise by nearly 20 percent over the next decade following its integration into the Asean Economic Community (AEC) starting in 2015, according to a report released Wednesday by the International Labor Organization.

Once the 10-member bloc is established next year, its objective to turn the region into a single common market and production base by scrapping tariffs and other barriers to intra-Asean trade will see Cambodia’s GDP value rise by 19.9 percent, the report says.

“The lower-income ASEAN Member States in general see the largest increases in GDP relative to the baseline—in part as consumers and producers in these countries face relatively high trade barriers and costs, and thus stand to gain most from increased international trade,” the report says.

The entrance of new companies will see Cambodia’s much-needed higher-value sectors develop, according to Phu Huynh, a labor economist at the ILO regional office for Asia and the Pacific.

“Trade and investment liberalization will increase trade and investment flows and accelerate the pace of economic structural change to higher value sectors,” Mr. Huynh said in an email.

“This could allow Cambodia to upgrade its economic base and increasingly compete in regional and global markets based on higher productivity.”

The report says that the development of industries under the AEC could lead to an extra 1.1 million Cambodians in employment, with productivity per worker increasing significantly. Total demand for Cambodian workers could increase 45 percent by 2025.

However, for Cambodia to achieve strong growth from integration, Jayant Menon, lead economist at the Asia Development Bank’s regional integration office, said local and regional businesses need to make more effort to prepare for the advent of the AEC.

“Most businesses have not prepared activities related to the AEC, nor considered how the AEC would link to their company’s vision, and the preparation work done by businesses and the general public has been minimal,” he said.

Sandra D’Amico, managing director of the human resources company HRINC, said economic integration would bring some positive changes to the labor market, but that the local education system still needed to improve so that young Cambodians are positioned to take advantage of the new jobs open to them.

“Of course there is going to be change with the AEC, but it is not a light switch, it’s a process,” she said.

Education Ministry spokesman Ros Salin said the ministry is preparing to roll out changes to the school curriculum next year to prepare for the AEC.

“We will start to include technical subjects like agriculture and mechanics from grade 7 upwards and the ministry will focus more on maths and sciences, such as physics.”

Mr. Salin said the ministry also had begun taking stricter measures against cheating on the national high school exams with an eye toward making Cambodian graduates more regionally competitive.

“We are improving the quality of education through taking strict measures for high school examination in order to wake students up to studying harder…. This will lead to faster economic development and readiness for AEC 2015,” he said.

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